Preface

The central ideas in this book were first sketched out briefly in a pamphlet called Our Land and Land Policy, published in San Francisco in 1871. I planned to develop them more fully as soon as I could, but it was a long time before I had the chance. In the meantime, I became even more firmly convinced that they were right. I could see their connections more completely and clearly. I also came to see how many false ideas and ingrained habits of thought stood in the way of people accepting them, and how necessary it was to work through the whole subject from the ground up.

That is what I've tried to do here, as thoroughly as space would allow. I've had to clear away a great deal of confusion before I could build anything up. I've had to write for two audiences at once: people who have never studied economics, and people who are deeply familiar with economic reasoning. And the argument covers so much ground that I couldn't give every question the full treatment it deserves. What I've tried hardest to do is establish general principles, trusting my readers to work out further applications where that's needed.

In some ways, this book will be best appreciated by readers with some background in economic literature. But no previous reading is necessary to understand the argument or to judge whether its conclusions are sound. The facts I rely on aren't buried in library archives. They are facts of common observation and common knowledge, which any reader can verify for themselves — just as they can decide whether my reasoning from those facts is valid or not.

I begin with a brief statement of the facts that prompted this investigation. Then I examine the explanation that mainstream economics currently offers for why, despite the enormous increase in our power to produce, wages tend to sink to the bare minimum needed to survive. This examination shows that the accepted theory of wages is built on a misconception. In truth, wages are produced by the very labor they pay for, and should — all else being equal — increase as the number of workers grows. Here the inquiry runs into a doctrine that sits at the foundation of the most important economic theories, one that has powerfully shaped thinking in every direction: the Malthusian theory, which holds that population tends to grow faster than the means to support it. But when we examine it, this doctrine turns out to have no real support in either facts or logic. When put to a decisive test, it falls apart completely.

Up to this point, the results of the inquiry, while extremely important, are mainly negative. They show that the current theories don't satisfactorily explain the link between poverty and material progress. But they shed no light on the problem itself — except to show that the answer must lie in the laws governing how wealth is distributed. So it becomes necessary to push the inquiry into this territory. A preliminary review shows that the three laws of distribution must necessarily fit together. But as mainstream economics states them, they don't — and an examination of the terminology in use reveals the confused thinking that has papered over this contradiction. I then set out to work out the laws of distribution properly. I begin with the law of rent. This, it's easy to see, is correctly understood by mainstream economics. But it's also clear that the full scope of this law hasn't been appreciated. It implies, as direct consequences, the laws of wages and interest — because whatever determines what share of output goes to the landowner necessarily determines what's left for labor and capital. Without stopping there, I proceed to derive the laws of interest and wages independently. I pause to determine the real cause and justification of interest, and to point out a major source of confusion: the habit of lumping together monopoly profits with the legitimate earnings of capital. Then, returning to the main investigation, I show that interest must rise and fall with wages, and that both ultimately depend on the same thing as rent — the margin of cultivation, the point in production where rent begins. A similar but independent investigation of wages yields the same harmonious results. The three laws of distribution are brought into mutual support and harmony. And the fact that rent rises everywhere with material progress is seen to explain why wages and interest don't.

What causes this rise in rent is the next question, and answering it requires examining how material progress affects the distribution of wealth. I separate the factors of material progress into two components: population growth and improvements in technology and methods. First, I show that population growth tends constantly — not just by pushing cultivation onto worse land, but by concentrating the economic advantages that come with larger populations into specific locations — to increase the share of total output taken as rent, while reducing the share going to wages and interest. Then, setting population growth aside, I show that improvements in production methods and technology push in the same direction. When land is privately owned, these improvements would produce in a population that isn't growing at all the same effects that the Malthusian theory attributes to population pressure. And then I examine what happens when the land values that rise from material progress keep rising continuously. This reveals that the speculative price increases inevitably generated when land is private property create a secondary but enormously powerful force driving rents higher and wages lower. Logical deduction shows that this force must produce periodic economic depressions, and real-world evidence confirms it. From the analysis as a whole, it becomes clear that the necessary result of material progress — when land is privately owned — is to force workers down to wages that provide nothing more than a bare living, regardless of how much the population grows.

Identifying this cause — which ties poverty to progress — points toward a remedy. But the remedy is so radical that I next consider whether any other solution exists. Starting the investigation over from a different angle, I examine the measures and trends currently advocated or relied upon for improving the condition of working people. The result of this investigation confirms the earlier one: nothing short of making land common property can permanently relieve poverty and stop the downward pressure on wages toward the starvation point.

The question of justice naturally arises next, and the inquiry moves into the field of ethics. An examination of the nature and basis of property rights shows that there is a fundamental and irreconcilable difference between property in things that are the product of labor and property in land. The first has a natural basis and justification; the second has none. Recognizing exclusive property rights in land necessarily means denying the right of people to own what their labor produces. Further investigation shows that private property in land always has, and always must, as society develops, lead to the enslavement of the working class. Landowners can make no just claim to compensation if society chooses to reclaim its right. Far from private property in land being consistent with people's natural sense of fairness, the very opposite is true. And in the United States, we are already beginning to feel the effects of having accepted this mistaken and destructive principle.

The inquiry then moves to the field of practical policy. I show that private property in land, far from being necessary for its improvement and use, actually stands in the way of improvement and use, and causes an enormous waste of productive energy. Recognizing the common right to land requires no sudden upheaval or dispossession. It can be achieved by the simple and straightforward method of abolishing all taxes except the tax on land values. And an examination of the principles of taxation shows this to be, in every respect, the best possible thing to tax.

A look at the effects of this proposed change then shows that it would enormously increase production, secure justice in how wealth is distributed, benefit all classes of people, and make possible an advance to a higher and nobler civilization.

The inquiry now rises to a wider field and begins again from yet another starting point. The hopes raised by the preceding arguments run into a widespread belief that social progress is possible only through slow improvement of the human race over generations. Moreover, the conclusions we've reached assert certain laws which, if they are truly natural laws, must be visible throughout all of human history. As a final test, it becomes necessary to work out the law of human progress. Certain great facts force themselves on our attention as soon as we begin examining this subject — facts utterly inconsistent with the currently accepted theory. This inquiry shows that differences in civilization are not due to differences in individuals, but rather to differences in social organization. Progress, always sparked by people coming together, always slides into decline once inequality takes hold. Even now, in modern civilization, the same forces that destroyed every previous civilization are beginning to show themselves, and political democracy alone is drifting toward anarchy and despotism. But this investigation also reveals that the law of social life is identical to the great moral law of justice. It confirms the earlier conclusions and shows how decline can be prevented and a grander advance begun. This ends the inquiry. The final chapter will explain itself.

The great importance of this investigation should be obvious. If it has been carefully and logically carried out, its conclusions completely transform economics, giving it the coherence and certainty of a true science and bringing it into full sympathy with the hopes and aspirations of ordinary people — from whom it has long been estranged. What I have done in this book, if I have correctly solved the great problem I set out to investigate, is to unite the truth seen by the school of Adam Smith and David Ricardo with the truth seen by the schools of Pierre-Joseph Proudhon and Ferdinand Lassalle. I have tried to show that true free markets, in their fullest and deepest sense, open the way to realizing the noble dreams of socialism. I have tried to identify social law with moral law, and to disprove ideas that cloud grand and elevating truths in the minds of many.

This work was written between August 1877 and March 1879, and the printing plates were finished by September of that year. Since then, new developments have confirmed the correctness of the views presented here, and the march of events — especially the great movement that has begun in Britain through the Irish land agitation — shows even more clearly how urgent the problem is that I have tried to solve. But nothing in the criticisms these views have received has given me reason to change or modify them. In fact, I have yet to see an objection that isn't already answered in the book itself. Except for correcting some minor errors and adding this preface, this edition is the same as the previous ones.

Henry George New York, November 1880

Introductory

The Problem

Our era has seen an enormous increase in the power to produce wealth. Steam and electricity, better manufacturing processes, labor-saving machinery, larger-scale production, and vastly improved trade networks have multiplied the effectiveness of human labor many times over.

At the dawn of this marvelous age, it was natural to expect — and people did expect — that labor-saving inventions would lighten the burden of work and improve the lives of working people. The enormous increase in productive power, it seemed certain, would make real poverty a thing of the past. Imagine if someone from the previous century — a Benjamin Franklin or a Joseph Priestley — could have seen, in a vision of the future, the steamship replacing the sailing vessel, the railroad train replacing the wagon, the reaping machine replacing the scythe, the threshing machine replacing the flail. Imagine they could have heard the throb of engines that, in obedience to human will and for the satisfaction of human desire, exert more power than all the people and all the beasts of burden on earth combined. Imagine they could have seen the forest tree transformed into finished lumber — into doors, window frames, blinds, boxes, and barrels, with hardly the touch of a human hand. The great workshops where boots and shoes are turned out by the crate with less labor than an old-fashioned cobbler could have put into a single sole. The factories where, under the watch of a young worker, cotton becomes cloth faster than hundreds of strong weavers could have managed with their handlooms. Imagine they could have seen steam hammers shaping enormous shafts and mighty anchors, and delicate machinery making tiny watches. The diamond drill cutting through the heart of solid rock, and petroleum lamps sparing the whale. Imagine they could have grasped the enormous savings of labor from improved communication and trade — sheep slaughtered in Australia eaten fresh in England, and an order placed by a London banker in the afternoon carried out in San Francisco the same morning. If they could have imagined the hundred thousand improvements that these only hint at, what would they have concluded about the condition of humanity?

It would not have seemed like a mere guess. Beyond what the vision showed, they would have felt they could see the rest as clearly as if it were before their eyes. Their hearts would have leaped, their nerves would have thrilled, like someone who from a hilltop spots, just ahead of a thirst-stricken caravan, the living gleam of rustling woods and the glint of laughing waters. Plainly, in their mind's eye, they would have seen these new forces lifting society from its very foundations, raising the poorest above any possibility of want, freeing even the lowest from anxiety about the basic needs of life. They would have seen these servants of knowledge taking on the ancient curse of toil, these muscles of iron and sinews of steel making the poorest worker's life a holiday, in which every noble quality and generous impulse could have room to grow.

And out of these bountiful material conditions, they would have seen arising, as natural consequences, the moral conditions of the golden age that humanity has always dreamed of. Youth no longer stunted and starved. Old age no longer driven by greed. The child at play with the tiger. The person bent over petty concerns suddenly looking up to drink in the glory of the stars! Foul things driven away, fierce things made tame, discord turned to harmony! For how could there be greed where everyone had enough? How could the vice, the crime, the ignorance, the brutality that spring from poverty and the fear of poverty exist where poverty had vanished? Who would grovel where all were free? Who would oppress where all were equals?

More or less vaguely or clearly, these have been the hopes, these the dreams, born of the improvements that give this remarkable century its place in history. They have sunk so deeply into the popular mind as to radically change the currents of thought, reshape beliefs, and displace the most fundamental assumptions. The haunting visions of a better world have not merely grown in splendor and vividness — their direction has changed. Instead of looking backward at the faint glow of a dying sunset, all the glory of the sunrise now lights up the sky ahead.

It is true that disappointment has followed disappointment, and that discovery after discovery, invention after invention, have neither lightened the toil of those who most need relief nor brought plenty to the poor. But there have been so many things to blame for this failure that, up to our time, the new faith has hardly weakened. We have gained a better appreciation of the difficulties to be overcome, but we have not lost our trust that the direction of the times was toward overcoming them.

Now, however, we are colliding with facts that cannot be mistaken. From all parts of the civilized world come complaints of economic depression — of workers condemned to involuntary idleness, of capital sitting idle and going to waste, of financial distress among business owners, of want and suffering and anxiety among the working classes. All the dull, deadening pain, all the sharp, maddening anguish that the words "hard times" mean for great masses of people, afflict the world today. This state of affairs, common to societies that differ widely in geography, political systems, tax and financial structures, population density, and social organization, can hardly be explained by local causes. There is distress where large standing armies are maintained, but also where armies are practically nonexistent. There is distress where protective tariffs stupidly and wastefully hamper trade, but also where trade is nearly free. There is distress where autocratic government still prevails, but also where political power is wholly in the hands of the people — in countries where paper serves as money, and in countries where gold and silver are the only currency. Clearly, beneath all these surface differences, we must look for a common cause.

That there is a common cause — and that it is either what we call material progress itself, or something closely connected with material progress — becomes more than a guess when we notice that the symptoms we group together as "economic depression" are simply intensified versions of conditions that always accompany material progress, and that show themselves more clearly and more strongly as progress advances. Where the conditions that material progress everywhere tends toward are most fully realized — that is, where population is densest, wealth greatest, and the machinery of production and exchange most highly developed — we find the deepest poverty, the fiercest struggle for existence, and the most involuntary idleness.

It is to the newer countries — the countries where material progress is still in its early stages — that workers emigrate in search of higher wages and capital flows in search of higher returns. It is in the older countries — the countries where material progress has reached its later stages — that widespread destitution exists amid the greatest abundance. Visit a new community where vigorous settlers are just beginning the race of progress, where the machinery of production and exchange is still rough and inefficient, where the growth of wealth is not yet great enough to allow any class to live in ease and luxury, where the best house is a log cabin or a cloth-and-paper shanty, and the richest person must still do daily work — and though you will find an absence of wealth and everything that comes with it, you will find no beggars. There is no luxury, but there is no destitution. No one makes an easy living, nor a very good one, but everyone can make a living, and no one who is able and willing to work is crushed by the fear of want.

But as such a community achieves the very conditions that all civilized societies are striving for, and advances up the scale of material progress — as denser settlement and closer connection with the rest of the world, and greater use of labor-saving machinery, make possible greater efficiencies in production and exchange, and wealth in consequence increases, not just in total but per person — poverty takes on a darker aspect. Some people get an infinitely better and easier living, but others find it hard to get a living at all. The vagrant arrives with the locomotive, and poorhouses and prisons are as surely the marks of "material progress" as are grand homes, rich warehouses, and magnificent churches. On streets lit by gas and patrolled by uniformed police, beggars wait for passersby, and in the shadow of colleges, libraries, and museums gather the modern barbarians — the more dangerous invaders that the historian Macaulay warned about.

This fact — the great fact that poverty and all its companions appear in communities precisely as they develop toward the conditions that material progress creates — proves that the social problems that emerge wherever a certain stage of progress has been reached do not arise from local circumstances. They are, in one way or another, produced by progress itself.

And, unpleasant as it may be to admit, it is at last becoming clear that the enormous increase in productive power that has marked our century — and is still accelerating — has no tendency to eliminate poverty or to lighten the burdens of those who must toil. It simply widens the gulf between rich and poor, and makes the struggle for existence more intense. The march of invention has given humanity powers that the boldest imagination could not have dreamed of a century ago. But in factories where labor-saving machinery has reached its most wonderful development, little children are at work. Wherever the new forces are anything close to fully utilized, large numbers of people are kept alive by charity or live on the edge of needing it. Amid the greatest concentrations of wealth, people die of starvation, and starving infants nurse at empty breasts — while everywhere the greed for gain and the worship of wealth reveal the power of the fear of want. The promised land retreats before us like a mirage. The fruits of the tree of knowledge turn, as we reach for them, to ashes that crumble at the touch.

It is true that wealth has been greatly increased, and that the average level of comfort, leisure, and refinement has been raised. But these gains are not shared by all. The lowest class has no part in them.1 I do not mean that the condition of the lowest class has improved nowhere and in nothing, but that there is no improvement anywhere that can be credited to increased productive power. What I mean is that the tendency of what we call material progress is in no way to improve the condition of the lowest class in the essentials of a healthy, happy human life. More than that — it tends to push the lowest class even further down. The new forces, uplifting as they are by nature, do not act on society from underneath, as was long hoped and believed. Instead, they strike at a point between the top and bottom. It is as though an immense wedge were being driven, not underneath society, but through it. Those above the point of separation are lifted up, but those below are crushed down.

This downward pressure is not widely recognized, because it is not visible where a class barely able to survive has long existed. Where the lowest class already lives at the bare minimum, as has been the case for a long time in many parts of Europe, it is impossible for them to sink any lower — the next step down is death. No tendency toward further depression can easily show itself. But in the development of new settlements into the conditions of older communities, it can be clearly seen that material progress does not merely fail to relieve poverty — it actually produces it. In the United States, it is plain that squalor and misery, and the vices and crimes that spring from them, increase everywhere as the village grows into a city and advancing development brings the advantages of improved methods of production and exchange. It is in the older and richer regions of the country that poverty and distress among the working classes are becoming most painfully apparent. If there is less deep poverty in San Francisco than in New York, is it not because San Francisco is still behind New York in everything that both cities are striving for? When San Francisco reaches the point where New York now is, who can doubt that there will also be ragged and barefoot children on its streets?

This link between poverty and progress is the great enigma of our times. It is the central fact from which spring the economic, social, and political difficulties that perplex the world, and that statesmanship, philanthropy, and education grapple with in vain. From it come the clouds that darken the future of the most progressive and self-reliant nations. It is the riddle that the Sphinx of Fate puts to our civilization — and to fail to answer it is to be destroyed. So long as all the increased wealth that modern progress brings goes only to build up great fortunes, to increase luxury, and to sharpen the contrast between the House of Have and the House of Want, progress is not real and cannot last. The reaction must come. The tower leans from its foundations, and every new story only hastens the final collapse. To educate people who are condemned to poverty is only to make them restless. To build political institutions founded on the theoretical equality of all people on top of the most glaring social inequality is to stand a pyramid on its point.

As urgent as this question is, pressing itself painfully upon our attention from every direction, it has not yet received an answer that accounts for all the facts and points to any clear and simple remedy. This is shown by the wildly varying attempts to explain the ongoing economic depression. They reveal not merely a gap between popular ideas and scientific theories, but also that the agreement that should exist among those who share the same general theories breaks down into a chaos of opinion when it comes to practical questions. On high economic authority, we have been told that the depression is caused by overconsumption; on equally high authority, that it is caused by overproduction. Meanwhile, the costs of war, the expansion of railroads, workers' attempts to maintain their wages, the removal of silver from the currency, the printing of paper money, the spread of labor-saving machinery, the opening of new trade routes — each of these has been separately pointed to as the cause by writers of reputation.

And while the experts disagree, ideas are rapidly gaining ground among ordinary people — who keenly feel the hurt and are sharply aware of a wrong. The idea that there is an inevitable conflict between capital and labor. That machinery is an evil. That competition must be restrained and interest abolished. That wealth can be created by printing money. That it is the government's duty to provide capital or provide jobs. Such ideas, which place great masses of people — the holders of ultimate political power — under the influence of charlatans and demagogues, are dangerous. But they cannot be successfully fought until economics provides an answer to the great question that is consistent with all its teachings and that makes sense to ordinary people.

It must be within the power of economics to give such an answer. For economics is not a set of dogmas. It is the explanation of a certain set of facts. It is the science that, in the sequence of certain phenomena, seeks to trace causes and effects, just as the physical sciences do with other phenomena. It rests on firm ground. The premises from which it draws its conclusions are truths of the highest order — principles we all recognize, on which we safely base the reasoning and actions of everyday life, and which boil down to the common-sense version of a physical law: that people seek to satisfy their desires with the least effort. Starting from this solid foundation, its methods — which consist simply of identifying and separating out different factors — carry the same certainty. In this sense, economics is as exact a science as geometry, which starts from similarly self-evident truths about space, reaches its conclusions by similar methods, and produces conclusions that, when valid, should be equally obvious. And although in economics we cannot test our theories by artificially controlled experiments the way some other sciences can, we can apply tests that are no less conclusive — by comparing societies where different conditions exist, or by mentally isolating, combining, adding, or removing forces whose direction we already know.

In the following pages, I propose to attempt to solve, by the methods of economics, the great problem I have outlined. I propose to find the law that links poverty to progress and increases want alongside advancing wealth. And I believe that in explaining this paradox, we will also find the explanation of those recurring waves of economic paralysis that, when viewed in isolation from larger patterns, seem so baffling. Properly begun and carefully pursued, such an investigation must yield a conclusion that will stand every test, and that, as truth, will fit together with all other truth. For in the chain of cause and effect, there is no accident. Every effect has a cause, and every fact implies a preceding fact.

That economics, as currently taught, does not explain the persistence of poverty amid advancing wealth in a way that satisfies people's deep-seated sense of justice; that the genuine truths it does teach stand unconnected and disjointed; that it has failed to win acceptance in the popular mind, as truth, even unpleasant truth, eventually must; that, on the contrary, after a century of development, during which it has occupied some of the most brilliant and powerful intellects, it should be dismissed by politicians, rejected by the masses, and regarded by many educated and thoughtful people as a pseudo-science where nothing is settled or can be settled — all of this must, it seems to me, be due not to any failing of the science when properly pursued, but to some false step in its premises, or some overlooked factor in its calculations. And since such mistakes are generally hidden by the respect paid to authority, I propose in this investigation to take nothing for granted, but to test even accepted theories against first principles — and if they fail the test, to question the facts anew in an effort to discover their true law.

I propose to dodge no question, to shrink from no conclusion, but to follow truth wherever it may lead. The responsibility of seeking the law falls on us, for in the very heart of our civilization today, women faint and little children cry out in suffering. But what that law may prove to be is not our concern. If the conclusions we reach run counter to our prejudices, let us not flinch. If they challenge institutions that have long been considered wise and natural, let us not turn back.

Book I: Wages and Capital

The Current Doctrine — That Wages Are Drawn from Capital

Let's reduce the problem we've set out to investigate to its most compact form, and examine, step by step, the explanation that mainstream economics gives for it.

Whatever causes poverty to persist alongside growing wealth is clearly the same force behind the widely recognized tendency of wages to fall to a minimum. So let's put our question this way:

Why, despite increases in productive power, do wages tend toward a minimum that barely keeps people alive?

The answer from mainstream economics goes like this: wages are determined by the ratio between the number of workers and the amount of capital devoted to employing them. Wages constantly tend toward the lowest amount workers will accept to live and reproduce, because the growth in the number of workers naturally tends to follow and outpace any growth in capital. Since the only thing holding back the increase of the divisor is the size of the quotient, the dividend can grow to infinity without making any real difference.

In current thinking, this doctrine holds almost undisputed power. It carries the endorsement of the most prestigious names in economics, and while there have been attacks on it, they are generally more formal than real.2 It was taken as a given by the historian Buckle as the foundation of his sweeping theories of world history. It is taught in all, or nearly all, the major English and American universities, and laid down in textbooks aimed at teaching ordinary people to reason correctly about practical matters. And it seems to fit neatly with the new evolutionary philosophy which, having in just a few years nearly conquered the scientific world, is now rapidly spreading through public thought.

Entrenched in these upper regions of intellectual life, the doctrine is in cruder form even more firmly rooted in what we might call the lower regions. What gives the fallacies of protectionism such a stubborn hold — despite their obvious inconsistencies and absurdities — is the idea that the total amount available for wages in any community is fixed, and that competition from "foreign labor" must divide it up even further. The same idea underlies most theories that aim to abolish interest or restrict competition as ways to increase workers' share of the general wealth. And it pops up everywhere among people who haven't thought carefully enough to have any theories at all, as you can see in newspaper columns and legislative debates.

And yet, widely accepted and deeply rooted as it is, this theory doesn't seem to match the obvious facts. Here's why: if wages depend on the ratio between the amount of labor seeking employment and the amount of capital devoted to employing it, then a relative scarcity of one factor must mean a relative abundance of the other. So capital should be relatively abundant where wages are high, and relatively scarce where wages are low. Now, since the capital used in paying wages must largely consist of capital constantly seeking investment, the current rate of interest should measure its relative abundance or scarcity. If it's true that wages depend on this ratio between labor and capital, then high wages — the mark of labor being relatively scarce — should come with low interest rates, the mark of capital being relatively abundant. And the reverse should hold: low wages should come with high interest.

But the facts show the opposite. Set aside the insurance component of interest and look only at interest proper — the return for the use of capital. Isn't it a general truth that interest is high where and when wages are high, and low where and when wages are low? Both wages and interest have been higher in the United States than in England, and higher in the Pacific states than in the Atlantic states. Isn't it a well-known fact that where labor flows in search of higher wages, capital also flows in search of higher returns? Isn't it true that whenever there has been a general rise or fall in wages, there has been a similar rise or fall in interest at the same time? In California, for instance, when wages were higher than anywhere else in the world, interest was also higher. Wages and interest in California went down together. When common wages were $5 a day, the ordinary bank interest rate was twenty-four percent per year. Now that common wages are $2 or $2.50 a day, the ordinary bank rate is ten to twelve percent.

Now, this broad, general fact — that wages are higher in new countries where capital is relatively scarce than in old countries where capital is relatively abundant — is too glaring to ignore. And although mainstream economists touch on it only lightly, they do acknowledge it. But the way they acknowledge it actually proves my point: it is completely inconsistent with the accepted theory of wages. In trying to explain it, writers like John Stuart Mill, Henry Fawcett, and Bonamy Price essentially abandon the very theory of wages they formally insist on in the same books. Even though they declare that wages are determined by the ratio between capital and workers, they explain the higher wages and interest of new countries by pointing to the greater relative production of wealth. I will later show that this isn't actually the case — that, on the contrary, wealth production is relatively larger in old, densely populated countries than in new, sparsely populated ones. But for now, I just want to point out the inconsistency. To say that the higher wages of new countries are due to greater proportionate production is clearly to make the ratio with production, not the ratio with capital, the thing that determines wages.

While this inconsistency doesn't seem to have been noticed by the writers I'm referring to, it has been spotted by one of the most logical of mainstream economists. Professor Cairnes3 attempts in a very clever way to reconcile the fact with the theory. He assumes that in new countries, where industry is generally focused on producing food and raw materials, a much larger share of the capital used in production goes to paying wages than in older countries, where a bigger portion must be spent on machinery and materials. So in the new country, even though capital is scarcer and interest is higher, the amount earmarked for wages is actually larger, and wages are higher too. For example: of $100,000 invested in manufacturing in an old country, $80,000 would probably go to buildings, machinery, and materials, leaving only $20,000 for wages. But in a new country, of $30,000 invested in agriculture, no more than $5,000 would be needed for tools and equipment, leaving $25,000 for wages. This is how it is supposedly explained that the wage fund can be comparatively large where capital is comparatively scarce, and that high wages and high interest can exist side by side.

In what follows, I believe I can show that this explanation rests on a complete misunderstanding of the relationship between labor and capital — a fundamental error about the fund from which wages are actually drawn. But for now, I only need to point out that the way wages and interest rise and fall together within the same countries and the same industries cannot be explained this way. In those swings we call "good times" and "hard times," a strong demand for labor and good wages is always accompanied by a strong demand for capital and high interest rates. Meanwhile, when workers can't find jobs and wages fall, there is always a buildup of capital seeking investment at low rates.4 The current depression has been marked just as much by unemployment and distress among working people as by the piling up of idle capital in all the major financial centers and rock-bottom interest rates on solid securities. So, under conditions that allow no explanation consistent with the current theory, we find high interest coinciding with high wages, and low interest with low wages — capital seemingly scarce when labor is scarce, and abundant when labor is abundant.

All these well-known facts point in the same direction and reinforce each other. They suggest a relationship between wages and interest — but it is a relationship of moving together, not of opposition. They are clearly and completely inconsistent with the theory that wages are determined by the ratio between labor and capital, or any portion of capital.

So how, you might ask, could such a theory have come about? How has it been accepted by one economist after another, from the time of Adam Smith to the present day?

If we look at the reasoning by which current textbooks support this theory of wages, we see right away that it is not drawn from observed facts. It is deduced from a previously assumed theory — namely, that wages are drawn from capital. Once you assume that capital is the source of wages, it necessarily follows that the total amount of wages must be limited by the amount of capital devoted to employing labor. And from that it follows that what individual workers can receive must be determined by the ratio between their number and the amount of capital available to pay them.5 This reasoning is logically valid, but as we've seen, the conclusion doesn't match the facts. The fault, therefore, must lie in the premises. Let's take a look.

I'm well aware that the idea that wages are drawn from capital is one of the most fundamental and seemingly well-established principles of mainstream economics, and that it has been accepted as self-evident by all the great thinkers who have devoted their powers to developing the science. Nevertheless, I believe it can be shown to be a fundamental error — the fertile source of a long chain of further errors that corrupt the most important practical conclusions. I'm about to attempt that demonstration. It needs to be clear and conclusive, because a doctrine on which so much important reasoning is built, which is backed by so much authority, which is so plausible on its face, and which keeps reappearing in different forms, cannot safely be brushed aside in a paragraph.

The proposition I will try to prove is this:

That wages, instead of being drawn from capital, are in reality drawn from the product of the labor for which they are paid.6

Now, since the current theory that wages come from capital also holds that capital is replenished from production, this might at first glance seem like a distinction without a difference — a mere change in terminology, the kind of thing whose discussion would only add to those fruitless disputes that make so much of what has been written on economic subjects as barren and worthless as the learned debates about the true meaning of the inscription on the stone that Mr. Pickwick found. But this is far more than a formal distinction. Consider that the entire body of current theory about the relationship between capital and labor is built on the difference between these two propositions. From it are deduced doctrines that are themselves treated as self-evident, and that shape and direct the thinking of the ablest minds on the most important questions. For upon the assumption that wages are drawn directly from capital, and not from the product of labor, rests not only the doctrine that wages depend on the ratio between capital and labor, but also the doctrine that industry is limited by capital — that capital must be accumulated before workers can be hired, and workers can only be hired to the extent that capital has been accumulated. It also supports the doctrine that every increase of capital gives or can give additional employment; the doctrine that converting circulating capital into fixed capital reduces the fund available for maintaining workers; the doctrine that more workers can be employed at low wages than at high; the doctrine that capital applied to agriculture will support more workers than if applied to manufacturing; and the doctrine that profits are high or low depending on whether wages are low or high, or that they depend on the cost of keeping workers alive. And from it come such paradoxes as the claim that demand for goods is not demand for labor, or that certain goods may cost more when wages fall or cost less when wages rise.

In short, all the teachings of mainstream economics, across the widest and most important part of its domain, rest more or less directly on the assumption that labor is fed and paid out of existing capital before the product that is the ultimate goal has been secured. If it can be shown that this is wrong — that on the contrary, the feeding and payment of labor do not even temporarily draw on capital, but come directly from the product of the labor itself — then this entire vast structure is left without support and must collapse. And with it must fall the popular theories that also rest on the belief that the total available for wages is a fixed sum, in which each person's share must shrink as the number of workers grows.

The difference between the current theory and the one I'm proposing is, in fact, similar to the difference between the old mercantilist theory of international trade and the one Adam Smith replaced it with. Between the theory that commerce is the exchange of goods for money and the theory that it is the exchange of goods for goods, there might seem to be no real difference, especially when you remember that even the mercantilists didn't think money had any use except to be exchanged for goods. Yet in practical application, these two theories produce all the difference between rigid government protectionism and free trade.

If I've said enough to show you the ultimate importance of the argument I'm about to walk you through, it won't be necessary to apologize in advance for being either too simple or too thorough. In challenging a doctrine of such importance — one backed by such authority — it is necessary to be both clear and complete.

If not for that, I'd be tempted to dismiss in a single sentence the assumption that wages are drawn from capital. For the entire vast structure that mainstream economics builds on this doctrine is in truth built on a foundation that has simply been taken for granted, without the slightest attempt to distinguish appearance from reality. Because wages are generally paid in money, and in many stages of production are paid before the product is fully completed or can be used, economists have concluded that wages are drawn from pre-existing capital. From that, they conclude that industry is limited by capital — meaning that labor cannot be employed until capital has been accumulated, and can only be employed to the extent that capital has been accumulated.

Yet in the very same textbooks where the limitation of industry by capital is stated without qualification and made the foundation for the most important theories, we are told that capital is stored-up or accumulated labor — "that part of wealth which is saved to assist future production." If we substitute this definition for the word "capital," the proposition refutes itself. The claim that labor cannot be employed until the results of labor are saved becomes too absurd to even discuss.

If we tried to close the argument with this logical absurdity, we would probably be met with the explanation — not that the first workers were supplied by Providence with the capital needed to put them to work — but that the proposition merely refers to a state of society in which production has become a complex operation.

But there is a fundamental truth that must be firmly grasped in all economic reasoning, and never let go: society in its most highly developed form is simply an elaboration of society in its most basic beginnings. Principles that are obvious in the simpler relationships between people are merely disguised — not canceled or reversed — by the more complicated relationships that come from the division of labor and the use of complex tools and methods. A steam-powered grain mill, with all its elaborate machinery exhibiting every kind of motion, is simply what the crude stone mortar dug up from an ancient riverbed was in its day — a tool for grinding grain. And every person working in that mill, whether tossing wood into the furnace, running the engine, dressing stones, printing sacks, or keeping the books, is really devoting their labor to the same purpose as the prehistoric person who used that mortar — preparing grain for human food.

In the same way, if we reduce all the complex operations of modern production to their simplest terms, we see that every individual who takes part in this infinitely subdivided and intricate network of production and exchange is really doing what early humans did when they climbed trees for fruit or followed the receding tide for shellfish — trying to obtain from nature, through the exercise of their abilities, the satisfaction of their desires. If we keep this firmly in mind — if we look at production as a whole, as the cooperation of everyone in any of its great groups to satisfy the various desires of each — we can plainly see that the reward each person gets for their effort comes as truly and directly from nature, as the result of that effort, as it did for the earliest humans.

To illustrate: in the simplest state we can imagine, each person digs their own bait and catches their own fish. The advantages of dividing labor soon become apparent, and one person digs bait while the others fish. Yet clearly, the one who digs bait is doing just as much toward catching fish as any of those who actually pull in the fish. Then when canoes prove useful, and instead of everyone going fishing, one person stays behind to make and repair canoes, the canoe-maker is really devoting their labor to catching fish just as much as the actual fishers. The fish they eat that night when the fishers come home are as truly the product of their labor as of the fishers'. And so when the division of labor is fully underway — instead of each person trying to satisfy all their needs by going directly to nature, one fishes, another hunts, a third picks berries, a fourth gathers fruit, a fifth makes tools, a sixth builds shelters, and a seventh prepares clothing — each person, to the extent they exchange the direct product of their own labor for the direct product of others' labor, is really applying their own labor to producing the things they use. They are in effect satisfying their particular desires through the exercise of their particular abilities. In other words, what they receive, they in reality produce. If someone digs roots and exchanges them for venison, they are in effect just as truly the procurer of the venison as if they had gone after the deer themselves and left the hunter to dig their own roots. The common expression "I made so-and-so," meaning "I earned so-and-so" or "I earned money with which I bought so-and-so," is, economically speaking, not a metaphor but literally true. Earning is making.

Now, if we follow these principles — obvious enough in a simpler state of society — through the complexities of what we call civilized life, we can see clearly that in every case where labor is exchanged for goods, production really does precede enjoyment. Wages are earnings — that is, the products of labor — not advances from capital. The worker who receives wages in money (which may have been coined or printed before the work even began) is really receiving, in return for what their labor has added to the general stock of wealth, a claim on that general stock — a claim they can use to get whatever particular form of wealth best satisfies their needs. Neither the money, which is merely the claim, nor the particular goods they use it to buy, represents an advance of capital for their support. On the contrary, it represents the wealth, or a portion of the wealth, that their labor has already added to the general stock.

Keeping these principles in view, we can see that the engineer who, shut away in some dingy office on the banks of the Thames, is drawing plans for a great marine engine, is in reality devoting their labor to producing bread and meat just as truly as if they were harvesting grain in California or swinging a lasso on the Argentine plains. They are as truly making their own clothing as if they were shearing sheep in Australia or weaving cloth in Paisley, Scotland, and just as effectively producing the wine they drink at dinner as if they had gathered the grapes on the banks of the Garonne in France. The miner who, two thousand feet underground in the heart of Nevada's Comstock silver mines, is digging out ore, is in effect — through a thousand exchanges — harvesting crops in valleys five thousand feet closer to the earth's surface; chasing whales through Arctic ice fields; picking tobacco leaves in Virginia; gathering coffee berries in Honduras; cutting sugar cane in the Hawaiian Islands; harvesting cotton in Georgia or weaving it in Manchester or Lowell; carving quaint wooden toys for their children in Germany's Harz Mountains; or plucking, amid the green and gold of Los Angeles orchards, the oranges they will take home to their sick spouse when their shift is over. The wages they receive on Saturday night at the mouth of the shaft — what are those but a certificate to the whole world that they have done these things? They are the first exchange in the long chain that transforms their labor into the things they have really been working for.

All this is clear when looked at this way. But to confront this fallacy in all its strongholds and hiding places, we need to shift our investigation from the deductive to the inductive approach. Let's now see whether, starting from facts and tracing their connections, we arrive at the same conclusions that are so obvious when we start from first principles and trace their application in the complex facts of real life.

The Meaning of the Terms

Before we go any further, let's make sure we agree on what our key terms mean. Fuzzy language leads to fuzzy thinking, and fuzzy thinking leads to wrong conclusions. Words like "wealth," "capital," "rent," and "wages" need much sharper definitions in economics than they carry in everyday conversation. Unfortunately, even within economics itself, there's no universal agreement on what some of these terms mean. Different writers use the same word in different ways, and the same writer will sometimes shift the meaning of a term from one paragraph to the next.

Many brilliant authors have warned about the importance of clear definitions — and then promptly fallen into serious errors caused by the very vagueness they cautioned against. Nothing better demonstrates the power of language over thought than watching sharp thinkers reach important conclusions based on quietly sliding between two different meanings of the same word.

I'm going to do my best to avoid these traps. Whenever a term becomes important, I'll state clearly what I mean by it, and I'll stick to that meaning consistently. I'd ask the reader to take note of these definitions and keep them in mind, because otherwise I can't hope to be properly understood. I won't invent new jargon or attach arbitrary meanings to familiar words. I'll stay as close to common usage as I can, while nailing down meanings precisely enough for clear reasoning.

Our task right now is to figure out whether wages really are drawn from capital, as the standard theory claims. As a first step, let's pin down what we mean by "wages" and what we mean by "capital." The first of these is fairly straightforward. The second — capital — is tangled in so many ambiguities that it will need a more detailed examination.

Wages

In everyday speech, "wages" means the pay a hired worker receives for their services. We talk about someone "working for wages" as opposed to "working for themselves." The word is narrowed even further by the habit of applying it only to pay for manual labor. We don't talk about the "wages" of doctors, managers, or office workers — we say fees, commissions, or salaries. So in common usage, wages just means pay for hired manual labor.

But in economics, the word has a much broader meaning. It includes all returns for human effort. Economists explain that the three factors of production are land, labor, and capital, and the share of what's produced that goes to the second factor — labor — is what they call wages.

So "labor" includes all human effort in producing wealth, and "wages" — being the share of production that goes to labor — includes all rewards for that effort. In this economic sense, there's no distinction based on the kind of work, or whether the reward comes through an employer or not. Wages simply means the return received for the effort of labor, as distinct from the return received for the use of capital (interest) and the return received for the use of land (rent).

A farmer who works their own soil receives their wages in the form of their crop — just as, if they also use their own capital and own their land, they may also receive interest and rent. A hunter's wages are the game they kill. A fisher's wages are the fish they catch. The gold washed out by an independent gold prospector is just as much their wages as the money paid to a hired coal miner by the company that bought their labor.7 And as Adam Smith showed, the high profits of retail shopkeepers are largely wages too — they're compensation for the shopkeeper's own labor, not returns on their capital. In short, whatever is received as the result or reward of effort is "wages."

That's all we need to note about wages for now. But it's important to keep this broad definition in mind, because in the standard economics textbooks, this meaning is acknowledged more or less clearly — and then quietly forgotten in the arguments that follow.

Capital

Capital is harder. Clearing away the ambiguities around this term is a real challenge. In everyday conversation, all sorts of things that have value or yield a return get loosely called "capital." Among economic writers, the definitions vary so wildly that the term can hardly be said to have a fixed meaning at all. Let's compare the definitions given by a few leading authorities.

Adam Smith (Book II, Chapter I) says "that part of a man's stock which he expects to afford him a revenue is called his capital." The capital of a country, he goes on to say, consists of: (1) machines and tools that make labor easier and faster; (2) buildings used for business — shops, farmhouses, and so on — not mere homes; (3) improvements to land that make it more productive; (4) the acquired skills and useful abilities of all the people; (5) money; (6) provisions held by producers and dealers who expect to profit from selling them; (7) partially completed goods still in the hands of producers or dealers; (8) finished goods still in the hands of producers or dealers. The first four he calls "fixed capital" and the last four "circulating capital" — a distinction we don't need to worry about here.

Ricardo's definition is quite different:

> "Capital is that part of the wealth of a country which is employed in production, and consists of food, clothing, tools, raw materials, machinery, etc., necessary to give effect to labor." > > — Principles of Political Economy, Chapter V.

Notice how different this is from Smith's definition. It excludes many things Smith includes — like acquired skills, or luxury items held by dealers — and includes some things Smith excludes, like food and clothing in the hands of the consumer.

McCulloch defines capital as:

> "All those portions of the produce of industry existing in it that may be directly employed either to support human existence or to facilitate production." > > — Notes on Wealth of Nations, Book II, Chapter I.

This follows Ricardo's approach but is even broader. It excludes everything that can't help production, but includes everything that can — regardless of whether it's actually being used that way. Under McCulloch's view, as he explicitly states, a horse pulling a pleasure carriage counts as capital just as much as a horse pulling a plow, because the pleasure horse could be put to work if the need arose.

John Stuart Mill, following the same general approach as Ricardo and McCulloch, makes neither the actual use nor the capability of use the test of capital, but the intention to use:

> "Whatever things are destined to supply productive labor with the shelter, protection, tools and materials which the work requires, and to feed and otherwise maintain the laborer during the process, are capital." > > — Principles of Political Economy, Book I, Chapter IV.

These quotations are enough to show how widely the leading authorities disagree. Among lesser writers, the confusion is even worse. A few examples will make the point.

Professor Wayland, whose Elements of Political Economy served for many years as a popular textbook in American schools — where there was any pretense of teaching economics at all — offers this supposedly clear definition:

> "The word capital is used in two senses. In relation to product it means any substance on which industry is to be exerted. In relation to industry, the material on which industry is about to confer value, that on which it has conferred value; the instruments which are used for the conferring of value, as well as the means of sustenance by which the being is supported while he is engaged in performing the operation." > > — Elements of Political Economy, Book I, Chapter I.

Henry C. Carey, the American champion of protectionism, defines capital as "the instrument by which man obtains mastery over nature, including in it the physical and mental powers of man himself." Professor Perry, a Massachusetts free trader, rightly objects that this hopelessly confuses the boundary between capital and labor — and then proceeds to hopelessly confuse the boundary between capital and land by defining capital as "any valuable thing outside of man himself from whose use springs a financial increase or profit."

An English economist of high standing, William Thornton, begins his detailed study of the relationship between labor and capital (On Labor) by announcing that he'll treat land as a form of capital. This is roughly like a math teacher beginning an algebra course by declaring that plus and minus signs mean the same thing. An American writer of equal standing, Professor Francis A. Walker, makes the same declaration in his elaborate book The Wages Question.

Another English writer, N. A. Nicholson (The Science of Exchanges, London, 1873), manages to reach what might be the peak of absurdity by stating in one paragraph (p. 26) that "capital must of course be accumulated by saving," and then in the very next paragraph declaring that "the land which produces a crop, the plow which turns the soil, the labor which secures the produce, and the produce itself, if a material profit is to be derived from its employment, are all alike capital." But how land and labor can be accumulated by saving them, he never bothers to explain. In the same way, the standard American writer Professor Amasa Walker (Science of Wealth, p. 66) first declares that capital arises from the net savings of labor and then immediately declares that land is capital.

I could go on for pages piling up contradictory and self-contradictory definitions. But it would only exhaust the reader. The quotations I've already given are enough to show the enormous disagreement over what "capital" means. Anyone who wants further proof of the tangled confusion on this subject among the professors of economics can find it in any library where their books sit side by side.

Why the Confusion Matters

Now, it makes little difference what name we give to things, as long as we always keep the same things in view when we use that name. But the real problem with these vague and shifting definitions of capital is this: the special technical definition is only used in the premises of the argument. In the conclusions — the practical takeaways — capital is always used, or at least always understood, in one general and definite sense.

For example, when economists say that wages are drawn from capital, the word "capital" is understood in the same way as when we talk about capital being scarce or abundant, growing or shrinking, destroyed or accumulated. It's understood in a commonly recognized sense that separates capital from the other two factors of production — land and labor — and also separates it from similar things used purely for personal enjoyment. In fact, most people understand perfectly well what capital is until they start trying to define it. And I think a close reading will show that the economists who disagree so wildly in their formal definitions actually use the term in this commonly understood sense everywhere except in their definitions and the reasoning built directly on them.

This commonly understood meaning is: wealth devoted to producing more wealth. Adam Smith correctly captures this common idea when he says, "That part of a man's stock which he expects to afford him revenue is called his capital." And the capital of a community is obviously the sum of all such individual holdings — the portion of the community's total wealth that is expected to produce more wealth.

This is also the original meaning of the word itself. Linguists trace "capital" back to a time when wealth was measured in cattle, and a person's income depended on the number of head they could keep for breeding.

Two Sources of Confusion

The difficulties that plague the word "capital" as a precise term — difficulties even more glaring in everyday political and social debates than in the definitions of economists — come from two facts. First, certain things that are to the individual exactly equivalent to owning capital are not part of the capital of the community as a whole. And second, things of the same kind may or may not be capital, depending on the purpose they're being used for.

With a little care about these two points, there should be no difficulty in arriving at a clear and consistent idea of what the term capital properly includes — an idea that lets us say what things are capital and what aren't, and use the word without slipping into ambiguity.

Land Is Not Capital

Land, labor, and capital are the three factors of production. If we remember that capital is a term used in contrast to land and labor, we immediately see that nothing properly included under either of those terms can also count as capital.

The term "land" necessarily includes not just the surface of the earth as distinct from water and air, but the entire material universe outside of human beings themselves. It's only by having access to land — from which our very bodies are drawn — that we can come into contact with nature at all. "Land," in short, encompasses all natural materials, forces, and opportunities. Therefore, nothing freely supplied by nature can properly be called capital. A fertile field, a rich vein of ore, a waterfall that provides power — these may give their owner advantages equivalent to owning capital, but to classify them as capital would erase the distinction between land and capital and make both terms meaningless.

Labor Is Not Capital

The term "labor" likewise includes all human effort. So human abilities, whether natural or learned, can never properly be called capital. In everyday speech, we often say that a person's knowledge, skill, or work ethic is "their capital." But this is clearly a metaphor, and we need to set it aside if we want to reason precisely. Superior abilities may boost an individual's income just as capital would, and an increase in the knowledge, skill, or dedication of a community may increase its production just as more capital would. But this effect comes from increased labor power, not from capital. Greater velocity can give a cannonball the same impact as greater weight — but weight is still one thing and velocity another.

What Capital Actually Is

So we must exclude from the category of capital everything that falls under either land or labor. What remains? Only things that are neither land nor labor but have resulted from combining these two original factors of production. Nothing qualifies as capital unless it consists of such things — that is, nothing can be capital that is not wealth.

But many of the confusions around the word "capital" actually stem from confusions around this broader term, "wealth."

Defining Wealth

In everyday usage, "wealth" means anything with exchange value. But in economics, the term needs a much more precise definition, because many things commonly called wealth cannot count as wealth when we're thinking about the wealth of a community as a whole. These things have exchange value, and they're commonly called wealth because they represent — for individuals or groups of individuals — the power to obtain wealth. But they are not truly wealth, because their increase or decrease doesn't change the total amount of wealth in existence.

What kinds of things fall into this category? Bonds, mortgages, promissory notes, bank bills, and other promises to transfer wealth. Slaves, whose value represents nothing more than one group's power to seize the earnings of another group. Land and other natural resources, whose value comes solely from the legal recognition of certain people's exclusive right to use them, representing nothing more than the power given to owners to demand a share of the wealth produced by those who actually use the land.

An increase in bonds, mortgages, notes, or bank bills cannot increase the wealth of a community that includes both the people who owe the debts and the people who are owed. The enslavement of some of a nation's people couldn't increase the wealth of the nation as a whole, because what the enslavers gained, the enslaved would lose. Rising land values don't represent an increase in the common wealth, because what landowners gain through higher prices, tenants and buyers who must pay those prices will lose.

And all of this relative wealth — which in common thought and speech, in legislation and law, is treated as no different from actual wealth — could be completely wiped out without destroying or consuming anything more than a few drops of ink and a piece of paper. By an act of the sovereign political power, debts could be canceled, slaves emancipated, and land reclaimed as the common property of all the people — without reducing the aggregate wealth by so much as a pinch of snuff. What some would lose, others would gain. There would be no more destruction of wealth than there was creation of wealth when Elizabeth Tudor enriched her favorite courtiers by granting them monopolies, or when Boris Godunov turned Russian peasants into property that could be bought and sold.

True Wealth

Not everything with exchange value, then, is wealth in the economic sense. Only those things qualify whose production increases and whose destruction decreases the total stock of wealth. Once we consider what these things are and what they have in common, defining wealth becomes straightforward.

When we say a community is growing wealthier — when we say that England has grown wealthier since Queen Victoria took the throne, or that California is a wealthier place than when it was Mexican territory — we don't mean there's more land, or that the land's natural powers have grown, or that there are more people (when we mean that, we say population has increased). Nor do we mean that debts owed by some people to others have increased. What we mean is that there's been an increase in certain tangible things with actual, not merely relative, value: buildings, livestock, tools, machinery, agricultural products, minerals, manufactured goods, ships, wagons, furniture, and the like.

An increase in such things is an increase in wealth. A decrease in them is a decrease in wealth. And the community that has the most of such things relative to its population is the wealthiest community.

What do all these things have in common? They consist of natural materials or products that have been adapted by human labor for human use or enjoyment. Their value depends on the amount of labor that would, on average, be required to produce similar things.

So wealth, as the term must be used in economics, consists of natural products that have been gathered, moved, combined, separated, or otherwise modified by human effort to satisfy human desires. In other words, it is labor stored in matter — much as the heat of the sun is stored in coal — in a form that can serve human needs.

Wealth is not the only purpose of labor, since labor also serves our desires directly. But wealth is the purpose and result of what we call productive labor — labor that creates value in material things. Nothing that nature supplies without human effort is wealth. And no expenditure of labor produces wealth unless it results in a tangible product that has and retains the power to satisfy some human desire.

Capital Is Wealth, But Not All Wealth Is Capital

Now, since capital is wealth devoted to a particular purpose, nothing can be capital that doesn't fall within this definition of wealth. Recognizing this and keeping it in mind clears away misconceptions that corrupt all reasoning where they're allowed to creep in, that fog up popular thinking, and that have led even sharp thinkers into mazes of contradiction.

But while all capital is wealth, not all wealth is capital. Capital is only part of wealth — specifically, the part devoted to aiding further production. And it's in drawing this line between wealth that is capital and wealth that isn't that a second set of misconceptions tends to arise.

Vulgar Errors vs. Expert Errors

The errors I've been pointing out so far — confusing actual wealth and capital with things that are fundamentally different, or that exist only in a relative sense — are at this point merely popular errors. They're widespread, it's true, and deeply rooted. They're held not just by less educated people, but seemingly by a large majority of those who in advanced countries like England and the United States shape public opinion, make laws in Parliaments, Congresses, and Legislatures, and administer those laws in the courts. They also crop up in the writings of many mediocre authors who have burdened the shelves and muddied the waters with numerous volumes labeled "economics" — books that pass as textbooks among the uninformed and as authority among those who don't think for themselves. Still, these are only popular errors, because the best economic writers give them no support.

Through one of those lapses that flaw his great work and strikingly reveal the imperfections of even the highest talent, Adam Smith counts certain personal qualities as capital — an inclusion that contradicts his own original definition of capital as stock from which revenue is expected. But this error was avoided by his most important successors, and the definitions previously given — from Ricardo, McCulloch, and Mill — don't make it. Nor do any of their definitions, including Smith's, commit the popular error of treating things that are only relatively capital — like debt instruments or land values — as real capital.

But when it comes to things that are genuinely wealth, their definitions disagree with each other, and widely with Smith, about what should and shouldn't count as capital. A jeweler's stock, for instance, would be included as capital under Smith's definition, while a laborer's food and clothing would be excluded. But Ricardo's and McCulloch's definitions would exclude the jeweler's stock, as would Mill's if understood the way most people would naturally read it. (As Mill explains his definition further, though, it's neither the nature nor the intended use of the things themselves that determines whether they're capital, but the intention of the owner to devote either the things or the money from selling them to supplying productive labor with tools, materials, and maintenance.) All these definitions, however, agree on including the laborer's food and clothing as capital — the very thing Smith excludes.

Testing the Three Definitions

Let's look more closely at these three definitions, which represent the best thinking of mainstream economics.

McCulloch's definition of capital as "all those portions of the produce of industry that may be directly employed either to support human existence or to facilitate production" has obvious problems. Walk down any main street in a thriving town and you'll see stores full of valuable goods that can't be used to support human existence or aid production — yet these clearly form part of the storekeeper's capital and part of the community's capital. You'll also see products of industry that could support life or aid production being consumed in mere display or pointless luxury. Surely these things, though they might serve productive purposes, don't actually constitute capital.

Ricardo's definition avoids the problem of including things that could be used in production but aren't, since it covers only things actually in use. But it's open to the first objection. If only wealth that is being used to support producers or aid production counts as capital, then the inventory of jewelers, toy dealers, tobacconists, candy shops, art dealers — in fact, all stocks that consist of luxury items — are not capital.

If Mill, by making the distinction depend on the intention of the owner, avoids this difficulty (which isn't entirely clear to me), he does so by making the test so subjective that no power short of omniscience could determine, in any given country at any given time, what was and wasn't capital.

But the biggest flaw these definitions share is that they all include something that clearly cannot be called capital if we're going to maintain any distinction between laborer and capitalist. They all bring into the category of capital the food, clothing, and other goods in the possession of ordinary workers — things that will be consumed whether the worker works or not — alongside the stock in the hands of a business owner that's meant to pay workers for their labor.

Yet this is obviously not how these same writers use the word "capital" when they talk about labor and capital playing separate roles in production and taking separate shares of what's produced. It's not what they mean when they say wages are drawn from capital, or that wages depend on the ratio between labor and capital, or in any of the other ways they commonly use the term. In all these cases, they use "capital" in its commonly understood sense: the portion of wealth that its owners don't plan to use directly for their own enjoyment, but intend to use for the purpose of obtaining more wealth.

In short, economists — in everything except their formal definitions and the reasoning built on them — use the word just as the rest of the world does: "that part of a man's stock," in Adam Smith's words, "which he expects to afford him revenue is called his capital." This is the only meaning of the term that expresses a clear idea — the only meaning that lets us cleanly separate capital from wealth in general and contrast it with labor.

Because if we must count as capital everything that supplies workers with food, clothing, shelter, and so on, then to find a worker who isn't a capitalist, we'd have to track down an absolutely naked person without even a sharpened stick or a hole in the ground — a condition in which, except under the most extreme circumstances, human beings have never actually been found.

A Clearer Definition

It seems to me that the inconsistencies in these definitions arise because economists have worked backward. They started with a preconceived idea of how capital helps production, and then crafted a definition of capital to include everything that performs those functions. Instead of first figuring out what capital is and then observing what it does, they assumed the functions first and defined the term to match.

Let's reverse this process. Let's take the natural approach: figure out what the thing is before deciding what it does. All we're really trying to do is draw clear boundaries around a term that most people already roughly understand — to sharpen and clarify at the edges a concept that's already generally grasped.

Imagine that all the actual wealth existing at a given moment in a given community were laid out for inspection before a dozen intelligent people who had never read a word of economics. I doubt they'd disagree about a single item as to whether it should count as capital or not.

Money that its owner keeps for use in business or investment? Capital. Money set aside for household or personal expenses? Not capital. The portion of a farmer's crop held for sale, or for seed, or to feed hired workers as part of their pay? Capital. The portion kept for the farmer's own family? Not capital. A cab driver's horses and carriage? Capital. A private carriage kept for the owner's pleasure? Not capital.

No one would think of counting as capital the wig on someone's head, the cigar in a smoker's mouth, or the toy a child is playing with. But the inventory of a wig dealer, a tobacconist, or a toy store owner would unhesitatingly be counted as capital. A coat made by a tailor for sale? Capital. A coat the tailor made for themselves? Not capital. Food in the hands of a hotel owner or restaurant operator? Capital. Food in a homemaker's pantry or a worker's lunch box? Not capital. Pig iron in the hands of a smelter, a foundry, or a dealer? Capital. Pig iron used as ballast in a yacht? Not capital.

The bellows of a blacksmith, the looms of a factory? Capital. A sewing machine belonging to someone who only sews for their own household? Not capital. A building rented out for hire or used for business? Capital. A private home? Not capital.

In short, I think we'd find that now, as when Adam Smith wrote, "that part of a man's stock which he expects to yield him a revenue is called his capital." And setting aside his unfortunate inclusion of personal qualities, and slightly adjusting his discussion of money, it's doubtful we could improve on Adam Smith's original list of what counts as capital, which I summarized earlier in this chapter.

Capital as Wealth in the Course of Exchange

Now, if we look at the wealth we've classified as capital and compare it to the wealth we haven't, we won't find that the distinction lies in the nature, capabilities, or final destination of the things themselves — as economists have vainly tried to draw it. Instead, the distinction lies in whether or not the things are in the possession of the consumer.8

Articles of wealth that — in themselves, in their uses, or in their products — are still to be exchanged are capital. Articles of wealth that are already in the hands of the final consumer are not capital.

So if we define capital as wealth in the course of exchange — understanding "exchange" to include not just passing from hand to hand, but also the transformations that occur when the reproductive or transforming forces of nature are harnessed to increase wealth — I think we capture everything that the general idea of capital properly includes, while shutting out everything it doesn't.

Under this definition, for instance, all tools that are truly capital fall neatly into place. What makes a tool an article of capital rather than merely an article of wealth is whether its services or products are going to be exchanged. A manufacturer's lathe, used to make things for sale, is capital. A lathe kept by a hobbyist for their own amusement is not. Wealth used to build a railroad, a telegraph line, a stagecoach service, a theater, or a hotel can all be said to be placed in the course of exchange. The exchange isn't completed all at once but little by little, with an indefinite number of people. Yet there is an exchange, and the "consumers" of the railroad, telegraph, stagecoach, theater, or hotel are not the owners but the people who use them from time to time.

Nor does this definition conflict with the idea that capital is the portion of wealth devoted to production. It's too narrow an understanding of production that limits it to the making of things. Production includes not just making things but bringing them to the consumer. The merchant or shopkeeper is just as truly a producer as the manufacturer or the farmer, and their stock or capital is just as much devoted to production as the factory or the farm. But it's not worth dwelling on the functions of capital right now — we'll be better able to determine those later. And the specific definition of capital I've suggested isn't what matters most here. I'm not writing a textbook. I'm trying to discover the laws that govern a great social problem. If the reader has formed a clear picture of what things we mean when we speak of capital, my purpose is served.

A Final Caution

Before closing this digression, let me draw attention to something often forgotten. The terms "wealth," "capital," "wages," and the like, as used in economics, are abstract terms. Nothing can be generally claimed about them that can't be claimed about the entire class of things they represent.

Forgetting this has led to much confused thinking and allows fallacies that would otherwise be transparent to pass for obvious truths. Because "wealth" is an abstract term, the idea of wealth inherently involves the idea of exchangeability. Possessing wealth to a certain amount is potentially possessing any or all forms of wealth up to that equivalent in exchange value. And the same is true, consequently, of capital.

Wages Not Drawn from Capital, but Produced by the Labor

The importance of this digression will, I think, become clearer and clearer as we move through our inquiry. But its relevance to the question we're tackling right now should already be apparent.

The Simple Cases: Self-Employment

At first glance, it's obvious that whenever people claim wages are drawn from capital, they've lost sight of the economic meaning of the word "wages" and are thinking only in its common, narrow sense. In all the cases where workers are their own employers — where they take the product of their labor directly as their reward — it's plain enough that wages are not drawn from capital. They result directly from the labor itself.

If, for instance, I spend my labor gathering birds' eggs or picking wild berries, the eggs or berries I get are my wages. Surely no one would argue that in such a case wages are drawn from capital. There is no capital in the picture. A completely naked person, cast ashore on an island where no human has ever set foot, could still gather birds' eggs or pick berries.

Or if I take a piece of leather and work it into a pair of shoes, the shoes are my wages — the reward for my effort. They certainly aren't drawn from capital, either mine or anyone else's. They were brought into existence by the very labor they compensate. And in earning this pair of shoes as wages, capital is not reduced by even the smallest amount. Think about it this way: if we bring in the concept of capital, my capital at the beginning consists of the piece of leather, the thread, and so on. As my labor proceeds, value is steadily added, until by the time I've finished the shoes, I have my original capital plus the difference in value between the raw materials and the finished shoes. In gaining this additional value — my wages — at what point has capital been drawn upon?

Adam Smith's Missed Opportunity

Adam Smith, who set the direction for the economic thinking that has resulted in today's elaborate theories about the relationship between wages and capital, recognized this fact in simple cases like the ones I've just described. In fact, he begins his chapter on the wages of labor (Chapter VIII) this way:

"The produce of labor constitutes the natural recompense or wages of labor. In that original state of things which precedes both the appropriation of land and the accumulation of stock, the whole produce of labor belongs to the laborer. He has neither landlord nor master to share with him."

If the great Scotsman had taken this as his starting point and kept following it — if he had continued to treat the product of labor as the natural wages of labor, and the landlord and employer merely as people who take a share — his conclusions would have been very different. Economics today would not contain such a mass of contradictions and absurdities. But instead of following the truth that's obvious in simple forms of production as a guiding thread through the complexities of more advanced ones, he recognizes it for a moment and then immediately abandons it. Noting that "in every part of Europe twenty workmen serve under a master for one that is independent," he restarts his inquiry from a point of view in which the employer is seen as providing wages to workers out of capital.

It's clear that when Smith put the proportion of self-employed workers at just one in twenty, he was thinking only of the skilled trades. If you include all workers, the proportion who earn their living directly — without any employer in between — must have been much larger, even in Europe a hundred years ago. After all, besides the independent workers found in every community in considerable numbers, agriculture across large parts of Europe has been carried on since the Roman Empire under the metayer system — a form of sharecropping in which the capitalist receives a return from the worker, rather than the worker from the capitalist. In any case, in the United States — where any general law of wages must apply just as fully as in Europe, and where despite the growth of manufacturing a very large share of the population are still self-employed farmers — the proportion of workers who receive wages through an employer must be comparatively small.

The Argument So Far

But we don't need to debate the exact ratio of self-employed to hired workers anywhere, and we don't need to keep piling up examples of the truism that when workers take their wages directly, those wages are the product of their labor. As soon as you recognize that the term "wages" includes all the earnings of labor — whether taken directly by the worker or received from an employer — it becomes clear that the assumption on which such a vast theoretical superstructure has been so confidently built in standard economics textbooks is at least largely untrue. The most that can plausibly be claimed is that some wages — namely, those received by a hired worker from an employer — are drawn from capital.

This restriction of the basic premise already invalidates all the conclusions drawn from it. But let's not stop here. Let's see whether even in this restricted sense the claim holds up against the facts. Let's pick up the thread where Adam Smith dropped it, and advancing step by step, see whether the relationship that's obvious in the simplest forms of production doesn't hold true through the most complex ones as well.

Wages Paid in Kind

Next in simplicity to "that original state of things" — of which many examples can still be found — where the entire product of labor belongs to the worker, is the arrangement where the worker, though employed by someone else or using someone else's capital, receives wages in kind. That is, they're paid in the very things their labor produces. In this case, it's just as clear as with the self-employed worker that wages really come from the product of the labor, not from capital at all.

If I hire someone to gather eggs, pick berries, or make shoes, and I pay them from the eggs, berries, or shoes that their labor produces, there can be no question that the source of the wages is the labor for which they're paid.

This form of employment is found in the "saer-and-daer" cattle tenancy described with such clarity by Sir Henry Maine in his Early History of Institutions — an arrangement that so clearly involved the relationship of employer and employee that accepting cattle from a capitalist made the recipient essentially that person's vassal. It was on terms like these that the biblical Jacob worked for Laban. And to this day, even in modern countries, this kind of arrangement is not unusual. Farming on shares, which is widespread in the Southern states and in California; the metayer system of Europe; the many cases where managers, salespeople, and others are paid a percentage of profits — what are all of these but labor being employed for wages that consist of a share of what it produces?

The Whaling Ship

The next step from simplicity to complexity is where wages, though calculated in kind, are paid in something else of equivalent value.

For example, on American whaling ships the custom is not to pay fixed wages but a "lay" — a share of the catch. This varies from a sixteenth to a twelfth for the captain, down to a three-hundredth for the cabin boy. So when a whaling ship comes into New Bedford or San Francisco after a successful voyage, she carries in her hold the wages of her crew, the profits of her owners, and enough to reimburse them for all the supplies used up during the trip.

Can anything be clearer than that these wages — this oil and bone the crew has taken — were not drawn from capital, but are really a share of the product of their labor? And this fact isn't changed or obscured even slightly when, as a matter of convenience, instead of actually dividing up each crew member's share of oil and bone, the value of each person's portion is estimated at the market price and paid in money. The money is simply a substitute for the real wages: the oil and bone. There is no advance of capital involved in this payment. The obligation to pay wages doesn't arise until the value from which they're to be paid has been brought into port. At the very moment the shipowner takes money from his capital to pay the crew, he adds oil and bone to his capital.

The Egg Gatherers of the Farallon Islands

So far there can be no dispute. Now let's take another step, which will bring us to the usual method of employing labor and paying wages.

The Farallon Islands, off the coast of San Francisco Bay, are a nesting ground for seabirds, and a company that claims these islands employs workers during the proper season to collect eggs. They could pay these workers a share of the eggs they gather, as is done in the whaling industry, and probably would if there were much uncertainty in the business. But since the birds are plentiful and predictable, and a given amount of labor yields roughly a given number of eggs, they find it more convenient to pay fixed wages. The workers go out and stay on the islands, gathering eggs and bringing them to a landing spot. Every few days a small boat takes the eggs to San Francisco to be sold. When the season ends, the workers return and are paid their agreed-upon wages in cash.

Doesn't this amount to the same thing as if, instead of being paid in cash, the workers were paid in an equivalent share of the eggs they gathered? Doesn't the cash represent those eggs, from the sale of which it was obtained? And aren't these wages just as much the product of the labor for which they're paid as the eggs would be in the hands of someone who gathered them independently, without any employer?

The Seal Hunter of San Buenaventura

Here's another example that shows, from the opposite direction, the identity between wages paid in money and wages paid in kind. In San Buenaventura lives a man who makes an excellent living by shooting the common hair seals that frequent the islands of the Santa Barbara Channel for their oil and skins. On these sealing expeditions he takes two or three Chinese workers along to help. At first he paid them entirely in cash. But it turns out that the Chinese workers highly prize certain organs of the seal, which they dry and grind into medicine, as well as the long whisker hairs of the male seal, which they greatly value for some purpose not entirely clear to outsiders. This man soon found that his workers were perfectly happy to accept these seal parts instead of money. So now, he pays a large part of their wages this way.

The Universal Principle

Now, isn't what we can see in all these cases — the fundamental identity between wages in money and wages in kind — true of all cases where wages are paid for productive labor? Isn't the fund created by the labor really the fund from which wages are paid?

Someone might object: "There's a difference. When people work for themselves, or when they take their wages in kind, their wages depend on the result of the labor. If the effort turns out to be futile, they get nothing. But when they work for an employer at fixed wages, they get paid regardless — wages depend on performing the labor, not on the result of the labor."

But this is clearly not a real distinction. On average, the labor performed for fixed wages not only yields the amount of the wages but more — otherwise employers couldn't make any profit. When wages are fixed, the employer takes on all the risk and is compensated for providing this guarantee, since fixed wages are always somewhat lower than wages that depend on results. And even though workers on fixed wages usually have a legal claim against the employer once they've done their part, it's frequently — if not typically — the case that the same disaster that prevents the employer from profiting from the labor also prevents them from paying the wages.

And in one important industry, the employer is legally exempt from paying even when the contract specifies fixed wages. The principle of admiralty law is: "Freight is the mother of wages." Even though the sailor may have done their full part, a disaster that prevents the ship from earning freight eliminates the claim for wages.

Production Is Always the Mother of Wages

In this legal principle is embedded the truth I'm arguing for. Production is always the mother of wages. Without production, wages would not and could not exist. It is from the product of labor, not from advances of capital, that wages come.

Wherever we examine the facts, this turns out to be true. Labor always precedes wages. This is just as universally true of wages received from an employer as it is of wages taken directly by workers who are their own employers. In both cases, reward is conditioned on effort.

Paid sometimes by the day, more often by the week or month, occasionally by the year, and in many industries by the piece — the payment of wages by an employer to an employee always implies that the employee has already performed work for the employer's benefit. The rare cases of advance payments for personal services are clearly either acts of generosity or forms of guarantee and purchase. The name "retainer," given to advance payments to lawyers, reveals the true nature of the transaction. So does the term "blood money," the dockside slang for a payment that is nominally wages advanced to sailors, but which in reality is purchase money — both English and American law treating a sailor as much a piece of property as a pig.

Why This Obvious Fact Matters

I dwell on this obvious fact — that labor always precedes wages — because it's absolutely essential for understanding the more complicated aspects of how wages work. Obvious as it is when I state it plainly, the plausibility of the claim that wages are drawn from capital — a claim used as the foundation for sweeping and far-reaching conclusions — comes in the first place from a statement that ignores this truth and leads attention away from it.

That statement is: labor cannot exert its productive power unless capital first supplies it with the means of living.9

The unsuspecting reader immediately recognizes that workers need food, clothing, and shelter in order to do their work. Having been told that the food, clothing, and shelter consumed by productive workers are capital, the reader accepts the conclusion that consuming capital is necessary for putting labor to work. From there, it's an easy step to the further conclusion that industry is limited by capital — that the demand for labor depends on the supply of capital, and therefore that wages depend on the ratio between the number of workers looking for jobs and the amount of capital available to hire them.

The Two-Senses Fallacy

But I think the discussion in the previous chapter will help anyone see where the fallacy in this reasoning lies — a fallacy that has trapped some of the sharpest minds in a web of their own spinning. It's in the use of the word "capital" in two different senses.

In the initial premise — that capital is necessary for productive labor — the word "capital" is understood to include all food, clothing, shelter, and so on. But in the final conclusions drawn from this premise, the word is used in its ordinary and proper meaning: wealth devoted not to immediate personal consumption but to obtaining more wealth — wealth in the hands of employers as distinguished from workers.

The conclusion is no more valid than it would be to accept the fact that workers can't go to work without breakfast and some clothes, and then infer that no more workers can go to work than employers first furnish with breakfasts and clothes.

The reality is that workers generally furnish their own breakfasts and the clothes they wear to work. And the further reality is that capital (in the sense that distinguishes it from labor) may in exceptional cases make advances to labor before work begins, but is never required to do so.

Of all the vast number of unemployed workers in the world today, there is probably not a single one willing to work who couldn't be employed without any advance of wages. A great many would gladly start working on terms that didn't require payment until the end of the month. It's doubtful there are enough who wouldn't wait for their wages until the end of the week — as most workers routinely do — to form any meaningful group. And there are certainly none who wouldn't wait until the end of the day, or if you prefer, until the next meal break.

The precise timing of wage payments is beside the point. The essential fact — the fact I want to emphasize — is that payment comes after the work is done.

Following the Logic Through

The payment of wages, then, always implies that labor has already been performed. Now, what does the performance of labor in production imply? Obviously, the production of wealth — which, if it's going to be exchanged or used in further production, is capital. Therefore, the payment of capital as wages presupposes that the labor being paid for has already produced capital. And since the employer generally makes a profit, the payment of wages is, from the employer's perspective, simply returning to the worker a portion of the capital the employer received from the worker's labor. From the employee's perspective, it's receiving a portion of the capital their labor has already created.

Since the value paid in wages is exchanged for a value brought into existence by the labor, how can anyone say that wages are drawn from capital or advanced by capital? Since the employer always receives the capital created by the labor before paying out capital in wages, at what point is the employer's capital even temporarily reduced?10

A Factory Floor Test

Let's test this against concrete facts. Take a manufacturer who turns raw materials into finished products — cotton into cloth, iron into hardware, leather into boots, or whatever it may be — and who pays workers once a week, as is generally the case.

Make an exact inventory of this manufacturer's capital on Monday morning before work begins. It will consist of buildings, machinery, raw materials, cash on hand, and finished products in stock.

Now suppose, for simplicity, that the manufacturer neither buys nor sells anything during the week. After work stops on Saturday night and the workers have been paid, take a new inventory. The cash item will be smaller — it's been paid out in wages. There will be less raw material, less coal, and so on. A proper deduction must be made from the value of buildings and machinery for the week's wear and tear.

But if this is a profitable business — which on average it must be — the item of finished products will have grown enough to more than compensate for all these reductions, and the total will show an increase in capital.

Clearly, then, the value paid to the workers in wages was not drawn from the manufacturer's capital, or from anyone else's capital. It came not from capital but from the value created by the labor itself. There was no more advance of capital than if the manufacturer had hired workers to dig clams and paid them with a share of the clams they dug. Their wages were just as truly the product of their labor as were the wages of our primitive ancestor when, long "before the appropriation of land and the accumulation of stock," they pried an oyster from the rocks with a stone.

The Bank Analogy

Workers who work for an employer don't get paid until after they've done the work. Their situation is like that of a bank depositor who can't draw money out until they've put money in. And just as a depositor withdrawing what they've previously deposited doesn't reduce the bank's capital, workers receiving wages don't reduce — even temporarily — either the employer's capital or the community's total capital.

Their wages no more come from capital than a depositor's checks are drawn against the bank's own capital. It's true that workers receiving wages don't usually get back wealth in the same form as they created it, just as bank depositors don't receive back the identical coins or bills they deposited. But they receive it in equivalent form. And just as we're justified in saying the depositor receives from the bank the money they put in, we're justified in saying workers receive in wages the wealth they created through their labor.

The Confusion of Wealth with Money

The reason this universal truth so often gets obscured is largely that endlessly productive source of economic confusion: mistaking wealth for money. And it's remarkable to see how many writers who, ever since Adam Smith set the egg on its head, have ably exposed the fallacies of the old mercantilist system, fall into delusions of the very same kind when discussing the relationship between capital and labor.

Money is the universal medium of exchange — the common channel through which all conversions of wealth from one form to another take place. Whatever difficulties exist in making an exchange will generally show up on the money side. It's sometimes easier to exchange money for any other form of wealth than to exchange a particular form of wealth for money, for the simple reason that there are more people wanting to make some exchange than there are people wanting to make any particular exchange.

So a manufacturer who has paid out money in wages may sometimes find it hard to quickly convert back into money the increased value for which the money was really exchanged. They're described as having used up or "advanced" their capital by paying wages. Yet unless the new value created by the labor is less than the wages paid — which can only be an exceptional case — the capital that previously existed in the form of money now exists in the form of goods. It has changed form, but it has not decreased.

Gold Mining: From Simple to Complex

There's one branch of production where the confusion that arises from measuring capital in money is least likely to cause trouble, since its product is the very material and standard of money. And it happens that this industry gives us, almost side by side, examples of production ranging from the simplest to the most complex forms.

In the early days of California, as later in Australia, the placer miner who found glittering gold particles in riverbeds and surface deposits — accumulated over ages by slow natural processes — picked up or washed out their "wages" (miners called them that, too) in actual money. Coins were scarce, so gold dust circulated as currency by weight. At the end of the day, the miner had wages in money in a buckskin bag in their pocket.

There can be no question whether these wages came from capital. They were obviously the product of labor. Nor could there be any question when the owner of an especially rich claim hired workers and paid them off in the very gold that their labor had extracted from gulch or sandbar.

As coins became more plentiful, their greater convenience pushed gold dust into the role of a commodity rather than currency. The employing miner sold the dust and paid workers in coins. When enough coins were available, rather than sell gold dust at the nearest store and pay a dealer's markup, the miner would hold onto it until they had enough to make a trip — or send it by express — to San Francisco, where the mint would turn it into coins at no charge. While accumulating gold dust, the miner was spending down their stock of coins, just as a manufacturer building up inventory spends down cash. Yet no one would be foolish enough to imagine that by taking in gold dust and paying out coins, the miner was reducing their capital.

The Apparent Exception: Major Mining Operations

But the deposits that could be worked without major preparation were soon exhausted, and gold mining rapidly became far more elaborate. Before many claims could produce any return, deep shafts had to be sunk, massive dams constructed, long tunnels cut through the hardest rock, water brought for miles over mountain ridges and across deep valleys, and expensive machinery erected. None of this could be done without capital. Sometimes the construction took years, during which no return could be expected, while the workers had to be paid every week or every month.

Surely, it will be said, in cases like these — even if in no others — wages really do come from capital, really are advanced by capital, and necessarily must reduce capital when they're paid! Surely here, at least, industry is limited by capital, because without capital such operations couldn't go forward!

Let's see.

Examining the Standard Argument

It's cases like these that are always pointed to as proof that wages are advanced from capital. Whenever wages are paid before the goal of the labor is achieved or the product is finished — as in agriculture, where plowing and sowing come months before the harvest; as in the construction of buildings, ships, railroads, and canals — it's clear that the owners of the capital paid out in wages can't expect an immediate return. As the phrase goes, they must "outlay" the capital or "lie out of it" for a time, sometimes many years. And so, if you don't keep first principles in mind, it's easy to jump to the conclusion that wages are being advanced by capital.

But these cases won't confuse any reader who has followed what I've said so far. A simple analysis will show that these instances — where wages are paid before the product is finished or even produced — are not exceptions to the rule that's apparent when the product is finished before wages are paid.

The Broker Analogy

If I go to a broker to exchange silver for gold, I hand over my silver. The broker counts it, puts it away, and then gives me the equivalent in gold, minus a commission. Has the broker advanced me any capital? Obviously not. What the broker previously had in gold, they now have in silver, plus their profit. And since the broker received the silver before paying out the gold, there isn't even a momentary advance of capital on their part.

This is precisely analogous to what the capitalist does when paying out capital in wages in the cases we're now considering. Since the performance of labor precedes the payment of wages, and since performing labor in production means creating value, the employer receives value before paying out value. They're simply exchanging capital in one form for capital in another form.

The creation of value doesn't depend on the product being finished. It takes place at every stage of the production process, as the immediate result of applying labor. Therefore, no matter how long the process, labor always adds to capital through its effort before it takes from capital in wages.

The Blacksmith and the Shipbuilder

Here's a blacksmith at the forge, making picks. Clearly, the blacksmith is creating capital — adding picks to the employer's stock before drawing money from it in wages.

And here's a machinist or boilermaker working on the keel plates of a great steamship. Aren't they also just as clearly creating value — making capital? The giant steamship, like the pick, is an article of wealth, an instrument of production. And though the ship may not be completed for years while the pick is finished in minutes, each day's work in both cases is equally a production of wealth — an addition to capital. In the case of the steamship, as in the case of the pick, it isn't the last hammer blow any more than the first that creates the value of the finished product. The creation of value is continuous. It results immediately from the effort of labor.

Value Is Created at Every Stage

We see this very clearly wherever the division of labor has made it customary for different stages of the production process to be carried out by different groups of producers — that is, wherever we're accustomed to measuring the value created at each preliminary stage. And a moment's thought shows that this is the case with the vast majority of products.

Take a ship, a building, a pocketknife, a book, a thimble, or a loaf of bread. These are finished products. But none of them were produced in a single step by a single set of producers. And because of this, we readily identify different stages in the creation of the value they represent as completed articles. Even when we don't distinguish different stages in the final process, we do distinguish the value of the materials. The value of those materials can often be broken down many times, revealing clearly defined steps in the creation of the final value. At each of these steps, we routinely recognize a creation of value, an addition to capital.

The batch of bread the baker takes from the oven has a certain value. But part of that is the value of the flour from which the dough was made. And the flour's value in turn includes the value of the wheat, the value added by milling, and so on.

Iron in the form of pig iron is a long way from being a finished product. It must pass through several — perhaps many — more stages of production before it becomes the finished articles for which the iron ore was originally extracted from the mine. Yet isn't pig iron capital?

And the process of production isn't really complete when a cotton crop is gathered, nor when it's ginned and pressed, nor when it arrives at the textile mills of Lowell or Manchester, nor when it's spun into yarn, nor when it becomes cloth — but only when it finally reaches the consumer. Yet at each step in this chain, there is clearly a creation of value, an addition to capital.

So why wouldn't there also be a creation of value — an addition to capital — when the ground is plowed for the crop? Is it because the season might be bad and the crop might fail? Obviously not, because the same risk of failure exists at every one of the many steps in producing the finished article. On average, a crop is just as sure to come up from a given amount of plowing and sowing as a given amount of spinning cotton yarn is sure to produce a given amount of cloth.

The Complete Principle

In short, since the payment of wages is always conditioned on the performance of labor, the payment of wages in production — no matter how long the process — never involves any advance of capital, or even a temporary reduction of capital.

It may take a year, or even years, to build a ship. But the creation of value — of which the finished ship will be the sum — goes on day by day, hour by hour, from the moment the keel is laid or even the ground is cleared. And when wages are paid before the ship is completed, the builder doesn't reduce either their own capital or the community's capital, because the value of the partially completed ship stands in place of the value paid out in wages.

There is no advance of capital in the payment of these wages. The workers' labor during the week or month creates and delivers to the builder more capital than is paid back to them at the end of the week or month. This is demonstrated by the fact that if the builder were asked at any stage of construction to sell the unfinished ship, they would expect a profit.

Tunnels and Canals

And the same is true when a great tunnel like the Sutro or St. Gotthard is cut, or a canal like the Suez is dug. There is no advance of capital. The tunnel or canal, as it's being built, becomes capital just as much as the money spent building it — or, if you prefer, just as much as the powder, drills, and other supplies used in the work, and the food, clothes, and other necessities consumed by the workers. This is shown by the fact that the value of the company's stock is not reduced as capital in these other forms is gradually transformed into capital in the form of tunnel or canal. On the contrary, the stock's value probably — and on average certainly — increases as the work progresses, just as capital invested in any faster method of production would on average increase.

Agriculture Too

And this is equally clear in agriculture. The creation of value doesn't happen all at once when the crop is gathered. It takes place step by step throughout the entire process that the harvest concludes. And no payment of wages in the interim reduces the farmer's capital.

This is obvious enough when land is sold or rented during the production process: a plowed field brings more than an unplowed field, and a planted field more than one merely plowed. It's obvious when growing crops are sold, as sometimes happens, or when the farmer doesn't harvest personally but contracts with the owner of harvesting machinery. It's obvious in the case of orchards and vineyards that, though not yet bearing fruit, sell for prices proportional to their age. It's obvious in the case of horses, cattle, and sheep, which increase in value as they grow toward maturity.

And even when it isn't obvious between what you might call the usual exchange points in production, this increase in value just as surely takes place with every effort of labor.

Therefore, where labor is performed before wages are paid, the advance of capital is really made by labor — from the employee to the employer, not from the employer to the employee.

"But Capital Is Still Required!"

"Yet," it may be said, "in such cases as we've been considering, capital is required!" Certainly. I don't dispute that. But it isn't required in order to make advances to labor. It's required for an entirely different purpose. Let's see what that purpose is.

When wages are paid in kind — that is, in the same type of wealth that the labor produces (if I hire workers to cut wood and agree to give them a share of the wood they cut, a method sometimes used by woodland owners) — it's obvious that no capital is needed to pay wages. Nor will I need any capital when, for everyone's convenience, I agree to pay wages in money instead of wood — provided I can sell the wood for money before the wages are due.

It's only when I can't make such a sale — or can't get as good a price as I want — until I've built up a large stock of wood that I'll need capital. And even then I won't need it if I can borrow against the wood. Only when I can't or choose not to sell the wood or borrow against it, yet still want to keep accumulating a large stockpile — only then will I need capital.

But notice: I need this capital not for paying wages. I need it for accumulating a stock of wood.

The same applies to cutting a tunnel. If the workers were paid in tunnel (which, if it were convenient, could easily be done by paying them in company stock), no capital for wages would be needed. Capital is only required because the company wants to accumulate capital in the form of a tunnel.

To return to our earlier example: the broker to whom I sell my silver can't run the business without capital. But the broker doesn't need this capital because exchanging my silver for gold involves advancing capital to me. The broker needs it because the nature of the business requires keeping a certain amount of capital on hand, so that whenever a customer comes in, the broker is ready to make the exchange the customer wants.

The Real Role of Capital

And so we'll find it in every branch of production. Capital never needs to be set aside for paying wages when the product of the labor is exchanged as soon as it's produced. Capital is only required when this product is stored up, or — what amounts to the same thing for the individual — placed in the general flow of exchange without being immediately drawn against (that is, sold on credit).

But the capital required in these cases is not required for paying wages or making advances to labor. It's always represented in the product of the labor. An employer never needs capital in their capacity as an employer of labor. When employers do need capital, it's because they're not merely employers of labor but also merchants, speculators, or accumulators of the products of labor. This is generally the case with employers.

To Sum Up

Workers who work for themselves receive their wages in the things they produce, as they produce them, and convert this value into another form whenever they sell the product.

Workers who work for someone else at agreed-upon wages in money work under a contract of exchange. They also create their wages as they perform their labor, but they don't receive them except at scheduled times, in set amounts, and in a different form. In performing the labor, they are advancing value in exchange. When they receive their wages, the exchange is completed.

During the time workers are earning their wages, they are advancing capital to their employer. But at no time — unless wages are paid before work is done — is the employer advancing capital to them.

Whether the employer who receives this product immediately resells it or holds onto it for a while changes the character of the transaction no more than does the final use of the product by the ultimate buyer — who may be in another quarter of the globe, at the end of a chain of exchanges numbering in the hundreds.

The Maintenance of Laborers Not Drawn from Capital

But a stumbling block may still remain — or come back — in the reader's mind.

A plowman can't eat the furrow. A half-built steam engine can't help produce the clothes the machinist wears. So haven't I, in the words of John Stuart Mill, "forgotten that the people of a country are maintained and have their wants supplied, not by the produce of present labor, but of past?" Or, to borrow the language of a popular introductory textbook — Mrs. Fawcett's — haven't I "forgotten that many months must elapse between the sowing of the seed and the time when the produce of that seed is converted into a loaf of bread," and that "it is, therefore, evident that laborers cannot live upon that which their labor is assisting to produce, but are maintained by that wealth which their labor, or the labor of others, has previously produced, which wealth is capital?"11

The assumption behind these passages — the assumption that it's so obviously true that labor must be fed from capital that you only need to state it to compel agreement — runs through the entire structure of mainstream economics. And this belief is held so confidently that the proposition "population regulates itself by the funds which are to employ it, and, therefore, always increases or diminishes with the increase or diminution of capital"12 is treated as equally self-evident, and in turn made the basis for important further reasoning.

Yet when you actually think these propositions through, they turn out to be not self-evident at all, but absurd. They imply that labor can't be exerted until the products of labor have already been saved up — putting the product before the producer.

And when examined closely, they'll be seen to draw their seeming plausibility from a confusion of thought.

The Breakfast Fallacy Revisited

I've already pointed out the fallacy — hidden by a faulty definition — underlying the claim that because food, clothing, and shelter are necessary for productive labor, industry must therefore be limited by capital. To say that a person must eat breakfast before going to work is not the same as saying they can't work unless a capitalist provides the breakfast. Their breakfast may come — and in any country not experiencing actual famine, it will come — not from wealth set aside to assist production, but from wealth set aside for personal consumption. And as I've previously shown, food, clothing, and other articles of wealth are only "capital" as long as they remain in the hands of people who plan to exchange them for other goods or for productive services, not consume them. They stop being capital the moment they pass into the hands of someone who will consume them. In that transaction, they leave the stock of wealth held for the purpose of acquiring more wealth and enter the stock of wealth held for personal use — regardless of whether consuming them will help produce more wealth or not.

Unless we maintain this distinction, it's impossible to draw the line between wealth that is capital and wealth that isn't — even by appealing to "the mind of the possessor," as John Stuart Mill tries to do. People don't eat or go hungry, wear clothes or go naked, based on whether they plan to do productive work. They eat because they're hungry and wear clothes because they'd be uncomfortable without them. Consider the food on the breakfast table of a worker who may or may not get work that day, depending on whether the opportunity comes along. If the test of capital versus non-capital is whether something supports productive labor, is this food capital or not? It's as impossible for the worker themselves as for any philosopher of the Ricardo-Mill school to say. And you can't tell even after the food enters their stomach. Suppose they don't find work right away but keep looking — you still can't determine whether the food was capital until it has been absorbed into their blood and tissues. Yet the person will eat breakfast regardless.

Beyond the Definition Question

Although it would be logically sufficient to stop here and let the argument rest on the distinction between wealth and capital, it's hardly safe to do so. Nor is it necessary. It seems to me that the proposition "present labor must be maintained by the produce of past labor" turns out, on analysis, to be true only in the trivial sense that afternoon's work requires the noonday meal, or that you have to catch and cook the hare before you eat it. And this, clearly, is not the sense in which the proposition is used to support the important conclusions built on it. The real claim is this: before any work that won't immediately produce food or other necessities can be carried out, there must already exist a stockpile of necessities sufficient to support the workers during the process. Let's see if that's true.

Robinson Crusoe and the Hundred Settlers

The canoe that Robinson Crusoe built with such enormous effort was a project that couldn't yield an immediate return. But was it necessary for him to stockpile enough food to last the whole time before he started — enough to sustain him while he felled the tree, hollowed out the canoe, and finally launched it? Not at all. He only needed to devote part of his time to getting food while devoting the rest of his time to building the canoe.

Or suppose a hundred people are dropped, without any provisions at all, in a new and unsettled country. Will they need to accumulate a whole season's worth of food before they can begin farming? Not at all. They only need two things: first, that fish, game, berries, and so on are plentiful enough that the labor of some of the hundred can feed them all each day; and second, that there's enough sense of mutual interest — or enough overlap between what different people want — so that those who gather food today will share it (trade it) with those whose efforts are directed toward future rewards.

The Universal Principle

What's true in these cases is true in all cases. It is not necessary, in order to produce things that can't be eaten or can't be used right away, that someone must have previously produced and saved up the food and necessities needed to keep the workers going during production. All that's necessary is that somewhere within the circle of exchange, other people are simultaneously producing enough food and necessities — and are willing to trade those things for whatever is being produced.

And as a matter of fact, isn't it true, under any normal conditions, that consumption is supported by contemporaneous production?

The Idle Heir

Here's a wealthy person who does no productive work of any kind — neither physical nor intellectual — but lives, as we say, on wealth inherited from a parent, securely invested in government bonds. Does their food actually come from wealth accumulated in the past, or from the productive labor going on around them right now?

On their table are fresh-laid eggs, butter churned just a few days ago, milk from this morning, fish that were swimming in the sea twenty-four hours ago, meat that the delivery person just brought in time to be cooked, vegetables fresh from the garden, and fruit from the orchard. In short, hardly anything that hasn't recently left the hands of a productive worker (and this category must include transporters and distributors, not just those involved in the earliest stages of production). Nothing on that table has been produced for any considerable length of time — unless maybe some bottles of aged wine.

What this person inherited, and what we say they "live on," isn't actually wealth at all. It's only the power to command wealth as others produce it. And it's from this contemporaneous production that their food is drawn.

The Fragility of London

The fifty square miles of London undoubtedly contain more wealth packed into a single area than anywhere else on earth. Yet if productive labor in London were to cease entirely, within a few hours people would begin dying in droves. Within a few weeks, or at most a few months, hardly anyone would be left alive.

A total suspension of productive labor would be a disaster more terrible than any besieged city has ever faced. It wouldn't just be an external wall of siege — like the one Titus built around Jerusalem — preventing supplies from flowing in. It would be the drawing of a similar wall around every household. Imagine such a shutdown of labor in any community, and you'll see how profoundly true it is that humanity really lives from hand to mouth. It is the daily labor of the community that supplies the community with its daily bread.

The Pyramids and the Tax Collector

Just as the workers who built the Pyramids were fed not from a previously hoarded stockpile but from the constantly recurring harvests of the Nile Valley — and just as a modern government, when it undertakes a massive project lasting years, doesn't set aside wealth that's already been produced, but takes wealth yet to be produced from workers in taxes as the project progresses — so it is with all laborers engaged in production that doesn't directly yield food or necessities. They're sustained by the production of food and necessities that other people are carrying out at the same time.

Tracing the Circle of Exchange

If we trace the circle of exchange by which the work of building a great steam engine gets the machinist their bread, meat, clothes, and shelter, we'll find that although there may be a thousand intermediate transactions between the machinist and the producers of bread and meat, the whole thing, reduced to its simplest terms, really amounts to an exchange of labor between them.

Now, the reason someone expends labor on the engine is obviously that someone with the power to offer what the machinist wants is demanding an engine in exchange. That is, there's a demand for an engine coming from people who produce bread, meat, and so on — or from people producing what those producers want. It's this demand that directs the machinist's labor toward building the engine. And in reverse, the machinist's demand for bread, meat, and the rest effectively directs an equivalent amount of labor toward producing those things. So the machinist's labor, though physically exerted in building the engine, virtually produces the food and goods on which their wages are spent.

Or, to state this as a principle:

The demand for consumption determines the direction in which labor will be expended in production.

This principle is so simple and obvious that it needs no further illustration. Yet in its light, all the complexities of our subject dissolve. We reach the same understanding of the real purposes and rewards of labor in the intricate web of modern production that we gained by observing the simpler forms of production and exchange in the earliest stages of society.

We see that now, as then, each worker is trying to satisfy their own desires through their own effort. We see that although the minute division of labor assigns each producer to making only a small part — or perhaps none at all — of the specific things they actually want, by helping to produce what other producers want, they are directing other people's labor toward producing what they want. In effect, they're producing it themselves. If a worker makes jackknives and eats wheat, the wheat is really as much the product of their labor as if they'd grown it themselves and left the wheat farmers to make their own jackknives.

No Advance of Capital

We can now see how thoroughly and completely true it is that in whatever workers take or consume as payment for their labor, there is no advance of capital to them. If I've made jackknives and used my wages to buy wheat, I've simply exchanged jackknives for wheat — added jackknives to the existing stock of wealth and taken wheat from it. And since the demand for consumption determines the direction in which labor is spent in production, it can't even be said — so long as the limit of wheat production hasn't been reached — that I've reduced the stock of wheat. By putting jackknives into the exchangeable stock of wealth and taking wheat out, I've directed labor at the other end of a series of exchanges toward producing wheat, just as the wheat grower, by putting in wheat and demanding jackknives, directed labor toward producing jackknives as the easiest way to get wheat.

The Plowman's Wages

And so the person following the plow — even though the crop for which they're opening the ground hasn't been sown yet, and after being sown will take months to mature — is nevertheless, by the exertion of their labor in plowing, virtually producing the food they eat and the wages they receive.

Plowing is only one part of the operation of producing a crop, but it's a necessary part — as necessary as harvesting. Doing it is a step toward producing a crop. And the assurance it gives of a future crop frees up, from the stock constantly held on hand, the food and wages of the plowman.

This isn't just theoretically true. It's practically and literally true. At the proper time for plowing, let plowing stop. Wouldn't the symptoms of scarcity immediately appear, without waiting for harvest time? Let plowing stop, and wouldn't the effect be felt at once in the office, the machine shop, and the factory? Wouldn't looms and spindles soon stand as idle as the plow? That this would happen, we can see from the effects that immediately follow a bad growing season. And if this is so, isn't the person who plows really producing their own food and wages just as much as if their daily or weekly labor actually resulted, then and there, in the things for which their labor is exchanged?

How It Works in Practice

As a matter of fact, wherever there are workers looking for employment, the lack of capital doesn't prevent a landowner with promising fields from hiring them. Either the owner makes a sharecropping arrangement — a common practice in some parts of the United States — in which case the workers, if they have no savings, will get credit at the nearest store on the strength of the work they're doing. Or, if the owner prefers to pay wages, the farmer will obtain credit themselves, and the work done in cultivation is immediately put to use or exchanged as it's done.

If anything more is consumed than would have been consumed if the workers had been forced to beg instead of work (for in any civilized country under normal conditions, workers must be supported one way or another), it will be reserve capital drawn out by the prospect of being replenished — capital that is in fact replaced by the work as it's done.

Here's a concrete example. In the purely agricultural districts of Southern California, there was in 1877 a total crop failure, and of millions of sheep nothing remained but their bones. In the great San Joaquin Valley, many farmers didn't have enough food to support their families until the next harvest, let alone to support any hired workers. But the rains came again at the right time, and these very farmers proceeded to hire workers to plow and sow. Here and there, a farmer had been holding back part of an earlier crop. As soon as the rains came, that farmer was eager to sell before the next harvest brought lower prices. And the grain held in reserve, through the network of exchanges and credit, passed to the use of the cultivators — set free, in effect produced, by the work done for the next crop.

The Curved Pipe

The series of exchanges that connect production to consumption can be compared to a curved pipe filled with water. If you pour a quantity of water in at one end, an equal quantity is released at the other. It isn't the same water, but it's the equivalent. And in the same way, those who do the work of production put in as they take out. They receive in food and wages nothing more than the product of their labor.

The Real Functions of Capital

At this point, someone might ask: if capital isn't needed to pay wages or support workers during production, then what does it actually do?

Our examination so far has made the answer clear. Capital, as we've seen, consists of wealth used to obtain more wealth — as opposed to wealth used to directly satisfy personal desires. Or, as I prefer to define it, capital is wealth in the course of exchange.

Capital increases the power of labor to produce wealth in three ways:

(1) By enabling labor to work more effectively — for example, digging up clams with a spade instead of bare hands, or powering a ship by shoveling coal into a furnace instead of pulling at an oar.

(2) By enabling labor to harness the reproductive forces of nature — for instance, growing corn by planting it, or raising livestock by breeding them.

(3) By making the division of labor possible. On the human side, this increases efficiency through specialization, skill development, and reduced waste. On the natural side, it lets us take advantage of differences in soil, climate, and location, producing each type of wealth wherever nature is most favorable to it.

Capital does not supply the raw materials that labor works into wealth, as is mistakenly taught. Nature supplies those materials. But materials that have been partially worked up and are in the course of exchange — those are capital.

Capital does not supply or advance wages, as is mistakenly taught. Wages are the portion of their own product that workers receive.

Capital does not sustain workers while they do their jobs, as is mistakenly taught. Workers are sustained by their own labor. Anyone who produces something — in whole or in part — that can be exchanged for food, clothing, or other necessities is effectively producing those necessities.

Capital, therefore, does not limit industry, as is mistakenly taught. The only limit to industry is access to natural resources. But capital may limit the form of industry and the productiveness of industry, by limiting the availability of tools and the division of labor.

Capital May Limit the Form and Productiveness of Industry

That capital may limit the form of industry is obvious. Without the factory, there could be no factory workers. Without the sewing machine, no machine sewing. Without the plow, no plowing. And without a large stock of capital devoted to exchange, industry could never take on the many specialized forms that depend on trade.

It's equally clear that a lack of tools must severely limit how productive industry can be. If a farmer has to use a spade because they can't afford a plow, a sickle instead of a reaping machine, or a flail instead of a thresher — if a machinist must cut iron with a chisel, or a weaver must use a hand loom — then productivity can't be a tenth of what it is when workers have access to the best available tools.

The division of labor, too, could never get beyond the crudest beginnings unless a portion of goods were constantly kept in stock or in transit. The exchanges that make specialization possible couldn't extend beyond the nearest neighbors. Even activities like hunting, fishing, nut-gathering, and weapon-making couldn't become specialized occupations unless some of what each person produced was held back from immediate consumption. The person who devotes themselves to one pursuit needs to be able to get the products of other pursuits when they need them, and to let a good day's haul cover for a bad one.

To support the elaborate division of labor that characterizes — and is necessary for — advanced civilization, an enormous amount of wealth of every description must constantly be held in stock or in transit. For the resident of a civilized community to freely exchange their labor with the labor of those around them and with the labor of people in the most distant parts of the globe, there must be stocks of goods in warehouses, in stores, in the holds of ships, and in railway cars. It's just like the water supply in a great city: for any resident to draw a cupful of water at will, billions of gallons must be stored in reservoirs and flowing through miles of pipe.

But "May Limit" Is Not "Does Limit"

But saying that capital may limit the form or productiveness of industry is a very different thing from saying that capital limits industry. When mainstream economics declares that "capital limits industry," it doesn't mean that capital limits the form of labor or how productive labor can be. It means that capital limits whether labor can be exerted at all. This claim gets its plausibility from the assumption that capital supplies workers with materials and sustenance — an assumption we've already shown to be unfounded, and which is in fact transparently absurd the moment you remember that capital is produced by labor. There must be labor before there can be capital.

Yes, capital may limit the form and productiveness of industry. But that's not the same as saying there could be no industry without capital — any more than saying there could be no weaving without the power loom, no sewing without the sewing machine, no farming without the plow, or that Robinson Crusoe, alone on his island, could do no work at all because he had no one to trade with.

In Practice, Capital Rarely Limits Productivity

And saying capital may limit the form and productiveness of industry is different from saying it actually does. The cases where a community's industry is truly limited by a lack of capital will, I think, turn out on examination to be more theoretical than real.

Take a country like Mexico or Tunisia. It's obvious that wider use of capital would dramatically change the forms of industry there and enormously boost productivity. People often say such countries "need capital to develop their resources." But isn't there something deeper behind this — a more fundamental problem that includes the lack of capital? Isn't it the greed and corruption of government, the insecurity of property, the ignorance and prejudice of the people that prevent capital from being accumulated and used? Isn't the real limitation in those things, not in the lack of capital — which wouldn't even be put to use if you simply placed it there?

We can, of course, imagine a community where a shortage of capital is the only obstacle to greater productivity. But it takes a combination of conditions that seldom if ever occurs, except by accident or as a passing phase. A community where capital has been wiped out by war, fire, or natural disaster, and possibly a community of civilized people who have just settled in a new land — those seem to me to be the only real examples. And yet, it has long been observed how quickly capital is rebuilt in a community devastated by war. Similarly, new communities rapidly produce whatever capital they can actually use.

I can't think of any conditions other than these rare and temporary ones in which labor productivity is truly limited by a shortage of capital. Yes, there may be individuals in any community who can't apply their labor as effectively as they'd like because they personally lack capital. But as long as there's enough capital in the community overall, the real limitation isn't a lack of capital — it's a lack of proper distribution. If bad government robs workers of their capital, if unjust laws take wealth from producers and hand it to those who are mere freeloaders on industry, then the real obstacle to productive labor is misgovernment, not a shortage of capital. The same goes for ignorance, custom, or other conditions that prevent capital from being used. They are the real limitation, not the absence of capital itself.

Giving a circular saw to an indigenous person in Tierra del Fuego, a locomotive to a Bedouin nomad, or a sewing machine to a member of a hunter-gatherer tribe wouldn't increase the efficiency of their labor. Nor does it seem possible to increase their capital by giving them other forms of wealth, because any wealth beyond what they're accustomed to using as capital would simply be consumed or left to waste. It's not the lack of seeds and tools that keeps nomadic peoples from farming. If provided with seeds and tools, they wouldn't use them productively unless they were simultaneously taught to cultivate the soil and settled in one place. If all the capital of London were given to them in their current condition, it would simply stop being capital. They would use productively only the tiny fraction that might help with hunting, and they wouldn't even use that until all the edible goods in the stockpile had been consumed.

And yet the capital these peoples actually do need, they manage to acquire — sometimes in spite of enormous difficulties. These tribes hunt and fight with the finest weapons that American and English factories produce, keeping up with the latest improvements. It's only as they adopt settled ways of life that they would want — or benefit from — the other kinds of capital that a settled society requires.

The Story of Hongi

Here's a telling example. During the reign of George IV, some returning missionaries brought a New Zealand chief named Hongi back to England with them. His striking appearance and elaborate tattoos attracted great attention, and when he was about to return to his people, the king and some religious societies presented him with a generous supply of tools, farming equipment, and seeds.

The grateful chief did use this capital to produce food — but not in the way his English hosts had imagined. On his way home, stopping in Sydney, he traded it all for weapons and ammunition. Back in New Zealand, he launched a war against a rival tribe with devastating success. On the first battlefield alone, three hundred prisoners were killed and eaten, with Hongi himself starting the feast by scooping out the eyes and drinking the warm blood of the wounded enemy chief.13

But now that the once-constant wars among the Maori have ended, and the surviving Maori have largely adopted European ways, many of them possess and use considerable amounts of capital.

Simple Methods Often Suit Simple Conditions

Likewise, it would be a mistake to blame the simple methods of production and exchange used in new frontier communities entirely on a lack of capital. These methods require little capital and are crude in themselves, but when you consider the actual conditions of such communities, they turn out to be the most effective.

A great factory with all the latest technology is the most efficient way yet devised to turn wool or cotton into cloth — but only when large quantities need to be produced. The cloth needed by a small village could be made with far less labor using a spinning wheel and hand loom. A modern printing press, per worker, can produce many thousands of impressions while a single worker with an old Stanhope or Franklin press might print only a hundred. Yet for running off the small edition of a country newspaper, the old-fashioned press is by far the more efficient machine. To carry two or three passengers occasionally, a canoe beats a steamboat. A few sacks of flour can be transported with less effort by pack horse than by railroad train. And stocking a backwoods crossroads store with a huge inventory would simply be wasting capital.

As a general rule, the simple methods of production and exchange found in thinly populated new communities result not so much from a lack of capital as from the inability to put more capital to profitable use.

A Society Produces the Capital It Needs

No matter how much water you pour in, a bucket can never hold more than a bucketful. In the same way, no more wealth will be used as capital than is required by the system of production and exchange that best suits a people under all their existing conditions — intelligence, custom, security, population density, and so on. And I'm inclined to think that, as a general rule, this amount will always be available. A society secretes the capital it needs much as a healthy body secretes the necessary amount of fat.

The Real Point: Poverty Isn't Caused by a Shortage of Capital

But whether capital ever truly limits the productiveness of industry — and thus sets a ceiling that wages can't exceed — one thing is clear: the poverty of the masses in civilized countries does not come from any scarcity of capital.

Not only do wages nowhere reach the limit set by the productivity of industry, but wages are actually lowest where capital is most abundant. In all the most progressive countries, the tools and machinery of production are clearly in excess of the use being made of them, and any prospect of profitable employment quickly draws out more than enough capital. The bucket isn't just full — it's overflowing.

This is so obvious that economic downturns are commonly blamed — not just by the uninformed, but by economists of high reputation — on the abundance of machinery and the accumulation of capital. War, which destroys capital, is looked upon as the cause of brisk trade and high wages. Strangely enough — given the deep confusion of thought on these matters — this view is endorsed by many of the same people who insist that capital employs labor and pays wages.

Recapitulation: Where We Stand

Our purpose in this inquiry is to solve the problem that has received so many self-contradictory answers. In figuring out clearly what capital really is and what capital really does, we've taken the first — and a crucially important — step. But it is only a first step. Let's review what we've established and move forward.

We've seen that the standard theory — that wages depend on the ratio between the number of workers and the amount of capital devoted to employing them — is inconsistent with the general fact that wages and interest don't rise and fall in opposite directions. They rise and fall together.

This discrepancy led us to examine the foundations of the theory, and we found that, contrary to the standard view, wages aren't drawn from capital at all. They come directly from the product of the labor for which they're paid. We found that capital doesn't advance wages or sustain workers. Its real functions are to assist labor in production — through tools, seeds, and the like — and to provide the wealth needed to carry on exchange.

These findings lead us irresistibly to practical conclusions so important that they amply justify the care we've taken to establish them.

For if wages come not from capital but from the product of labor, then the standard theories about the relationship between capital and labor are wrong. And every remedy — whether proposed by economics professors or by working people themselves — that tries to reduce poverty by increasing capital, or by restricting the number of workers, or by limiting how efficiently they work, must be rejected.

If each worker, in doing their work, actually creates the fund from which their wages are drawn, then wages cannot be reduced by an increase in the number of workers. On the contrary — since the efficiency of labor clearly increases with the number of workers — more workers should mean higher wages, other things being equal.

But that necessary qualifier, "other things being equal," brings us to a question we must address before we can go any further. That question is: Do the productive powers of nature tend to diminish as a growing population makes greater and greater demands on them?

Book II: Population and Subsistence

The Malthusian Theory, Its Genesis and Support

Behind the theory we've been examining lies another theory we have yet to consider. The standard doctrine about where wages come from and what determines them finds its strongest support in an equally widely accepted doctrine — the one that bears the name of the economist Thomas Malthus — that population naturally tends to grow faster than the food supply. These two doctrines fit together hand in glove, and together they form the answer that mainstream economics gives to the great problem we're trying to solve.

In the preceding chapters, I've shown — or at least I think I've shown — that the standard doctrine that wages are determined by the ratio between capital and workers is so utterly baseless that it's actually surprising it could have been so widely and so long accepted. It's not hard to understand how such a theory would arise in a society where the great mass of workers seem to depend on a separate class of capitalists for employment and wages. Nor is it surprising that under those conditions it held up among ordinary people, who rarely bother to separate what's real from what merely appears to be real. But it is surprising that a theory so groundless on closer examination could have been accepted by one sharp thinker after another — all the brilliant minds who over the past century have devoted themselves to building out the science of economics.

The explanation for this otherwise baffling fact lies in the general acceptance of the Malthusian theory. The standard theory of wages has never been properly put on trial, because with the Malthusian theory backing it up, it has seemed to economists like a self-evident truth. These two theories blend together, strengthen each other, and defend each other. And they both draw additional support from a principle that features prominently in discussions of the theory of rent — namely, that beyond a certain point, applying more capital and labor to land yields diminishing returns. Together, they provide an explanation of what we see in a highly organized and advancing society that seems to fit all the facts — and that has therefore prevented anyone from looking more closely.

Which of these two theories came first historically is hard to say. The theory of population wasn't formally stated as a scientific doctrine until after that had been done for the theory of wages. But the two naturally spring up and grow together, and both were held in a rough form long before anyone tried to build a systematic economics. It's clear from several passages that though he never fully developed it, the Malthusian theory was already present in embryonic form in the mind of Adam Smith. And to this, it seems to me, we must largely attribute the wrong direction his thinking about wages took. But however that may be, the two theories are so closely connected and so completely complement each other that the historian Henry Thomas Buckle, reviewing the history of economics in his Examination of the Scotch Intellect During the Eighteenth Century, credits Malthus with the honor of having "decisively proved" the standard theory of wages by advancing the doctrine that population presses on the food supply. In his History of Civilization in England, Vol. 3, Chap. 5, Buckle writes:

"Scarcely had the Eighteenth Century passed away when it was decisively proved that the reward of labor depends solely on two things; namely, the magnitude of that national fund out of which all labor is paid, and the number of laborers among whom the fund is to be divided. This vast step in our knowledge is due, mainly, though not entirely, to Malthus, whose work on population, besides marking an epoch in the history of speculative thought, has already produced considerable practical results, and will probably give rise to others more considerable still. It was published in 1798; so that Adam Smith, who died in 1790, missed what to him would have been the intense pleasure of seeing how, in it, his own views were expanded rather than corrected. Indeed, it is certain that without Smith there would have been no Malthus; that is, unless Smith had laid the foundation, Malthus could not have raised the superstructure."

The famous doctrine that has so powerfully shaped thought ever since — not just in economics but in even deeper fields of inquiry — was formulated by Malthus as a proposition. Using the growth of the North American colonies as evidence, he argued that population naturally tends to double at least every twenty-five years, increasing in a geometric ratio (1, 2, 4, 8, 16...), while the food supply that can be obtained from land "under circumstances the most favorable to human industry could not possibly be made to increase faster than in an arithmetical ratio, or by an addition every twenty-five years of a quantity equal to what it at present produces." "The necessary effects of these two different rates of increase, when brought together," Malthus naively goes on to say, "will be very striking." And so (in Chapter I of his Essay) he brings them together:

"Let us call the population of this island eleven millions; and suppose the present produce equal to the easy support of such a number. In the first twenty-five years the population would be twenty-two millions, and the food being also doubled, the means of subsistence would be equal to this increase. In the next twenty-five years the population would be forty-four millions, and the means of subsistence only equal to the support of thirty-three millions. In the next period the population would be equal to eighty-eight millions, and the means of subsistence just equal to the support of half that number. And at the conclusion of the first century, the population would be a hundred and seventy-six millions, and the means of subsistence only equal to the support of fifty-five millions; leaving a population of a hundred and twenty-one millions totally unprovided for.

"Taking the whole earth instead of this island, emigration would of course be excluded; and supposing the present population equal to a thousand millions, the human species would increase as the numbers 1, 2, 4, 8, 16, 32, 64, 128, 256, and subsistence as 1, 2, 3, 4, 5, 6, 7, 8, 9. In two centuries the population would be to the means of subsistence as 256 to 9; in three centuries, 4,096 to 13, and in two thousand years the difference would be almost incalculable."

Of course, such a result is prevented by the physical fact that no more people can exist than can find food. Malthus's conclusion, therefore, is that this tendency of population to increase without limit must be held in check either by moral restraint on reproduction, or by the various causes that increase the death rate — which he boils down to vice and misery. Causes that prevent people from reproducing he calls the "preventive check." Causes that kill people off he calls the "positive check." This is the famous Malthusian doctrine, as Malthus himself laid it out in his Essay on Population.

It's not worth dwelling on the fallacy in his assumption about geometric and arithmetic rates of increase. This is really just a trick with proportions, one that barely rises to the level of the old puzzle about the tortoise and the hare, in which the hare is made to chase the tortoise for all eternity without catching it. This particular assumption isn't essential to the Malthusian doctrine anyway, and some of the theory's strongest supporters explicitly reject it. John Stuart Mill, for instance, calls it "an unlucky attempt to give precision to things which do not admit of it, which every person capable of reasoning must see is wholly superfluous to the argument."14 The essence of the Malthusian doctrine is that population tends to grow faster than the ability to produce food. Whether you state this as Malthus does — a geometric ratio for population versus an arithmetic ratio for food — or as Mill does — a constant ratio for population versus a diminishing ratio for food — is just a matter of how you express it. The crucial point, on which both agree, is, in Malthus's own words, "that there is a natural tendency and constant effort in population to increase beyond the means of subsistence."

The Malthusian doctrine, as it's currently held, can be stated in its strongest and least objectionable form like this:

Population, always tending to grow, must — when left unchecked — eventually press against the limits of the food supply. Not against a hard wall, but against an elastic barrier that makes it progressively harder and harder to feed everyone. And so, wherever reproduction has had time to assert its power and is not restrained by prudence, there will inevitably be enough want and suffering to keep population from exceeding what the food supply can support.

In reality, this theory is no more offensive to our sense of a wisely designed world than the complacent non-explanation that simply blames poverty on the mysterious will of God without examining the matter any further. But by openly declaring that suffering and vice are the inevitable results of an instinct bound up with our deepest and most tender feelings, it crashes headlong into ideas deeply rooted in the human mind. As soon as it was formally stated, it was fought with a bitterness in which passion was more evident than logic. But it has triumphantly survived the onslaught. Despite the refutations of the Godwins, the denunciations of the Cobbetts, and every weapon that argument, sarcasm, ridicule, and sentimentality could throw at it, it stands today in the world of ideas as an accepted truth — one that compels recognition even from those who would dearly love to reject it.

The reasons for its triumph, the sources of its strength, are not hard to see.

First, it seems to be backed by an indisputable mathematical truth: a continuously growing population must eventually exceed the earth's capacity to provide food or even standing room. Second, the Malthusian theory is supported by analogies from the animal and plant kingdoms, where life everywhere pushes wastefully against the barriers that hold each species in check — analogies that have gained more and more weight as modern thought has broken down the distinctions between different forms of life. Third, it appears to be confirmed by many obvious facts: the prevalence of poverty, vice, and misery in densely populated areas; the general tendency of material progress to increase population without actually relieving poverty; the rapid growth of population in newly settled countries; and the clear slowing of population growth in more densely settled countries due to higher death rates among the poor.

The Malthusian theory provides a general principle that accounts for all these facts, and accounts for them in a way that harmonizes perfectly with the doctrine that wages are drawn from capital and with all the principles deduced from it. According to the standard theory of wages, wages fall as more workers force a finer division of capital. According to the Malthusian theory, poverty appears as more people force a finer division of the food supply. All you need to do is equate capital with food supply, and number of workers with population — an equation that the standard economics textbooks routinely make, freely converting between the terms — and the two propositions become formally identical, just as they are identical in substance.15 And that, as Buckle states in the passage quoted earlier, is how the population theory advanced by Malthus appeared to decisively prove the wage theory advanced by Smith.

The economist David Ricardo, who a few years after the publication of the Essay on Population corrected Adam Smith's mistake about the nature and cause of rent, gave the Malthusian theory yet another prop. Ricardo pointed out that rent would rise as a growing population forced farming onto less and less productive land, or onto less and less productive uses of the same land — thus explaining why rents go up. In this way a triple combination was formed, with the Malthusian theory buttressed on both sides. The earlier wage doctrine and the later rent doctrine were both presented as merely specific examples of the general principle bearing Malthus's name. The fall in wages and the rise in rents that come with increasing population were treated as nothing more than two different ways the pressure of population on the food supply shows itself.

Having taken its place in the very framework of economics (for the science as it was then accepted had undergone no major change since Ricardo's time, though some minor points had been clarified), the Malthusian theory — despite clashing with the sentiments I just mentioned — is not at odds with other ideas that generally prevail among working people, at least in established countries. On the contrary, like the wage theory that supports it and is in turn supported by it, it harmonizes with them. To the factory worker or tradesperson, the cause of low wages and the inability to find work is obviously the competition created by too many people. And in the squalid quarters of poverty, what seems clearer than that there are simply too many mouths to feed?

Why the Powerful Love This Theory

But the greatest reason for this theory's triumph is that, instead of threatening any vested right or challenging any powerful interest, it is supremely soothing and reassuring to the classes who wield the power of wealth and largely control how people think. At a time when old justifications for privilege were crumbling, it came to the rescue. It proclaimed a natural cause for want and misery — want and misery that, if blamed on political institutions, would condemn every government under which they existed. The Essay on Population was openly a reply to William Godwin's Inquiry Concerning Political Justice, a work that argued for the principle of human equality. Its purpose was to justify existing inequality by shifting the blame from human institutions to the laws of nature. There was nothing new in this idea — the writer Robert Wallace, nearly forty years earlier, had raised the danger of excessive population growth as the answer to demands for a more equal distribution of wealth. But the circumstances of the times were such that when Malthus brought forward the same idea, it was peculiarly welcome to a powerful class whose intense fear of any questioning of the status quo had been stoked by the upheaval of the French Revolution.

Now, as then, the Malthusian doctrine deflects the demand for reform. It shelters selfishness from questioning and from conscience by placing an "inevitable necessity" between the rich and the poor. It provides a philosophy by which the rich man feasting at his table can shut out the image of the beggar fainting with hunger at his door — the biblical Dives ignoring the suffering of Lazarus. It lets wealth complacently button up its pockets when poverty asks for help. It lets the rich Christian kneel on Sundays in a nicely upholstered pew and pray to God for blessings without feeling the slightest responsibility for the squalid misery festering just a block away.

For under this theory, poverty, want, and starvation are not the fault of individual greed or social injustice. They are the inevitable results of universal natural laws — laws it would be as hopeless to fight (if not downright impious) as it would be to quarrel with gravity. Under this view, whoever has accumulated wealth in the midst of widespread want has merely fenced in a little oasis from the driving sand that would otherwise have swallowed it. They have gained for themselves but harmed no one. And even if the rich literally obeyed Christ's command and divided their wealth among the poor, nothing would be gained. Population would simply increase until it pressed once more against the limits of the food supply, and the equality produced would be nothing but the equality of shared misery.

And so reforms that would interfere with the interests of any powerful class are dismissed as hopeless. Since morality forbids us from hastening the deaths by which nature eliminates surplus population — a population that, unchecked, would be potent enough to pack the surface of the globe with human beings like sardines in a box — nothing can really be done to eliminate poverty, either by individuals or through collective action, except to trust in education and preach the virtue of self-restraint.

A theory that fits the working assumptions of the poor while justifying the greed of the rich and the selfishness of the powerful will spread quickly and sink its roots deep. And that is exactly what has happened with the theory advanced by Malthus.

New Support from Darwin

In recent years, the Malthusian theory has gained new support from the rapid transformation of ideas about the origin of humanity and the development of species. Buckle was right to say that the publication of the Malthusian theory marked an epoch in the history of ideas. I could easily demonstrate its influence in the higher domains of philosophy, of which Buckle's own work is an example — but that, however interesting, would carry us beyond the scope of this investigation. What must be noted, however, in any assessment of where this theory draws its current strength, is the support it receives from the new philosophy of evolution, now spreading rapidly in every direction — regardless of how much of that support flows reflexively and how much is genuinely original.

Within economics, the support the Malthusian theory received from the wage doctrine and the rent doctrine combined to elevate it to the rank of a central truth. Now the extension of similar ideas to the development of life in all its forms has given it an even higher and more unassailable position. The naturalist Louis Agassiz, who to the day of his death fiercely opposed evolutionary theory, called Darwinism "Malthus all over."16 And Darwin himself wrote that the struggle for existence "is the doctrine of Malthus applied with manifold force to the whole animal and vegetable kingdoms."17

It doesn't seem exactly right to me, however, to say that the theory of evolution by natural selection — or survival of the fittest — is simply Malthusianism extended, because Malthus's original doctrine did not necessarily involve the idea of progress. But the idea of progress was soon grafted onto it. The economist McCulloch18 credits the "principle of increase" with driving social improvement and the advance of the arts. He declares that the poverty population pressure creates actually serves as a powerful stimulus — spurring the development of industry, the expansion of science, and the accumulation of wealth by the upper and middle classes, without which stimulus society would quickly sink into apathy and decay.

And what is this but the recognition, applied to human society, of exactly what natural science now tells us about the "struggle for existence" and "survival of the fittest" — the forces that Nature has used to bring forth all the infinitely varied and wonderfully adapted forms that teeming life on Earth takes? What is it but the recognition of the force that, seemingly cruel and merciless, has over the course of countless ages developed higher forms from lower ones, separated humans from apes, and carried civilization from the Stone Age to the present day?

The Orthodox Position

So there it stands: endorsed and seemingly proven, linked and buttressed from every side. The Malthusian theory — the doctrine that poverty results from the pressure of population against the food supply, or to put it another way, that the tendency toward more workers must always tend to push wages down to the bare minimum on which workers can survive and reproduce — is now generally accepted as unquestionable truth. Social phenomena are explained in its light, just as for centuries the movements of the stars were explained on the assumption that the Earth stood still, or the facts of geology were explained on the assumption that the Bible's creation account was literally true.

If authority alone were the deciding factor, to formally deny this doctrine would require almost as much audacity as that of the preacher who recently set out on a crusade against the idea that the Earth goes around the sun. In one form or another, the Malthusian doctrine has received nearly universal endorsement in the intellectual world, and it can be seen cropping up everywhere in both the finest and the most ordinary writing of the day. It is endorsed by economists and by politicians, by historians and by natural scientists, by social science conferences and by trade unions, by clergy and by atheists, by the most hidebound conservatives and the most radical reformers. It is held and routinely used as a basis for reasoning by many who have never heard of Malthus and haven't the slightest idea what his theory actually says.

Nevertheless, just as the foundations of the standard wage theory crumbled when subjected to honest examination, so too, I believe, will the foundations of its twin crumble. In proving that wages are not drawn from capital, we have lifted this Antaeus from the earth.

Inferences from Facts

The general acceptance of the Malthusian theory, and the high authority behind it, seemed to me to make it worth reviewing its foundations and the reasons it has gained such a dominant influence over discussions of social questions.

But when we subject the theory itself to the test of straightforward analysis, it will, I think, be found just as utterly untenable as the standard theory of wages.

First, the facts marshaled in support of this theory do not actually prove it, and the analogies do not support it.

Second, there are facts that conclusively disprove it.

No Warrant for the Core Assumption

Let me go straight to the heart of the matter: there is no basis, either in experience or in analogy, for assuming that population has any tendency to increase faster than the food supply. The facts cited to prove this simply show that where life is consumed by the struggle for physical survival — whether because population is still sparse, as in newly settled countries, or because wealth is distributed unequally, as among the poorer classes in older countries — the tendency to reproduce runs at a rate that would, if left unchecked, eventually exceed the food supply. But it is not a legitimate conclusion from this that the same reproductive drive would show itself with the same force in a society where population was dense enough and wealth distributed evenly enough to lift an entire community above the struggle for mere survival. Nor can we assume that the tendency to reproduce, by causing poverty, must prevent such a community from ever existing — because that would be assuming the very point at issue and reasoning in a circle. And even if we grant that the tendency to multiply must eventually produce poverty, we cannot point to existing poverty and blame it on this cause until we've shown there are no other causes that could account for it — which, given the current state of government, laws, and customs, is clearly impossible.

What the Essay on Population Actually Says

All of this is abundantly demonstrated in the Essay on Population itself. This famous book, which is far more often talked about than actually read, is still well worth looking at, if only as a literary curiosity. The gap between the book's actual quality and the effect it has produced — or at least is credited with (for although Sir James Stewart, Mr. Townsend, and others share with Malthus the credit for discovering "the principle of population," it was the Essay's publication that brought it to prominence) — is, it seems to me, one of the most remarkable things in the history of literature. It's easy to understand how William Godwin, whose Political Justice provoked the Essay on Population, should have disdained to reply until his old age.

The book begins with the assumption that population tends to increase in a geometric ratio, while the food supply can at best increase only in an arithmetic ratio. This assumption is exactly as valid — and no more so — as it would be to observe that a puppy doubled the length of its tail while adding a certain number of pounds to its weight, and then to assert a geometric progression of tail and an arithmetic progression of weight. And the inference drawn from the assumption is just the sort of thing Jonathan Swift might have satirically attributed to the scholars of a previously dogless island, who, by combining these two ratios, might deduce the very "striking consequence" that by the time the dog weighed fifty pounds its tail would be over a mile long and extremely difficult to wag — and hence recommend the prudential check of a bandage as the only alternative to the positive check of constant amputations.

Starting from such an absurdity, the essay goes on to include a long argument for imposing a duty on imported grain and paying a bounty for exported grain — an idea that was long ago sent to the junkyard of exploded fallacies. And the argumentative portions throughout are marked by passages that reveal, on the reverend gentleman's part, the most astonishing incapacity for logical thought. For example, he claims that if wages were increased from eighteen pence or two shillings per day to five shillings, the price of meat would necessarily rise from eight or nine pence to two or three shillings per pound, and therefore the condition of working people would not be improved. The closest parallel I can think of is a claim I once heard a certain printer solemnly advance: because an author he had known was forty years old when the printer was twenty, the author must now be eighty because the printer was forty.

This confusion of thought doesn't just crop up here and there — it runs through the entire work.19 The main body of the book is actually a refutation of the very theory the book claims to advance. Malthus's survey of what he calls the "positive checks" to population is really just a demonstration that the results he attributes to overpopulation actually arise from other causes. Of all the cases he cites — and he surveys pretty much the entire globe — in which vice and misery check population growth by limiting marriages or shortening lives, there is not a single case where the vice and misery can be traced to an actual increase in the number of mouths beyond the power of the accompanying hands to feed them. In every case, the vice and misery spring either from ignorance and greed, or from bad government, unjust laws, or destructive warfare.

History Offers No Proof

What Malthus failed to show, no one since him has shown either. You can survey the globe and review all of history without finding a single instance of a sizable country20 where poverty and want can fairly be blamed on the pressure of a growing population. Whatever dangers the power of human increase may theoretically pose, they have never yet appeared. Whatever may someday be, overpopulation has never yet been the affliction of humankind.

Population always tending to outrun the food supply! How is it, then, that after all the thousands — and it is now thought millions — of years that humans have been on this earth, our globe is still so thinly populated? How is it that so many former hives of human activity are now deserted — that once-cultivated fields are choked with jungle, and wild animals raise their young where busy communities of people once thrived?

Population Has Ebbed as Often as It Has Flowed

Here is a fact we tend to lose sight of as we count our growing millions — but it is a fact nonetheless: in what we know of world history, the decline of population has been just as common as its increase. Whether the total population of the earth is now greater than at any previous time is a question that can only deal in guesses. In the early part of the last century, the philosopher Montesquieu asserted what was then probably the prevailing view: that the earth's population had greatly declined since the Christian era. Since then, opinion has swung the other way. But the trend of recent investigation and exploration has been to give more credit to what were previously dismissed as the exaggerated accounts of ancient historians and travelers, and to reveal evidence of denser populations and more advanced civilizations than had been suspected — as well as a far greater antiquity for the human race. And when we estimate past populations based on the development of trade, the advance of the arts, and the size of cities, we tend to underestimate the population density that the intensive farming methods of earlier civilizations could support, especially where irrigation was used. As we can see from the closely cultivated districts of China and Europe, a very large population with simple habits can readily exist with very little commerce, a much lower stage of technology in the areas where modern progress has been most dramatic, and without the tendency to concentrate in cities that modern populations display.21

Be that as it may, the only continent we can be sure now holds a larger population than ever before is Europe. And this is not even true of all parts of Europe. Greece, the Mediterranean islands, and Turkey in Europe certainly, and Italy probably, and possibly Spain, have all contained larger populations than they do now. The same may be true of parts of northwestern, central, and eastern Europe as well.

The Americas have also gained population during the time we know about them, but this increase is not as great as people commonly assume. Some estimates give Peru alone a greater population at the time of European contact than the whole continent of South America has today. And all the evidence suggests that before the European discovery, the population of the Americas had actually been declining. What great nations rose and fell, what empires were built and destroyed in "that new world which is the old," we can only imagine. But fragments of massive ruins still attest to a grand pre-Incan civilization. Amid the tropical forests of Yucatan and Central America lie the remains of great cities forgotten even before the Spanish conquest. Mexico, as Cortes found it, showed barbarism layered on top of a higher social development. And scattered across much of what is now the United States are mounds that prove a once relatively dense population, and here and there — as in the Lake Superior copper mines — are traces of more advanced skills than those known to the Indigenous peoples the Europeans first encountered.

As for Africa, there can be no question. Northern Africa can contain only a fraction of the population it had in ancient times. The Nile Valley once held an enormously greater population than it does now. South of the Sahara, there is nothing to indicate growth within recorded history, and the slave trade certainly caused widespread depopulation.

As for Asia, which even now contains more than half the human race despite being only about half as densely populated as Europe, there are signs that both India and China once held larger populations than they do today. Meanwhile, the vast central Asian breeding ground from which waves of people swept over both those countries and rolled across Europe must once have been far more populous. But the most dramatic change is in Asia Minor, Syria, Babylonia, Persia — that whole vast region that yielded to the conquering armies of Alexander the Great. Where great cities and teeming populations once stood, there are now only squalid villages and barren wastes.

The Ebb and Flow of Civilizations

It is somewhat surprising that among all the theories people have proposed, no one has suggested that the total quantity of human life on earth is roughly fixed. That idea would at least fit the historical facts better than the claim of a constant tendency for population to outrun the food supply.

Population has clearly ebbed here and flowed there. Its centers have shifted. New nations have arisen and old nations declined. Sparsely settled regions have become populous, and populous regions have lost their people. But as far back as we can look without abandoning ourselves entirely to speculation, there is nothing to show continuous increase, or even clearly to show an aggregate increase from one era to the next. The advance of pioneering peoples has, as far as we can tell, never been into uninhabited lands — their march has always been a battle with some other people already in possession. Behind dim empires, vaguer ghosts of empire loom. We can confidently infer that the world's population must have had its small beginnings, because we know there was a geological era when human life could not have existed, and we cannot believe that people sprang up all at once, like the warriors that grew from the dragon's teeth sowed by the mythical Cadmus. Yet through long stretches of time — where history, tradition, and archaeology shed a light that fades into the faintest glimmers — we can make out large populations. And during all those long ages, the principle of population has not been strong enough even to fully settle the world, much less — as far as we can clearly see — to materially increase its total population. Compared with its capacity to support human life, the earth as a whole is still very sparsely populated.

Ancient Wisdom Contradicts Malthus

There is another broad, general fact that cannot fail to strike anyone who thinks about this subject beyond the confines of modern society. The Malthusian theory claims to be a universal law — that the natural tendency of population is to outrun the food supply. If such a law existed, it would, wherever population reached a certain density, become as obvious as any of the great natural laws that have been recognized everywhere. How is it, then, that neither in the laws and moral codes of ancient Greece and Rome, nor in those of the Jews, the Egyptians, the Hindus, the Chinese, nor any of the peoples who have lived in close communities and built up legal and moral systems, do we find any instructions to practice the prudential restraints that Malthus recommends? On the contrary, the accumulated wisdom of the ages and the religions of the world have always taught ideas of civic and religious duty that are the very opposite of what mainstream economics now prescribes and what Annie Besant was then trying to popularize in England.

And we must remember that there have been societies where the community guaranteed every member employment and basic needs. John Stuart Mill says (Book II, Chapter XII, Section 2) that to do this without state regulation of marriages and births would produce "a state of general misery and degradation." He adds: "These consequences have been so often and so clearly pointed out by authors of reputation that ignorance of them on the part of educated persons is no longer pardonable." Yet in Sparta, in Peru, in Paraguay, and in the communal farming systems that appear almost everywhere to have been the earliest form of agricultural organization, there seems to have been a complete ignorance of these supposedly dire consequences of a natural tendency.

The Mystery of Dying Family Lines

Besides the broad, general facts I've cited, there are facts of common knowledge that seem utterly inconsistent with such an overpowering tendency to multiply. If the drive to reproduce is as strong as the Malthusian theory supposes, how is it that families so often become extinct — even families in which want is unknown? How is it that when every incentive is offered by hereditary titles and hereditary estates — not just encouraging reproduction, but encouraging the preservation of genealogical records and proof of descent — that in an aristocracy like England's, so many peerages lapse, and the House of Lords is kept up from century to century only by fresh creations?

For the single example of a family that has survived any great stretch of time, even with guaranteed support and social distinction, we must look to unchanging China. The descendants of Confucius still exist there and enjoy special privileges and standing, forming in fact the only hereditary aristocracy. On the assumption that population tends to double every twenty-five years, they should, 2,150 years after the death of Confucius, have amounted to 859,559,193,106,709,670,198,710,528 people. Instead of anything remotely approaching such an unimaginable number, the descendants of Confucius, 2,150 years after his death, during the reign of the Emperor Kanghi, numbered 11,000 males — or roughly 22,000 people in all.

That is quite a discrepancy. And it becomes even more striking when you consider that the high esteem in which this family is held on account of their ancestor, "the Most Holy Ancient Teacher," has prevented the operation of the positive check (premature death), while the teachings of Confucius advocate anything but the prudential check (restraining reproduction).

Descendants Are Not the Same as Population Growth

Yet it may be said that even this increase is a significant one. Twenty-two thousand people descended from a single couple in 2,150 years is far short of the Malthusian rate, but it still suggests the possibility of overcrowding.

But consider this: an increase of descendants does not prove an increase in population. It could only do so if the breeding were entirely within the family. Smith and his wife have a son and a daughter, who marry respectively someone else's daughter and son, and each couple has two children. Smith and his wife would thus have four grandchildren. But the total number of people in the next generation would be no greater than in the previous one — each child has four grandparents. If this process continued, the line of descent might constantly spread out into hundreds, thousands, and millions. But in each generation of descendants, there would be no more individuals than in any previous generation of ancestors.

The web of generations is like latticework, or like the diagonal threads in cloth. Starting at any point at the top, the eye follows lines that widely diverge at the bottom. But starting at any point at the bottom, the lines diverge in the same way toward the top. How many children a person may have is uncertain. But that they had two parents is certain, and that those parents in turn had two parents each is also certain. Follow this geometric progression backward through a few generations and see if it doesn't lead to "striking consequences" every bit as dramatic as Mr. Malthus's predictions about filling up the solar system.

Testing the Theory: India, China, and Ireland

But let us move from these general considerations to a more specific investigation. I assert that the cases commonly cited as instances of overpopulation will not hold up under examination. India, China, and Ireland provide the strongest of these cases. In each of these countries, large numbers of people have died of starvation and large classes have been reduced to abject misery or forced to emigrate. But is this really due to overpopulation?

India: Tyranny, Not Too Many People

Comparing total population with total area, India and China are far from being the most densely populated countries in the world. According to the estimates of Behm and Wagner, India has a population of just 132 per square mile and China 119, whereas Saxony has 442 per square mile, Belgium 441, England 422, the Netherlands 291, Italy 234, and Japan 233.22 In both India and China, large areas are unused or underused. And even in their more densely populated districts, either country could undoubtedly support a much larger population at a much higher standard of living — because in both countries, labor is applied to production in the crudest and most inefficient ways, and great natural resources are completely neglected.

This does not arise from any innate deficiency in these peoples. The Hindu, as comparative linguistics has shown, belongs to the same Indo-European family as Europeans. And China had achieved a high degree of civilization and developed the beginnings of the most important modern inventions while European ancestors were still wandering as hunter-gatherers. The problem arises from the social systems that have taken root in both countries — systems that have shackled productive capacity and robbed workers of their reward.

In India, from time immemorial, the working classes have been ground down by taxation and oppression into a condition of helpless and hopeless degradation. For age after age, farmers have considered themselves lucky if the demands of the powerful left them enough of their harvest to support life and provide seed for the next planting. Capital could nowhere be safely accumulated or used in any significant way to help production. All wealth that could be squeezed from the people was in the hands of princes who were little better than armed bandits occupying the country, or of their agents and favorites. This wealth was squandered in useless — or worse than useless — luxury, while religion, having sunk into an elaborate and terrifying superstition, tyrannized over people's minds just as physical force did over their bodies.

Under these conditions, the only arts that could advance were those that catered to the extravagance and luxury of the powerful. The elephants of the rajah blazed with exquisitely crafted gold, and the umbrellas symbolizing his royal power glittered with gems. But the plow of the ryot — the common farmer — was nothing but a sharpened stick. The ladies of the rajah's court wrapped themselves in muslins so fine they were called "woven wind," but the tools of ordinary workers were of the poorest and crudest description, and commerce could only be carried on, as it were, by stealth.

Isn't it clear that this tyranny and insecurity produced the want and starvation of India — and not, as the historian Buckle claimed, the pressure of population on the food supply that produced the want, which in turn produced the tyranny?23

The Rev. William Tennant, a chaplain in the service of the East India Company, wrote in 1796 — two years before the publication of the Essay on Population:

"When we reflect upon the great fertility of Hindostan, it is amazing to consider the frequency of famine. It is evidently not owing to any sterility of soil or climate; the evil must be traced to some political cause, and it requires but little penetration to discover it in the avarice and extortion of the various governments. The great spur to industry, that of security, is taken away. Hence no man raises more grain than is barely sufficient for himself, and the first unfavorable season produces a famine.

"The Mogul government at no period offered full security to the prince, still less to his vassals; and to peasants the most scanty protection of all. It was a continued tissue of violence and insurrection, treachery and punishment, under which neither commerce nor the arts could prosper, nor agriculture assume the appearance of a system. Its downfall gave rise to a state still more afflictive, since anarchy is worse than misrule. The Mohammedan government, wretched as it was, the European nations have not the merit of overturning. It fell beneath the weight of its own corruption, and had already been succeeded by the multifarious tyranny of petty chiefs, whose right to govern consisted in their treason to the state, and whose exactions on the peasants were as boundless as their avarice. The rents to government were, and, where natives rule, still are, levied twice a year by a merciless banditti, under the semblance of an army, who wantonly destroy or carry off whatever part of the produce may satisfy their caprice or satiate their avidity, after having hunted the ill-fated peasants from the villages to the woods. Any attempt of the peasants to defend their persons or property within the mud walls of their villages only calls for the more signal vengeance on those useful, but ill-fated mortals. They are then surrounded and attacked with musketry and field pieces till resistance ceases, when the survivors are sold, and their habitations burned and leveled with the ground. Hence you will frequently meet with the ryots gathering up the scattered remnants of what had yesterday been their habitation, if fear has permitted them to return; but oftener the ruins are seen smoking, after a second visitation of this kind, without the appearance of a human being to interrupt the awful silence of desolation. This description does not apply to the Mohammedan chieftains alone; it is equally applicable to the Rajahs in the districts governed by Hindus."24

To this merciless plundering — which would have produced want and famine even if the population were one person per square mile and the land a Garden of Eden — there succeeded, in the first era of British rule in India, an equally merciless greed backed by far more irresistible power. The historian Macaulay, in his essay on Lord Clive, writes:

"Enormous fortunes were rapidly accumulated at Calcutta, while millions of human beings were reduced to the extremity of wretchedness. They had been accustomed to live under tyranny, but never under tyranny like this. They found the little finger of the Company thicker than the loins of Surajah Dowlah. ... It resembled the government of evil genii, rather than the government of human tyrants. Sometimes they submitted in patient misery. Sometimes they fled from the white man as their fathers had been used to fly from the Maharatta, and the palanquin of the English traveler was often carried through silent villages and towns that the report of his approach had made desolate."

Upon the horrors that Macaulay only touches on, the vivid eloquence of the statesman Edmund Burke throws a stronger light — whole districts surrendered to the unchecked greed of the worst of humanity, poverty-stricken peasants fiendishly tortured to force them to give up their meager savings, and once-populous regions turned into deserts.

British Rule: New Masters, Same Misery

But the lawless license of early English rule has long since been restrained. To that vast population, England's strong hand has given a peace more secure than Rome's. The just principles of English law have been extended through an elaborate system of codes and legal officers designed to secure for the humblest of these impoverished peoples the rights of free citizens. The entire peninsula has been crisscrossed by railways, and great irrigation works have been constructed. Yet, with increasing frequency, famine has followed famine, striking with greater intensity over wider areas.

Isn't this a demonstration of the Malthusian theory? Doesn't it show that no matter how much the capacity for producing food is increased, population still presses against it? Doesn't it show, as Malthus argued, that closing off the channels through which surplus population drains away only forces nature to open new ones — and that unless reproduction is checked by prudential restraint, the alternative to war is famine?

This has been the orthodox explanation. But the truth — as can be seen in the facts brought out in recent discussions of Indian affairs in the English periodicals — is that these famines, which have been sweeping away millions, are no more caused by the pressure of population against the natural limits of the food supply than was the devastation of the Carnatic region when Hyder Ali's cavalry burst upon it in a whirlwind of destruction.

The millions of India have bowed their necks beneath the yokes of many conquerors, but worst of all is the steady, grinding weight of English domination — a weight that is literally crushing millions out of existence and, as English writers themselves have shown, is inevitably heading toward the most frightful and widespread catastrophe.

Other conquerors had lived in the land and, however tyrannical their rule, had understood the people and been understood by them. But India now is like a great estate owned by an absentee foreign landlord. An enormously expensive military and civil administration is maintained, managed and staffed at the top by English officials who regard India as merely a place of temporary exile. And an enormous sum — estimated at no less than 20 million pounds annually — raised from a population where laborers in many places are glad in good times to work for a penny and a half to four pence a day, is drained away to England in the form of remittances, pensions, and government expenses. It is tribute for which there is no return.

The immense sums lavished on railroads have, as the financial returns show, been economically unproductive. The great irrigation works are for the most part costly failures. In large parts of India, the English, eager to create a class of landed proprietors, turned the soil over in absolute possession to hereditary tax collectors, who squeeze their tenants mercilessly. In other parts, where the government still takes rent in the form of a land tax, assessments are so high and taxes collected so relentlessly that the ryots — who barely scrape by in good seasons — are driven into the hands of money lenders who are, if anything, even more rapacious than the landlords.

On salt — an article of basic necessity everywhere, and of particular necessity where food is almost entirely vegetable — a tax of nearly twelve hundred percent is imposed. Industrial uses of salt are prohibited, and large segments of the population cannot get enough to keep either themselves or their livestock in health. Below the English officials is a horde of native employees who oppress and extort. The effect of English law, with its rigid rules and proceedings that are mysterious to native people, has been to put a powerful tool of plunder into the hands of money lenders, from whom the peasants are forced to borrow on the most extravagant terms to pay their taxes, and to whom they are easily induced to sign obligations they don't understand.

"We do not care for the people of India," Florence Nightingale writes, with what reads like a sob. "The saddest sight to be seen in the East — nay, probably in the world — is the peasant of our Eastern Empire." She goes on to show the causes of the terrible famines: taxation that strips cultivators of the very means of cultivation, and the actual slavery to which the ryots are reduced "as the consequences of our own laws" — producing, "in the most fertile country in the world, a grinding, chronic semi-starvation in many places where what is called famine does not exist."25

"The famines which have been devastating India," says the writer H. M. Hyndman,26 "are in the main financial famines. Men and women cannot get food, because they cannot save the money to buy it. Yet we are driven, so we say, to tax these people more."

Hyndman shows how, even from famine-stricken districts, food is exported in payment of taxes, and how all of India is subjected to a steady, exhausting drain that, combined with the enormous expenses of government, is making the population poorer year by year. India's exports consist almost exclusively of agricultural products. For at least one-third of these, as Hyndman demonstrates, no return whatever is received. They represent tribute — remittances made by English residents in India, or expenses of the English branch of the Indian government.27 For the rest, the return is mostly government stores, or articles of comfort and luxury used by India's English masters.

He shows that the cost of government has been enormously increased under Imperial rule. That the relentless taxation of a population so miserably poor that the masses are not more than half fed is robbing them of their meager means for farming. That the number of bullocks — the Indian draft animal — is decreasing, and their scanty farming tools are being surrendered to money lenders, from whom "we, a business people, are forcing the cultivators to borrow at 12, 24, 60 percent28 to build and pay the interest on the cost of vast public works, which have never paid nearly five percent."

"The truth is," says Hyndman, "that Indian society as a whole has been frightfully impoverished under our rule, and that the process is now going on at an exceedingly rapid rate" — a statement that cannot be doubted in view of the facts presented not only by writers like those I've cited but by Indian officials themselves.

The very efforts the government makes to alleviate famines only intensify and extend their real cause through increased taxation. Although in the recent famine in Southern India an estimated six million people perished of actual starvation, and the great mass of survivors were stripped of everything, the taxes were not reduced. The salt tax — already beyond the reach of these poverty-stricken people — was increased by forty percent. Just as after the terrible Bengal famine of 1770, when the revenue was actually driven up by raising assessments on the survivors and ruthlessly enforcing collection.

The Real Cause: Human Greed, Not Natural Limits

In India now, as in India in the past, it is only the most superficial view that can blame want and starvation on the pressure of population against the land's capacity to produce food. If the farmers could keep their small savings; if they could be freed from the drain that, even in non-famine years, reduces great masses of them to a standard of living below what is considered necessary for the army's soldiers and below what English humanitarian standards provide for prisoners in jails — reviving industry, taking on more productive forms, would undoubtedly support a much greater population. There are still vast uncultivated areas in India, immense mineral resources untouched. And it is certain that India's population does not reach — and within recorded history has never reached — the real limit of the soil to provide food, or even the point where that capacity begins to decline under increasing demand. The real cause of want in India has been, and still is, the greed of human beings, not the stinginess of nature.

China: Same Story, Different Setting

What is true of India is true of China. Densely populated as China is in many parts, the extreme poverty of the lower classes can be traced to causes similar to those at work in India, not to excessive population. Many facts prove this. Insecurity is pervasive, production operates under enormous disadvantages, and trade is tightly restricted.

Where the government is a chain of shakedowns, and security for any kind of investment must be purchased from an official; where people's shoulders are the main means of inland transportation; where junks must be built in ways that make them unsuitable as seagoing vessels; where piracy is a regular trade and robbers sometimes march in regiments — under those conditions, poverty would prevail and the failure of a crop would bring famine no matter how sparse the population.29

That China is capable of supporting a much larger population is shown not only by the vast stretches of uncultivated land that all travelers report, but by the immense untapped mineral deposits known to exist there. China, for instance, is said to contain the largest and finest deposits of coal yet discovered anywhere. How much the mining of these coal beds would add to the country's ability to support a greater population is easy to imagine. Coal is not food, it's true. But producing coal is equivalent to producing food. Coal can be exchanged for food, as happens in every mining district. The energy from burning coal can be used in the production of food, or it can free up labor for producing food.

Not Population, but Oppression

In neither India nor China, therefore, can poverty and starvation be blamed on the pressure of population against the food supply. It is not dense population but the forces that prevent social organization from developing naturally and that prevent labor from earning its full return — these are what keep millions right on the edge of starvation and periodically push millions over it.

That the Indian laborer considers it good fortune to get a handful of rice, that the Chinese have been reduced to eating rats and puppies — this is no more caused by the pressure of population than it is caused by the pressure of population that the Digger Indians lived on grasshoppers, or that aboriginal Australians ate the grubs found in rotting wood.

What I Am Actually Arguing

Let me be clear about what I'm saying. I don't merely mean that India or China could, with a more advanced civilization, support a larger population. Any follower of Malthus would agree with that. The Malthusian theory does not deny that advances in productive technology could allow a greater population to feed itself. But the Malthusian theory does assert — and this is its core claim — that whatever the capacity for production may be, the natural tendency of population is to catch up with it, and in the effort to push beyond it, to produce (in Malthus's own phrase) "that degree of vice and misery which is necessary to prevent further increase." So that as productive capacity increases, population correspondingly increases, and soon produces the same miserable results as before.

What I am saying is this: nowhere is there any evidence to support this theory. Nowhere can want be properly attributed to the pressure of population against the capacity to produce food at the existing level of human knowledge. Everywhere, the vice and misery blamed on overpopulation can be traced to warfare, tyranny, and oppression — forces that prevent knowledge from being used and deny the security that is essential for production.

Why the natural increase of population does not produce want is something we will come to later. The fact that it has not yet anywhere done so is what concerns us now. This fact is obvious in the cases of India and China. It will be equally obvious wherever we trace the true causes of results that, on a superficial view, are often taken to be the work of overpopulation.

Ireland: The Most Powerful Example

Ireland, of all European countries, provides the great standard example of overpopulation. The extreme poverty of the Irish peasantry, the low wages, the Irish famine, and Irish emigration are constantly pointed to as a demonstration of the Malthusian theory playing out before the eyes of the civilized world. I doubt a more striking example can be found of the power of an accepted theory to blind people to the true relationship of facts.

The truth is — and it lies right on the surface — that Ireland has never had a population that the natural resources of the country, given the existing state of productive technology, could not have maintained in ample comfort. At the period of its greatest population (1840-45), Ireland contained just over eight million people. But a very large proportion of them merely managed to exist — living in miserable cabins, clothed in rags, with potatoes as their only staple food. When the potato blight came, they died by the thousands.

But was it the inability of the soil to support so large a population that forced so many to live in this miserable way and exposed them to starvation when a single crop failed? On the contrary, it was the same ruthless greed that robbed the Indian farmer of the fruits of labor and left people to starve where nature offered plenty. No merciless bandits marched through the land plundering and torturing — but the laborer was just as effectively stripped by an equally merciless horde of landlords, among whom the soil had been divided as their absolute property, with no regard for any rights of those who lived on it.

The Conditions of Irish Life

Consider the conditions under which these eight million people managed to live until the potato blight struck. It was a situation to which the words of Mr. Tennant about India apply just as well: "the great spur to industry, that of security, was taken away." Farming was mostly done by tenants who could be evicted at will, and who — even if the crushing rents they were forced to pay had allowed them to — dared not make improvements, since any improvement would have been nothing but a signal for the rent to be raised. Labor was therefore applied in the most inefficient and wasteful way, and energy was wasted in aimless idleness that, with any security for its fruits, would have been applied tirelessly.

But even under these conditions, the fact remains that Ireland more than supported eight million people. When its population was at its peak, Ireland was a food-exporting country. Even during the famine itself, grain and meat and butter and cheese were carted to the ports for export along roads lined with the starving and past trenches into which the dead were piled. For these food exports — or at least a great part of them — there was no return. As far as the people of Ireland were concerned, the food shipped abroad might as well have been burned, thrown into the sea, or never produced. It went not as an exchange but as tribute — to pay the rent of absentee landlords, a levy wrung from the people who grew it by those who contributed nothing to its production.

If this food had been left to those who raised it; if the farmers had been allowed to keep and use the capital their labor produced; if security had encouraged hard work and permitted the adoption of efficient methods — there would have been more than enough to support in generous comfort the largest population Ireland ever had, and the potato blight could have come and gone without depriving a single person of a full meal.

It was not the "imprudence of Irish peasants," as English economists coldly put it, that made them depend on the potato. Irish emigrants, when they have access to other foods, do not live on potatoes. And in the United States, the prudence of the Irish character — the drive to save something for a rainy day — is well known. They lived on potatoes because rack-rents stripped everything else from them. The truth is that the poverty and misery of Ireland have never been fairly attributable to overpopulation.

The economist McCulloch, writing in 1838, says in his notes to The Wealth of Nations:

"The wonderful density of population in Ireland is the immediate cause of the abject poverty and depressed condition of the great bulk of the people. It is not too much to say that there are at present more than double the persons in Ireland it is, with its existing means of production, able either fully to employ or to maintain in a moderate state of comfort."

Since in 1841 the population of Ireland was recorded as 8,175,124, we can estimate it at about eight million in 1838. So, to turn McCulloch's statement around: according to the overpopulation theory, Ireland should have been able to fully employ and maintain in moderate comfort something under four million people.

Now, in the early part of the previous century, when Jonathan Swift wrote his Modest Proposal, the population of Ireland was about two million. Since neither the means nor the methods of production had noticeably improved in Ireland during the interval, then — if the poverty and suffering of the Irish in 1838 were truly caused by overpopulation — there should, by McCulloch's own admission, have been more than full employment and much more than moderate comfort for the whole two million people back in 1727.

Yet instead of this being the case, the poverty and suffering of the Irish in 1727 were so extreme that, with scorching, blistering irony, Dean Swift proposed to relieve surplus population by cultivating a taste for roasted babies and bringing yearly to the butcher's stalls, as dainty food for the rich, 100,000 Irish infants!

The Blood Boils

It is difficult for someone who has been reading through the literature of Irish misery — as I have been doing while writing this chapter — to speak in measured terms about the comfortable way writers like Mill and Buckle attribute Irish want and suffering to overpopulation, even though they are otherwise high-minded thinkers. I know of nothing better calculated to make the blood boil than the cold accounts of the grasping, grinding tyranny to which the Irish people have been subjected — tyranny to which, and not to any inability of the land to support its population, Irish poverty and Irish famine must be attributed. And were it not for the spirit-crushing effect that the history of the world proves everywhere accompanies abject poverty, it would be hard to resist something like contempt for a people who, stung by such wrongs, only occasionally assassinated a landlord!

Overpopulation Was Never the Cause

Whether overpopulation has ever caused poverty and starvation may be an open question. But the poverty and starvation of Ireland can no more be blamed on overpopulation than the slave trade can be blamed on the overpopulation of Africa, or the destruction of Jerusalem on the inability of food production to keep pace with reproduction.

If Ireland had been by nature a grove of banana and breadfruit trees; if its coasts had been lined with the guano deposits of Peru's Chincha Islands; if the sun of tropical latitudes had warmed its moist soil into more abundant life — the social conditions prevailing there would still have produced poverty and starvation. How could there fail to be poverty and famine in a country where crushing rents stripped the farmer of everything except barely enough to stay alive in good seasons; where tenancy at will forbade improvements and removed every incentive for anything but the most wasteful farming; where tenants dared not accumulate savings, even if they could, for fear the landlord would demand them in higher rent; where in fact they were abject slaves who, at the whim of a fellow human being, could at any moment be driven from their miserable mud cabins — houseless, homeless, starving wanderers, forbidden even to pick wild fruit or trap a hare to ease their hunger?

No matter how sparse the population, no matter what the natural resources — aren't poverty and starvation the inevitable result in a land where producers are forced to work under conditions that strip them of hope, self-respect, energy, and thrift? Where absentee landlords drain away at least a fourth of the net produce of the soil with no return? Where, besides them, a starving workforce must also support resident landlords with their horses and hounds, agents, brokers, middlemen and bailiffs, an alien state church that insults their religious beliefs, and an army of police and soldiers to intimidate and hunt down any opposition to this outrageous system?

Isn't it a kind of impiety — far worse than atheism — to blame natural laws for misery caused by human injustice?

The Verdict

What is true of these three cases will be found, on examination, to be true of all cases. As far as our knowledge of the facts goes, we may safely deny that the increase of population has ever pressed upon the food supply in such a way as to produce vice and misery — that growth in numbers has ever reduced the relative production of food. The famines of India, China, and Ireland can no more be credited to overpopulation than the famines of sparsely populated Brazil. The vice and misery that spring from want can no more be blamed on the stinginess of nature than the six million killed by the sword of Genghis Khan, the pyramid of skulls built by Tamerlane, or the extermination of the ancient Britons or the Indigenous peoples of the West Indies.

Inferences from Analogy

If we turn from examining the facts used to illustrate the Malthusian theory and consider instead the analogies used to support it, we'll find them just as inconclusive.

The Reproductive Power of Nature

The extraordinary reproductive force in the animal and plant kingdoms — the fact that a single pair of salmon, if protected from predators for a few years, could fill the ocean; that a pair of rabbits under the same conditions could overrun a continent; that many plants scatter their seeds by the hundreds and some insects lay thousands of eggs; that everywhere throughout these kingdoms each species constantly tends to push against, and when not limited by its natural enemies clearly does push against, the limits of the food supply — all of this is constantly cited, from Malthus right down to today's textbooks, as proof that human population likewise tends to press against subsistence. And, the argument goes, when unrestrained by other means, this natural increase must necessarily result in wages so low and poverty so deep — or, if even that isn't enough and growth continues, in actual starvation so widespread — as to keep population within the limits of the food supply.

But is this analogy actually valid? It's from the plant and animal kingdoms that human food is drawn. So the greater reproductive power of plants and animals compared to humans simply proves that the food supply can increase faster than population. Doesn't the fact that everything humans eat has the power to multiply many times over — some things many thousandfold, some many millionfold or even billionfold — while human numbers are only doubling, show that even if human beings reproduced at the full extent of their power, population growth could never outrun the food supply?

This becomes clear when you remember that although every species in the plant and animal kingdoms, by virtue of its reproductive power, naturally and necessarily presses against the conditions limiting its further increase, those conditions are nowhere fixed and final. No species reaches the ultimate limit of soil, water, air, and sunshine. The actual limit of each species is set by the existence of other species — its rivals, its enemies, or its food. And these are conditions that humans can change. We can extend the conditions that support the species we use for food (in some cases, our mere presence extends them), and the reproductive forces of those species, instead of wasting themselves against their former limits, leap forward in our service at a pace our own powers of increase can't match.

If we simply shoot hawks, the birds we eat will increase. If we trap foxes, wild rabbits will multiply. The honeybee moves with the pioneer, and fish feed on the organic matter that fills the rivers wherever people settle.

Humans Are Not Just Another Animal

Even if we set aside any consideration of design or purpose in nature — even if we're not allowed to suggest that the high and constant reproductive force in plants and animals exists to serve human needs, and that therefore the pressure of lower forms of life against subsistence doesn't prove it must be the same for humanity, "the roof and crown of things" — there still remains a distinction between humans and all other forms of life that destroys the analogy.

Of all living things, humans are the only ones who can harness the reproductive forces — more powerful than their own — that supply them with food. Animals, insects, birds, and fish take only what they find. Their increase comes at the expense of their food, and when they've reached the existing limits of food, their food must increase before they can increase. But unlike any other living thing, the increase of humans involves the increase of their food.

If bears instead of people had been shipped from Europe to North America, there would now be no more bears than in the time of Columbus — and possibly fewer. Bear food would not have increased, nor would the conditions of bear life have expanded, because of the bear immigration. Probably the reverse. But within the limits of the United States alone, there are now forty-five million people where there were once only a few hundred thousand, and yet there is now much more food per person for those forty-five million than there was for the few hundred thousand. It wasn't the increase of food that caused the increase of people. It was the increase of people that brought about the increase of food. There is more food simply because there are more people.

Here is the difference between animals and humans. Both the jayhawk and the person eat chickens, but the more jayhawks, the fewer chickens — while the more people, the more chickens. Both the seal and the person eat salmon, but when a seal takes a salmon there is one less salmon, and if seals increased past a certain point, salmon would have to decline. But by placing salmon eggs under favorable conditions, humans can increase the number of salmon more than enough to make up for all they take. No matter how much people multiply, their increase need never outrun the supply of salmon.

The Limits of Subsistence Are Not Fixed

In short, while throughout the plant and animal kingdoms the limit of subsistence is independent of the thing being sustained, with humans the limit of subsistence is — within the ultimate limits of earth, air, water, and sunshine — dependent upon humans themselves. And this being the case, the analogy drawn between lower forms of life and humanity clearly fails. While plants and animals do press against the limits of subsistence, humans cannot press against the limits of theirs until the limits of the globe itself are reached.

And notice: this is true not just of the whole, but of every part. Just as we cannot lower the water level of the smallest bay or harbor without lowering the level of the ocean it connects to — and indeed all the seas and oceans of the world — so the limit of subsistence in any particular place is not the physical limit of that place alone, but the physical limit of the entire globe.

Fifty square miles of land will, given current methods of production, yield food for only some thousands of people. But on the fifty square miles that make up the city of London, some three and a half million people are sustained, and their food supply grows as their population grows. As far as the limits of subsistence are concerned, London could grow to a population of a hundred million, or five hundred million, or a billion, because it draws its food from the entire globe. The limit that subsistence sets to London's growth is the limit of the whole earth to feed its inhabitants.

The Myth of Diminishing Returns

But here another idea arises — one from which the Malthusian theory draws great support: the concept of diminishing returns from land. As supposedly conclusive proof of this law, the standard textbooks argue that if it weren't true that beyond a certain point land yields less and less to additional applications of labor and capital, a growing population would never need to expand cultivation. All the additional food needed could be raised without bringing any new land under the plow. Accepting this seems to mean accepting that the difficulty of feeding people must grow as population grows.

But I think this necessity is only apparent. If we analyze the proposition carefully, we'll see it belongs to a class of statements that depend for their validity on an implied qualification — truths in a relative sense that, taken as absolutes, become falsehoods.

The reason is simple: humans cannot exhaust or diminish the powers of nature. This follows from the indestructibility of matter and the persistence of force. "Production" and "consumption" are only relative terms. In absolute terms, humans neither produce nor consume anything. The entire human race, laboring for all eternity, could not make this spinning planet one atom heavier or one atom lighter. We could not add to or diminish by one iota the sum of the forces whose everlasting cycling produces all motion and sustains all life.

Just as water taken from the ocean must return to the ocean, the food we take from nature's reservoirs is, from the moment we take it, on its way back to those reservoirs. What we draw from a limited area of land may temporarily reduce that land's productivity, because the nutrients may return to other land, or be divided between that land and other land, or perhaps all land. But this possibility shrinks as the area grows larger, and disappears entirely when we consider the whole globe.

That the earth could sustain a thousand billion people as easily as a thousand million is a necessary conclusion from the self-evident truths that — at least as far as our activity is concerned — matter is eternal and force must forever continue to act. Life does not use up the forces that maintain life. We come into the material universe bringing nothing; we take nothing away when we depart. A human being, physically considered, is merely a transient form of matter, a changing mode of motion. The matter remains and the force persists. Nothing is lessened, nothing is weakened. And from this it follows that the only limit to the earth's population is the limit of space.

The Far-Off Specter of Overcrowding

Now, this limitation of space — the danger that the human race might increase beyond the possibility of finding elbow room — is so far off that it has no more practical interest for us than the return of the next ice age or the final burning out of the sun. Yet remote and shadowy as it is, this possibility is what gives the Malthusian theory its apparently self-evident character.

But if we follow even this shadow, it too will disappear. It also springs from a false analogy. The fact that plant and animal life tend to press against the limits of space does not prove the same tendency in human life.

The Infinite Ladder of Human Desire

Grant that humans are only a more highly developed animal — that the ring-tailed monkey is a distant relative who gradually developed acrobatic tendencies, and the humpbacked whale a far-off connection who early in life took to the sea. Grant that behind these we are kin to plants, and still subject to the same laws as plants, fish, birds, and beasts. There is still this difference between humans and all other animals: we are the only animal whose desires increase as they are fed, the only animal that is never satisfied.

The wants of every other living thing are uniform and fixed. The ox of today aspires to no more than it did when humans first yoked it. The seagull of the English Channel, hovering above a modern steamship, wants no better food or shelter than the gulls that circled as the keels of Caesar's galleys first scraped a British beach. Of all that nature offers them, no matter how abundant, all living things except humans can take — and care for — only enough to supply wants that are definite and fixed. The only use they can make of additional supplies or opportunities is to multiply.

But not so with us. No sooner are our animal wants satisfied than new wants arise. Food we want first, as does the beast; shelter next, as does the beast; and given these, our reproductive instincts assert their pull, as do those of the beast. But here humans and beasts part company. The beast never goes further. The human has merely set foot on the first step of an infinite progression — a progression the beast never enters, a progression away from and above the beast.

Once the demand for quantity is satisfied, we seek quality. The very desires we share with animals become extended, refined, elevated. It's not merely hunger but taste that seeks gratification in food. In clothing, we seek not merely comfort but beauty. The crude shelter becomes a home. Undiscriminating sexual attraction begins to transform itself into subtle influences, and the hard, common stock of animal life blossoms and blooms into shapes of delicate beauty.

As the power to gratify our wants increases, so does aspiration grow. Held down to the lower levels of desire, Lucullus will feast with Lucullus; twelve boars turn on spits so that Antony's mouthful of meat might be done to perfection; every kingdom of nature is ransacked to add to Cleopatra's charms, and marble colonnades and hanging gardens and pyramids that rival the hills arise.

Passing into higher forms of desire, that which slumbered in the plant and fitfully stirred in the beast awakens in the human being. The eyes of the mind are opened, and we long to know. We brave the scorching heat of the desert and the icy blasts of the polar sea, but not for food. We watch all night, but it is to trace the circling of the eternal stars. We add toil to toil, to satisfy a hunger no animal has felt, to quench a thirst no beast can know.

Out upon nature, in upon ourselves, back through the mists that shroud the past, forward into the darkness that overhangs the future — the restless desire that arises when the animal wants slumber in satisfaction turns in every direction. Beneath things, we seek the law; we would know how the globe was forged and the stars were hung, and trace to their origins the springs of life.

And then, as our nobler nature develops, there arises a desire higher still — the passion of passions, the hope of hopes — the desire that we, even we, might somehow help make life better and brighter, might help destroy want and sin, sorrow and shame. We master and curb the animal within; we turn our backs on the feast and renounce the place of power; we leave it to others to accumulate wealth, to gratify pleasant tastes, to bask in the warm sunshine of the brief day. We work for those we've never seen and never can see — for a fame, or maybe just a scant justice, that can only come long after the clods have rattled on our coffin lids. We toil in the advance, where it is cold and there is little cheer, and the stones are sharp and the brambles thick. Amid the scoffs of the present and the sneers that stab like knives, we build for the future; we cut the trail that progressive humanity may one day broaden into a highway.

Into higher, grander spheres desire mounts and beckons, and a star that rises in the east leads us on. The pulses of the human being throb with the yearnings of the divine — we would aid in the process of the suns!

The Gulf Is Too Wide

Is not the gulf too wide for the analogy to span? Give more food, open fuller conditions of life, and the plant or animal can only multiply; the human being will develop. In the one, the expansive force can only extend existence in new numbers. In the other, it will inevitably tend to extend existence in higher forms and wider powers.

We are animals, but we are animals plus something else. We are the mythic earth-tree, whose roots are in the ground but whose topmost branches may blossom in the heavens!

The Malthusian Theory Fails

Whichever way you turn it, the reasoning that supports this theory of population's constant tendency to press against the limits of subsistence reveals an unwarranted assumption — an "undistributed middle," as logicians would say. Facts don't support it. Analogy doesn't back it up. It is a pure figment of the imagination, like those misconceptions that for centuries kept people from recognizing the roundness and rotation of the earth.

It's exactly the kind of theory that says everything beneath us not fastened to the earth must fall off; that a ball dropped from the mast of a moving ship must fall behind the mast; that a live fish placed in a vessel full of water will displace no water. It is as unfounded, if not as absurd, as an assumption we can imagine Adam might have made had he been mathematically inclined and calculated his first baby's growth from its early months. From the fact that it weighed ten pounds at birth and twenty pounds eight months later, he might — with the arithmetical skill some sages have credited him with — have figured out a result quite as striking as Mr. Malthus's. Namely, that by age ten the baby would weigh as much as an ox, at twelve as much as an elephant, and by thirty would weigh no less than 175,716,339,548 tons.

No Cause for Alarm

The fact is, there is no more reason for us to worry about population pressing against subsistence than there was for Adam to worry about the rapid growth of his baby.

So far as an inference is genuinely warranted by facts and suggested by analogy, it is this: the law of population includes the same kind of beautiful adaptations that investigation has already revealed in other natural laws. We are no more justified in assuming that the instinct of reproduction, in the natural development of society, tends to produce misery and vice, than we would be in assuming that gravity must crash the moon into the earth and the earth into the sun. Or than in assuming — from the fact that water contracts as it cools down to thirty-two degrees Fahrenheit — that rivers and lakes must freeze solid to the bottom with every frost, making the temperate regions of the earth uninhabitable through even moderate winters.

Besides Malthus's positive and preventive checks, there is a third check that comes into play as standards of living rise and intellectual life develops. Many well-known facts point to this. Birth rates are notoriously higher in new settlements, where the struggle with nature leaves little opportunity for intellectual life, and among the poverty-stricken classes of older countries — people who in the midst of wealth are deprived of all its advantages and reduced to near-animal existence — than among the classes to whom growing wealth has brought independence, leisure, comfort, and a fuller, more varied life. This fact, long ago captured in the homely saying, "a rich man for luck, and a poor man for children," was noted by Adam Smith, who observed that it's not uncommon to find a poor, half-starved Highland woman who has been the mother of twenty-three or twenty-four children. The pattern is so clearly visible everywhere that it's only necessary to mention it.

The Real Law of Population

If the real law of population is thus indicated — as I believe it must be — then the tendency to increase, instead of being always uniform, is strong where a larger population would bring increased comfort and where the survival of the race is threatened by high death rates caused by adverse conditions. But it weakens precisely as the higher development of the individual becomes possible and the survival of the race is assured.

In other words, the law of population harmonizes with and is subordinate to the law of intellectual development. Any danger that human beings may be brought into a world where they cannot be provided for arises not from the laws of nature, but from social failures that condemn people to want in the midst of plenty.

The truth of this will, I believe, be conclusively demonstrated when, after clearing the ground, we trace out the true laws of social growth. But it would disrupt the natural order of the argument to get ahead of ourselves now. If I've succeeded in maintaining a negative — in showing that the Malthusian theory is not proven by the reasoning used to support it — that's enough for the present. In the next chapter I propose to take the affirmative and show that it is disproved by facts.

Disproof of the Malthusian Theory

The doctrine that population growth tends to reduce wages and produce poverty is so deeply rooted in mainstream economics, so thoroughly woven into its reasoning, so neatly aligned with many popular assumptions, and so liable to keep resurfacing in different forms, that I've thought it necessary to lay out in some detail the weakness of the arguments supporting it before bringing it to the test of facts. The general acceptance of this theory adds a striking example to the many that intellectual history provides of how easily people ignore facts when blinded by a theory they've already accepted.

Now let's bring this theory to that supreme and final test — the test of facts.

The question is straightforward. Does population growth necessarily tend to reduce wages and cause want? That's simply another way of asking: does population growth tend to reduce the amount of wealth that a given amount of labor can produce?

What the Standard Doctrine Claims

This is exactly what the standard doctrine claims. The accepted theory holds that the more we demand from nature, the less generously she responds — that doubling the labor applied to the land won't double the output. Therefore, population growth must tend to push wages down and deepen poverty, or, in Malthus's phrase, must result in vice and misery. Here is how the economist John Stuart Mill puts it:

"A greater number of people cannot, in any given state of civilization, be collectively so well provided for as a smaller. The niggardliness of nature, not the injustice of society, is the cause of the penalty attached to overpopulation. An unjust distribution of wealth does not aggravate the evil, but, at most, causes it be somewhat earlier felt. It is in vain to say that all mouths which the increase of mankind calls into existence bring with them hands. The new mouths require as much food as the old ones, and the hands do not produce as much. If all instruments of production were held in joint property by the whole people, and the produce divided with perfect equality among them, and if in a society thus constituted, industry were as energetic and the produce as ample as at the present time, there would be enough to make all the existing population extremely comfortable; but when that population had doubled itself, as, with existing habits of the people, under such an encouragement, it undoubtedly would in little more than twenty years, what would then be their condition? Unless the arts of production were in the same time improved in an almost unexampled degree, the inferior soils which must be resorted to, and the more laborious and scantily remunerative cultivation which must be employed on the superior soils, to procure food for so much larger a population, would, by an insuperable necessity, render every individual in the community poorer than before. If the population continued to increase at the same rate, a time would soon arrive when no one would have more than mere necessaries, and, soon after, a time when no one would have a sufficiency of those, and the further increase of population would be arrested by death."30

The Counter-Argument

All of this I deny. I assert the exact opposite of these propositions.

I assert that in any given state of civilization, a greater number of people can collectively be better provided for than a smaller number. I assert that the injustice of society, not the stinginess of nature, is the cause of the want and misery that the current theory blames on overpopulation. I assert that the new mouths an increasing population brings into existence require no more food than the old ones, while the hands they bring with them can, in the natural order of things, produce more. I assert that, all else being equal, the greater the population, the greater the comfort that a fair distribution of wealth would give to each individual. I assert that in a state of equality, the natural increase of population would constantly tend to make every person richer, not poorer.

I raise this challenge clearly and directly, and I submit the question to the test of facts.

The Right Question to Ask

But notice — and I want to stress this even at the risk of repeating myself, because even writers of great reputation fall into this confusion — that the factual question here is not "at what stage of population is the most food produced?" It is: "at what stage of population is the greatest power of producing wealth displayed?" Because the power to produce wealth in any form is the power to produce the necessities of life — and the consumption of wealth in any form, or of wealth-producing power, is equivalent to the consumption of those necessities.

Here's what I mean. Say I have some money in my pocket. I can use it to buy food, or cigars, or jewelry, or theater tickets. Depending on how I spend my money, I direct labor toward producing food, cigars, jewelry, or theatrical performances. A set of diamonds has a value equal to so many barrels of flour — meaning that, on average, it takes as much labor to produce the diamonds as it would to produce that much flour. If I load my wife with diamonds, it's as much an expenditure of food-producing power as if I had devoted that much food to showing off. If I keep a servant, I take a potential farmer from the fields. Breeding and maintaining a racehorse requires the care and labor that could sustain many workhorses. The wealth destroyed in a fireworks display or a cannon salute is equivalent to burning up food. Keeping a regiment of soldiers, or a warship and its crew, diverts to unproductive uses the labor that could produce food for many thousands of people.

The point is this: the power of any population to produce the necessities of life can't be measured only by the necessities actually produced. It must be measured by the total expenditure of productive power in all its forms.

The Simple Test

We don't need abstract reasoning here. The question is one of simple fact: does the relative power of producing wealth decrease as population increases?

The facts are so obvious that we only need to call attention to them.

In modern times, we've seen many communities grow in population. Haven't they also grown even more rapidly in wealth? We see many communities still growing in population right now. Aren't they also increasing their wealth even faster? Is there any doubt that while England has been increasing her population at about two percent per year, her wealth has been growing at an even greater rate? Isn't it true that while the population of the United States has been doubling every twenty-nine31 years, her wealth has been doubling at much shorter intervals?

Isn't it also true that under similar conditions — among communities of similar people at a similar stage of civilization — the most densely populated community is also the richest? Aren't the more densely populated Eastern states richer per person than the more sparsely populated Western or Southern states? Isn't England, where population is even denser than in the Eastern states, also richer per person?

Where will you find wealth devoted most lavishly to nonproductive uses — costly buildings, fine furniture, luxurious carriages, statues, paintings, pleasure gardens, and yachts? Is it not where population is densest rather than where it is sparsest? Where will you find, in the largest proportion, those whom the general production supports without any productive labor on their part — people of independent income and leisured elegance, thieves, police officers, household servants, lawyers, writers, and the like? Is it not where population is dense rather than where it is sparse? Where does surplus capital flow in search of profitable investment? Is it not from densely populated countries to sparsely populated ones?

These facts conclusively show that wealth is greatest where population is densest — that the production of wealth per unit of labor increases as population increases. These things are apparent wherever we turn our eyes. At the same level of civilization, the same stage of technology and government, the most populous countries are always the wealthiest.

The California Test Case

Let's take a particular case — and one that, at first glance, seems best to support the theory we're examining. This is the case of a community where population has greatly increased, wages have greatly decreased, and it's not a matter of disputed inference but of obvious fact that nature has become less generous. That community is California.

When the discovery of gold sent the first wave of immigration pouring into California, newcomers found a land where nature was in her most generous mood. From the river banks and sandbars, the glittering deposits of thousands of years could be extracted with the most primitive tools, in amounts that made an ounce ($16) per day just ordinary wages. The plains, covered with nutritious grasses, were alive with countless herds of horses and cattle — so plentiful that any traveler was free to swap their saddle to a fresh horse, or to kill a steer if they wanted a steak, leaving the hide (its only valuable part) for the owner. From the rich soil that came first under cultivation, simply plowing and sowing produced crops that in older countries, if obtainable at all, could only be obtained by the most thorough fertilizing and cultivation. In early California, surrounded by this profusion of nature, wages and interest were higher than anywhere else in the world.

This virgin abundance has been steadily giving way before the greater and greater demands that an increasing population has made upon it. Poorer and poorer mining sites have been worked, until now no deposits worth mentioning can be found, and gold mining requires heavy capital, specialized skill, and elaborate machinery, and involves great risks. "Horses cost money," and cattle bred on the sagebrush plains of Nevada are shipped by railroad across the mountains and slaughtered in San Francisco stockyards, while farmers are beginning to save their straw and look for fertilizer, and land is under cultivation that will hardly yield a crop three years out of four without irrigation. At the same time, wages and interest have steadily gone down. Many workers are now glad to work for a week for less than they once demanded for a day, and money is loaned by the year at a rate that once would hardly have seemed excessive by the month.

Is the connection between nature's reduced productivity and the reduced rate of wages one of cause and effect? Is it true that wages are lower because labor produces less wealth?

On the contrary! Instead of the wealth-producing power of labor being less in California in 1879 than in 1849, I'm convinced that it is greater. And it seems to me that no one who considers how enormously, during those years, the efficiency of labor in California has been increased — by roads, wharves, flumes, railroads, steamboats, telegraphs, and machinery of all kinds; by closer connection with the rest of the world; and by the countless efficiencies that come with a larger population — can doubt that the return labor receives from nature in California is, on the whole, much greater now than it was in the days of unexhausted gold deposits and virgin soil. The increase in the power of the human factor has more than compensated for the decline in the power of the natural factor.

That this conclusion is correct is proved by many facts showing that the consumption of wealth is now much greater, relative to the number of workers, than it was then. Instead of a population made up almost exclusively of people in the prime of life, a large proportion of women and children are now supported, and other non-producers have increased in a far greater ratio than the population. Luxury has grown far more than wages have fallen. Where the best houses were cloth and paper shanties, there are now mansions rivaling European palaces. There are liveried carriages on the streets of San Francisco and pleasure yachts on her bay. The class who can live sumptuously on their incomes has steadily grown. There are rich people beside whom the richest of the earlier years would look like paupers.

In short, there is on every hand the most striking and conclusive evidence that the production and consumption of wealth have increased with even greater speed than the increase of population — and that if any class receives less, it is solely because of the greater inequality of distribution.

The Broader Picture

What is obvious in this particular case is obvious wherever we extend the survey. The richest countries are not those where nature is most generous, but those where labor is most efficient — not Mexico but Massachusetts, not Brazil but England. The countries where population is densest and presses hardest on the capabilities of nature are, all else being equal, the countries where the largest share of production can be devoted to luxury and the support of non-producers — the countries where capital overflows, the countries that in an emergency like war can withstand the greatest drain.

That production must be greater per worker in a densely populated country like England than in new countries where wages and interest are higher is clear from the fact that, even though a much smaller proportion of the population is engaged in productive labor, a much larger surplus is available for other purposes beyond meeting basic physical needs.

In a new country, the whole available workforce is devoted to production. There's no healthy person who doesn't do productive work of some kind, no one exempt from useful tasks. There are no paupers or beggars, no idle rich, no class of workers devoted to serving the whims of the wealthy, no purely literary or scientific class, no criminal class who live by preying on society, no large police force maintained to guard society against them.

Yet with the entire force of the community devoted to production, no such consumption of wealth per person takes place — or can be afforded — as goes on in the older country. Although the condition of the poorest is better, and there is no one who can't make a living, there is no one who earns much more — few or none who can live in anything like what would be called luxury, or even comfort, in the older country. In other words, the consumption of wealth per person is greater in the older country, even though the proportion of labor devoted to producing wealth is less. That means fewer workers are producing more wealth — because wealth must be produced before it can be consumed.

The Myth of Accumulated Wealth

It might be argued, however, that the superior wealth of older countries is due not to superior productive power, but to the accumulation of wealth that a new country hasn't yet had time to build up.

It's worth pausing to consider this idea of accumulated wealth. The truth is that wealth can only be accumulated to a slight degree. Communities really live, as the vast majority of individuals live, from hand to mouth. Wealth doesn't keep well. Except in a few unimportant forms, it won't last. The matter of the universe, which, when worked up by labor into desirable forms, constitutes wealth, is constantly tending back to its original state.

Some forms of wealth last for a few hours, some for a few days, some for a few months, some for a few years. Very few forms of wealth can be passed from one generation to another. Take wealth in some of its most useful and permanent forms — ships, houses, railroads, machinery. Unless labor is constantly applied to preserving and renewing them, they will almost immediately become useless. Stop labor in any community, and wealth would vanish almost as the spray of a fountain vanishes when the water is shut off. Let labor resume, and wealth will almost as quickly reappear.

This has been observed time and again where war or other catastrophe has swept away wealth while leaving the population intact. There is not less wealth in London today because of the Great Fire of 1666. There is not less wealth in Chicago because of the great fire of 1870. On those fire-swept acres have risen, under the hand of labor, more magnificent buildings filled with greater stocks of goods. A stranger who, ignorant of the city's history, walks those stately avenues would never dream that just a few years ago everything lay black and bare.

The same principle — that wealth is constantly recreated — is obvious in every new city. Given the same population and the same efficiency of labor, the town of yesterday will possess and enjoy as much as the town founded by the Romans. No one who has seen Melbourne or San Francisco can doubt that if the population of England were transported to New Zealand, leaving all accumulated wealth behind, New Zealand would soon be as rich as England is now. Or, conversely, that if England's population were reduced to the sparseness of New Zealand's current population, in spite of all accumulated wealth, they would soon be as poor.

Accumulated wealth plays about the same role in relation to a society as stored nutrients do in relation to the body. Some accumulation is necessary, and to a certain extent it can be drawn upon in emergencies. But the wealth produced by past generations can no more account for the consumption of the present than last year's dinners can supply a person with today's strength.

What the Evidence Actually Shows

But setting aside these considerations — which I raise more for their general importance than for their specific bearing here — it's clear that superior accumulations of wealth can only explain greater consumption of wealth in cases where accumulated wealth is decreasing. Wherever the total stock of accumulated wealth is maintained, and even more obviously wherever it is increasing, greater consumption of wealth must mean greater production of wealth.

Now, whether we compare different communities with each other or the same community at different times, it's obvious that the progressive state marked by growing population is also marked by increased consumption and increased accumulation of wealth — not merely in the aggregate, but per person. And therefore, increase of population, as far as it has yet anywhere gone, does not mean a reduction but an increase in the average production of wealth.

Why Population Growth Increases Productive Power

The reason is obvious. Even if population growth does reduce the power of the natural factor of wealth by forcing people onto poorer soils and less productive resources, it so vastly increases the power of the human factor as to more than compensate. Twenty people working together will, where nature is stingy, produce more than twenty times the wealth that one person can produce where nature is most generous.

The denser the population, the finer the division of labor becomes, the greater the efficiencies of production and distribution. And so the very reverse of the Malthusian doctrine is true. Within the limits where we have reason to think population growth would still continue, in any given state of civilization a greater number of people can produce a larger proportionate amount of wealth, and more fully supply their wants, than a smaller number can.

The Real Question

Look simply at the facts. Can anything be clearer than that the cause of the poverty festering in the centers of civilization is not the weakness of the productive forces? In countries where poverty is deepest, the forces of production are obviously strong enough, if fully employed, to provide for the poorest not merely comfort but luxury. The industrial paralysis, the commercial depression that curses the civilized world today, obviously springs from no lack of productive power. Whatever the trouble may be, it is clearly not a lack of ability to produce wealth.

It is this very fact — that want appears where productive power is greatest and the production of wealth is largest — that constitutes the puzzle which perplexes the civilized world, the puzzle we are trying to solve. The Malthusian theory, which blames want on the decrease of productive power, obviously cannot explain it. That theory is utterly inconsistent with all the facts.

It is really a gratuitous blaming on the laws of God of results that, even from this examination, we can already see really spring from the bad arrangements of human society — an inference that, as we proceed, will become a full demonstration. For we have yet to find what actually does produce poverty amid advancing wealth.

Book III: The Laws of Distribution

The Inquiry Narrowed to the Laws of Distribution

The examination in the preceding chapters has, I think, conclusively shown that the explanation currently offered in the name of economics for the problem we're trying to solve is no explanation at all.

The fact that wages fail to increase with material progress — and actually tend to decrease — cannot be explained by the theory that more workers constantly divide a fixed pool of capital into smaller portions. As we've seen, wages don't come from capital. They are the direct product of labor. Each productive worker, as they work, creates their own wages. And with every additional worker, there's an addition to the true wages fund — an addition to the common stock of wealth that, generally speaking, is considerably greater than the amount that worker draws in wages.

Nor can the decline in wages be explained by the theory that nature yields less as a growing population makes greater demands on her. The increased efficiency of labor makes a growing society a state of continually increasing production per person. And the most densely populated countries, all else being equal, are always the wealthiest.

So far, we've only deepened the puzzle. We've overthrown a theory that did, after a fashion, explain existing facts. But in doing so, we've only made those facts seem more inexplicable. It's as though, while the Ptolemaic theory was still widely accepted, someone had simply proved that the sun and stars do not revolve around the earth. The phenomena of day and night and the apparent motion of the celestial bodies would still remain unexplained — inevitably reinstating the old theory unless a better one took its place. Our reasoning has led us to the conclusion that each productive worker produces their own wages, and that an increase in the number of workers should increase the wages of each. Yet the apparent facts are that many workers can't find decent-paying employment, and that an increase in their number brings a decrease in wages. We have, in short, proved that wages ought to be highest where in reality they are lowest.

But This Clears the Ground

Nevertheless, even in doing this, we've made some progress. Next to finding what we're looking for is discovering where it's useless to look. We've at least narrowed the field of inquiry. For this much is now clear: the cause that, despite the enormous increase in productive power, confines the great body of producers to the smallest share of the product they'll consent to live on is not the limitation of capital, nor the limitation of nature's capacity to respond to labor. Since the cause is not to be found in the laws governing the production of wealth, it must be sought in the laws governing distribution. To those laws, let us now turn.

What We Need to Discover

It will be necessary to review the whole subject of the distribution of wealth in its main branches. To discover the cause that, as population grows and technology advances, deepens the poverty of the lowest class, we must find the law that determines what part of the total product is distributed to labor as wages. And to find the law of wages — or at least to be sure when we've found it — we must also determine the laws that fix the share going to capital and the share going to landowners. Since land, labor, and capital join together in producing wealth, the total product must be divided among these three.

What is meant by the "product" or "production" of a community is the sum of all wealth produced by that community — the general fund from which, as long as the existing stock isn't being depleted, all consumption must be met and all incomes drawn. As I've already explained, "production" doesn't just mean making things. It also includes the increase in value gained by transporting or exchanging things. There is a product of wealth in a purely commercial community, just as there is in a purely agricultural or manufacturing one. And in each case, some part of this product will go to capital, some to labor, and some, if land has any value, to the owners of land.

As a practical matter, a portion of the wealth produced is constantly going to replace capital, which is constantly being consumed and constantly being replaced. But we don't need to account for this separately, since we can treat capital as continuous — which, in speaking and thinking about it, we habitually do. So when we speak of "the product," we mean the wealth produced above what's necessary to replace the capital consumed in production. And when we speak of interest, or the return to capital, we mean what goes to capital after its replacement or maintenance.

Setting Aside Taxes and Monopoly

It's also true that in every community past the most primitive stage, some portion of the product is taken in taxation and consumed by government. But in seeking the laws of distribution, we don't need to take this into account. We can treat taxation as either not existing or as simply reducing the total product by that amount. The same goes for what's taken from the product by certain forms of monopoly, which will be considered in a later chapter (Chapter IV) and which exercise powers similar to taxation. After we've discovered the laws of distribution, we can then see what bearing, if any, taxation has on them.

The Confusion in Mainstream Economics

We must discover these laws of distribution for ourselves — or at least two out of three. That they are not correctly understood by mainstream economics, at least as a whole, can be seen in any of the standard textbooks, quite apart from our earlier examination of one of them.

This is evident, in the first place, from the terminology used.

In all economics textbooks, we're told that the three factors in production are land, labor, and capital, and that the entire product is divided into three corresponding shares. Three terms are therefore needed, each clearly expressing one of these shares to the exclusion of the others. Rent, as defined, clearly enough expresses the first — the share that goes to landowners. Wages, as defined, clearly expresses the second — the share that constitutes the return to labor. But when it comes to the third term — the one that should express the return to capital — there is, in the standard works, the most puzzling ambiguity and confusion.

Of words in common use, the one that comes closest to exclusively expressing the return for the use of capital is interest. As commonly used, interest implies the return for the use of capital, excluding any labor in its use or management and excluding any risk beyond what's involved in the security of the loan. The word profits, as commonly used, is almost synonymous with revenue. It means a gain, an amount received in excess of an amount spent, and frequently includes receipts that are really rent, while it nearly always includes receipts that are really wages, plus compensation for the risk associated with various uses of capital. Unless extreme violence is done to the meaning of the word, "profits" cannot serve in economics to signify the share of the product that goes to capital, as distinct from the shares going to labor and landowners.

The Profits Problem

Now, all of this is recognized in the standard economics textbooks. Adam Smith clearly illustrates how wages and risk compensation get lumped into profits, pointing out how the large profits of pharmacists and small retail dealers are really wages for their labor, not interest on their capital. He shows how the large profits sometimes made in risky businesses — like smuggling and the lumber trade — are really just compensation for risk, which, over the long run, reduces the returns to the capital used in those businesses to the ordinary rate, or below it. Similar illustrations appear in most subsequent works, where profit is formally defined in its common sense, with perhaps the exclusion of rent. In all these works, the reader is told that profits are made up of three elements: wages of management, compensation for risk, and interest — or the return for the use of capital.

So neither in its common meaning nor in the meaning specifically assigned to it by mainstream economics can "profits" have any proper place in a discussion of how wealth is distributed among the three factors of production. In either its common meaning or its technical meaning, to talk about the distribution of wealth into rent, wages, and profits is like talking about the division of humanity into men, women, and human beings.

Yet this — to the complete bewilderment of the reader — is exactly what all the standard works do. After formally breaking profits down into wages of management, compensation for risk, and interest (the net return for the use of capital), they proceed to discuss the distribution of wealth among the rent of land, the wages of labor, and the profits of capital.

A Confusion That Defeated Even Great Minds

I have no doubt that thousands of people have puzzled their brains over this confusion of terms and given up in despair, thinking that since the fault couldn't be in such great thinkers, it must be in their own stupidity. If it's any consolation to them, they can turn to Buckle's History of Civilization and see how a man who certainly got a remarkably clear understanding of what he read, and who had carefully studied the major economists from Smith onward, was hopelessly tangled by this jumble of profits and interest. For the historian Henry Buckle (Vol. 1, Chapter II, and notes) consistently speaks of the distribution of wealth into rent, wages, interest, and profits.

And this is hardly surprising. After formally breaking profits down into wages of management, insurance, and interest, these economists, when assigning causes that fix the general rate of profit, speak of things that clearly affect only that part of profits they've labeled "interest." Then, when discussing the rate of interest, they either offer the meaningless formula of supply and demand, or speak of causes that affect compensation for risk — clearly using the word "interest" in its everyday sense, not in the technical sense they themselves assigned to it, from which risk compensation is excluded. If the reader takes up John Stuart Mill's Principles of Political Economy and compares the chapter on Profits (Book II, Chapter 15) with the chapter on Interest (Book III, Chapter 23), they'll see this confusion illustrated in the case of the most logical of English economists, in a more striking way than I'd care to characterize.

Now, such thinkers haven't fallen into such confused thinking without a cause. If they, one after another, have followed Dr. Adam Smith like children playing "follow the leader" — jumping where he jumped and falling where he fell — it's because there was a fence where he jumped and a hole where he fell.

The Root Cause of This Confusion

The difficulty from which this confusion has sprung lies in the pre-accepted theory of wages. For reasons I've already laid out, it seemed to these economists like a self-evident truth that the wages of certain classes of workers depended on the ratio between capital and the number of workers. But there are certain kinds of reward for work to which this theory clearly doesn't apply, so the term "wages" was narrowed in practice to include only wages in the everyday sense — pay for hired manual labor. Given this, if the term "interest" had been used, as their own definitions required, to represent the third share in the division of the product, all rewards for personal effort except those of common wage-workers would clearly have been left out. But by treating the division of wealth as being among rent, wages, and profits — instead of among rent, wages, and interest — this difficulty is papered over. All wages that don't fit the pre-accepted law of wages get vaguely lumped under profits as "wages of management."

To read carefully what economists say about the distribution of wealth is to see that, although they define it correctly, "wages" as they actually use the term is what logicians would call an undistributed term. It doesn't mean all wages, but only some wages — namely, the wages of manual labor paid by an employer. So other wages get thrown in with the return to capital and included under "profits," and any clear distinction between returns to capital and returns to human effort is conveniently avoided. The fact is that mainstream economics fails to give any clear and consistent account of the distribution of wealth. The law of rent is clearly stated, but it stands alone and unconnected. The rest is a confused and incoherent jumble.

The very arrangement of these textbooks shows this confusion and lack of clear thinking. In no economics treatise I know of are the laws of distribution brought together so the reader can take them in at a glance and see how they relate to each other. Instead, what's said about each law is buried in a mass of political and moral reflections and side discussions. And the reason isn't hard to find. To bring together the three laws of distribution as they're currently taught is to show at a glance that they lack the necessary relationship to one another.

The Laws of Distribution Must Fit Together

The laws of the distribution of wealth are obviously laws of proportion, and they must be related to each other so that any two, once known, allow the third to be figured out. To say that one of the three parts of a whole is increased or decreased is to say that one or both of the other parts has correspondingly decreased or increased. If Tom, Dick, and Harry are partners in a business, the agreement that fixes one partner's share of the profits must at the same time fix either the separate or the combined shares of the other two. To fix Tom's share at forty percent is to leave only sixty percent to be divided between Dick and Harry. To fix Dick's share at forty percent and Harry's share at thirty-five percent is to fix Tom's share at twenty-five percent.

But among the laws of distribution as laid down in the standard works, there is no such relationship. If we dig them out and bring them together, we find them to be as follows:

Wages are determined by the ratio between the amount of capital devoted to the payment and support of labor and the number of workers seeking employment.

Rent is determined by the margin of cultivation — all land yielding as rent that part of its product which exceeds what an equal application of labor and capital could obtain from the poorest land in use.

Interest is determined by the balance between the demands of borrowers and the supply of capital offered by lenders. Or, if we take what's given as the law of profits, it is determined by wages — falling as wages rise and rising as wages fall, or, to use Mill's phrase, by "the cost of labor to the capitalist."

Bringing these standard statements of the laws of distribution together reveals at a glance that they lack the relationship to each other that the true laws of distribution must have. They don't correlate and coordinate. Therefore, at least two of these three laws are either wrongly understood or wrongly stated. This matches what we've already seen: that the conventional understanding of the law of wages, and by extension the law of interest, can't survive examination. Let us, then, seek the true laws governing the distribution of the product of labor into wages, rent, and interest. The proof that we've found them will be in their correlation — that they meet, relate, and mutually define one another.

Setting Profits Aside

This inquiry has nothing to do with "profits." We want to find what determines the division of the joint product among land, labor, and capital — and "profits" is not a term that refers exclusively to any one of these three shares. Of the three components into which profits are divided by economists — compensation for risk, wages of management, and return for the use of capital — the last falls under the term interest, which includes all returns for the use of capital and excludes everything else. Wages of management falls under the term wages, which includes all returns for human effort and excludes everything else. And compensation for risk has no place at all, since risk is eliminated when all the transactions of a community are taken together. I shall therefore, consistently with the economists' own definitions, use the term interest to signify the part of the product that goes to capital.

A Summary of Terms

To recap:

Land, labor, and capital are the factors of production. The term land includes all natural opportunities or forces; the term labor, all human effort; and the term capital, all wealth used to produce more wealth. The entire product is distributed as returns to these three factors. The part that goes to landowners as payment for the use of natural opportunities is called rent. The part that constitutes the reward for human effort is called wages. And the part that constitutes the return for the use of capital is called interest. These terms are mutually exclusive. Any individual's income may come from any one, two, or all three of these sources. But in our effort to discover the laws of distribution, we must keep them separate.

The Wrong Starting Point

Let me preface the inquiry we're about to undertake by saying this: the failure of economics to solve this problem, which I think has now been amply demonstrated, can be traced, it seems to me, to the adoption of a wrong starting point. Living and making their observations in a society where capitalists generally rent land and hire labor — and thus appear to be the initiators and prime movers of production — the great founders of the science were led to view capital as the primary factor in production, land as its instrument, and labor as its agent or tool. This is apparent on every page — in the form and direction of their reasoning, in the character of their examples, and even in their choice of words. Everywhere capital is the starting point, the capitalist the central figure. This goes so far that both Smith and Ricardo use the term "natural wages" to describe the minimum on which workers can survive — whereas, unless injustice is natural, everything the worker produces should really be considered their natural wages. This habit of viewing capital as the employer of labor led both to the theory that wages depend on the relative abundance of capital and to the theory that interest varies inversely with wages, while it led away from truths that would otherwise have been obvious. In short, the misstep that, as far as the great laws of distribution are concerned, led economics into the jungles instead of to the mountaintops was taken when Adam Smith, in his first book, abandoned the standpoint expressed in the sentence "The produce of labor constitutes the natural recompense or wages of labor," and adopted instead a framework in which capital is considered as employing labor and paying wages.

The Natural Order: Land, Labor, Capital

But when we consider the origin and natural sequence of things, this order is reversed. Capital, instead of coming first, comes last. Instead of being the employer of labor, it is in reality employed by labor. There must be land before labor can be exerted, and labor must be exerted before capital can be produced. Capital is a result of labor, and is used by labor to assist in further production. Labor is the active and initial force, and labor is therefore the employer of capital. Labor can only be exerted on land, and it is from land that the raw material which labor transforms into wealth must be drawn. Land therefore is the precondition, the field and material of labor. The natural order is land, labor, capital. And instead of starting from capital as our initial point, we should start from land.

How the Laws Must Relate

There's another important thing to notice. Capital is not a necessary factor in production. Labor applied to land can produce wealth without any capital at all, and in the natural development of things must do so before capital can exist. Therefore, the law of rent and the law of wages must fit together and form a complete whole without reference to the law of capital. Otherwise, these laws wouldn't apply to cases — easily imagined and to some degree actually existing — in which capital plays no part in production. And since capital is, as is often said, simply stored-up labor — a form of labor, a subdivision of the general category — its law must be subordinate to, and independently consistent with, the law of wages, so as to cover cases in which the entire product is divided between labor and capital, with no deduction for rent.

To return to the illustration I used before: the division of the product among land, labor, and capital must work the way it would if Tom, Dick, and Harry were partners in a business where Tom and Dick were the original partners, and Harry came in only as an assistant to and sharer with Dick.

Rent and the Law of Rent

The term "rent," in its economic sense — that is, the way I'm using it here, to mean the share of wealth that flows to the owners of land or other natural resources simply because they own them — means something different from the everyday use of the word. In some ways the economic meaning is narrower than the common one; in other ways it's wider.

How "Rent" Is Narrower Than the Everyday Meaning

It's narrower in this way: In everyday language, we use "rent" to describe payments for the use of buildings, machinery, equipment, and other things, as well as payments for the use of land itself. When we talk about the rent on a house or the rent on a farm, we don't separate the price for using the improvements from the price for using the bare land. But in the economic meaning of rent, payments for the use of anything produced by human effort are excluded. Of the combined payments for houses, farms, and so on, only the portion that pays for the use of the land itself counts as rent. The part you're paying for buildings or other improvements is properly called interest, since it's a return on the use of capital.

How "Rent" Is Wider Than the Everyday Meaning

It's wider in this way: In everyday language, we only talk about "rent" when the owner and the user are different people. But in the economic sense, rent also exists when the same person is both owner and user. When you own and use your own land, whatever portion of your income you could get by leasing the land to someone else is rent. The return for your own labor and capital is only the part of your income they would earn you if you were renting someone else's land instead of owning your own. Rent is also expressed in a selling price. When land is purchased, the payment for ownership — the right to use it forever — is rent converted into a lump sum. If I buy land cheaply and hold it until I can sell it for a high price, I've gotten rich not through wages for my labor or interest on my capital, but through the increase of rent. In short, rent is the share of produced wealth that the exclusive right to use natural resources gives to the owner. Wherever land has exchange value, there is rent in the economic sense. Wherever land with value is being used, whether by an owner or a tenant, there is actual rent. Wherever it's not being used but still has value, there is potential rent. It's this ability to yield rent that gives land its value. Until ownership of a piece of land confers some advantage, that land has no value.32

Rent Doesn't Come from Productivity -- It Comes from Monopoly

So rent, or land value, doesn't arise from the productivity or usefulness of land. It in no way represents any help or advantage given to production. It simply represents the power to capture a portion of what's produced. No matter what a piece of land is capable of, it can yield no rent and have no value until someone is willing to trade labor, or the products of labor, for the privilege of using it. And what anyone will give for that privilege depends not on the land's own productive capacity, but on how it compares to the best land that can still be had for free.

Here's how it works. I might own very rich land, but it will yield no rent and have no value as long as equally good land is available at no cost. But when that other land gets claimed by owners, and the best land still available for free is inferior — whether in soil quality, location, or some other feature — my land begins to have value and yield rent. And even if my land's productivity actually decreases, as long as the productivity of the free land decreases by an even greater amount, the rent I can charge, and therefore the value of my land, will steadily increase. Rent, in short, is the price of monopoly. It arises from reducing to private ownership natural resources that human effort can neither create nor expand.

What Determines How Much Rent an Owner Can Charge

If one person owned all the land accessible to a community, they could of course demand any price or condition they pleased for its use. As long as their ownership was recognized, the rest of the community would face only death or emigration as alternatives to accepting their terms. This has actually happened in many communities. But in modern society, although land is generally reduced to private ownership, it's held by too many different people for the price to be set by sheer whim or desire. While each individual owner tries to get as much as they can, there's a limit to what they can get. This limit is the market price or market rent of the land, and it varies for different lands and at different times. The law, or relationship, that determines what rent or price an owner can get — under conditions of free competition among all parties, which is the condition we always assume when tracing out the principles of economics — is called the law of rent. Once we've established this with certainty, we have more than just a starting point for tracing the laws that govern wages and interest. Since the distribution of wealth is a matter of division, figuring out what determines the share going to rent also tells us what determines the share left over for wages (where capital isn't involved) and the combined share left for wages and interest (where capital is involved in production).

The Law of Rent

Fortunately, there's no need for debate about the law of rent. Authority agrees with common sense here,33 and the accepted principle of mainstream economics has the self-evident quality of a geometric axiom. This accepted law of rent, which the economist John Stuart Mill called the "bridge of asses" of economics — meaning it's the basic test that separates those who understand the subject from those who don't — is sometimes called "Ricardo's law of rent." The economist David Ricardo wasn't the first to state it, but he was the first to bring it to wide attention.34 It is:

The rent of land is determined by how much more it produces than the same amount of labor and capital could produce on the least productive land still in use.

This law applies not just to farmland but to land used for any purpose, and to all natural resources — mines, fisheries, and so on. It's been thoroughly explained and illustrated by every leading economist since Ricardo. But its simple statement carries the full force of a self-evident truth. Here's why: the effect of competition is to make the lowest reward for which labor and capital will engage in production also the highest reward they can demand. This means the owner of more productive land can claim as rent everything above what labor and capital need to be compensated at the ordinary rate — that is, what they could earn on the least productive land in use, or at the least productive point, where of course no rent is paid.

It might help to understand the law of rent if we state it this way: owning a natural resource gives you the power to claim however much of the wealth produced on it exceeds what the same labor and capital could earn in the least productive occupation in which they freely engage.

Why These Two Statements Mean the Same Thing

This amounts to exactly the same thing, for two reasons. First, there's no occupation that doesn't require the use of land. Second, the use of land — whether farming or anything else — will always be pushed to as low a point of return, all things considered, as people freely accept in any other pursuit.

Here's an example. Imagine a community where some labor and capital goes to farming and some to manufacturing. The poorest land being farmed yields an average return we'll call 20. So 20 will also be the average return to labor and capital in manufacturing as well as in farming. Now suppose that from some permanent cause, the return in manufacturing drops to 15. Clearly, labor and capital will shift from manufacturing to farming. This process won't stop until — either by extending farming to less productive land, or by farming existing land more intensively, or by an increase in the value of manufactured goods due to reduced production, or (as actually happens) by a combination of all these — the return in both pursuits has been brought back to the same level. So whatever the final level of productivity turns out to be, whether 18 or 17 or 16, farming will also extend to that point. Saying that rent equals the excess in productivity above the yield at the margin — the lowest point of cultivation — is the same as saying rent equals the excess above what the same labor and capital could earn in the least rewarding occupation.

Rent as a Deduction from the Law of Competition

The law of rent is really just a logical consequence of the law of competition. It amounts to this simple assertion: since wages and interest tend toward a common level, all the wealth produced beyond what the labor and capital involved could have earned on the poorest natural resource in use will flow to landowners as rent. It rests, in the final analysis, on the fundamental principle that is to economics what gravity is to physics: people will seek to satisfy their desires with the least effort.

The Full Importance of the Law of Rent

This, then, is the law of rent. Although many standard textbooks follow Ricardo's example a bit too closely — he seems to view rent only in relation to farming, and in several places says that manufacturing yields no rent, when in truth manufacturing and commerce yield the highest rents, as shown by the greater value of land in manufacturing and commercial cities — this narrow focus has hidden the law's full importance. Still, ever since Ricardo's time, the law itself has been clearly understood and widely accepted. But not so its logical consequences. Plain as they are, the accepted doctrine of wages (backed and reinforced not only by what we've already examined, but by considerations whose enormous weight will become clear when we reach the logical conclusion this argument is building toward) has so far prevented their recognition.35

Yet isn't it as plain as the simplest geometric proof that the logical consequence of the law of rent is the law of wages — in cases where the division of output is simply between rent and wages? Or the law of wages and interest combined — where the division is between rent, wages, and interest?

Rent Determines What's Left for Everyone Else

Stated in reverse, the law of rent is necessarily the law of wages and interest taken together. Here's what it asserts: no matter how much wealth is produced by applying labor and capital, workers and investors will receive in wages and interest only what they could have produced on land available to them without paying rent — that is, on the least productive land or point in use. Because if everything above what labor and capital could earn on rent-free land must go to landowners as rent, then all that workers and investors can claim is the amount they could have earned on land that yields no rent.

Or to put it in algebraic form:

Since Produce = Rent + Wages + Interest,

Therefore, Produce - Rent = Wages + Interest.

This means wages and interest don't depend on how much labor and capital produce. They depend on what's left after rent is taken out — or, equivalently, on what labor and capital could produce without paying rent, on the poorest land in use. And so, no matter how much productive power increases, if rent increases at the same pace, neither wages nor interest can rise.

The Key That Unlocks the Puzzle

The moment we recognize this simple relationship, a flood of light pours in on what was previously baffling. Facts that seemed contradictory suddenly fall into line under an obvious law. The steady increase of rent in growing economies is immediately revealed as the key that explains why wages and interest fail to rise alongside increasing productive power.

Here's how it works. The wealth produced in every community is divided into two parts by what we might call the rent line. This line is set by the margin of cultivation — the return that labor and capital can earn from whatever natural resources are available to them without paying rent. From the portion of output below this line, wages and interest must be paid. Everything above it goes to landowners.

This explains everything:

Where land values are low, total wealth production may be small, yet wages and interest can be high — as we see in new, developing regions. Where land values are high, total wealth production may be enormous, yet wages and interest can be low — as we see in older, established countries.

And where productive power is growing, as it is in all advancing economies, wages and interest won't be determined by the increase in production itself, but by how rent is affected. If land values rise proportionally to the increase in productive power, all the gains will be swallowed up by rent, and wages and interest will stay the same. If land values rise faster than productive power, rent will swallow up even more than the increase — and while total output will be much larger, wages and interest will actually fall. Only when land values fail to rise as fast as productive power can wages and interest rise along with it.

All of this is confirmed by the actual facts.

Interest and the Cause of Interest

Now that we've established the law of rent, we've also established — as a necessary consequence — the law of wages, at least where the division is between rent and wages. And where all three factors are involved, we've established the law of wages and interest taken together. Whatever proportion of production goes to rent must determine what's left for wages alone (if only land and labor are involved) or for wages and interest combined (if capital is also part of the picture).

But let's not just rely on this deduction. Let's seek each of these laws separately and independently. If, when we arrive at them this way, they line up with each other, our conclusions will carry the highest certainty.

And since discovering the law of wages is the ultimate purpose of our inquiry, let's take up the subject of interest first.

Interest vs. Profits

I've already pointed out the difference in meaning between the terms "profits" and "interest." But it's worth going further. "Interest," as an abstract term in the distribution of wealth, differs from how the word is commonly used in two ways. First, it includes all returns for the use of capital, not merely the payments that pass from a borrower to a lender. Second, it excludes compensation for risk, which makes up a large part of what people commonly call interest. Compensation for risk is simply the evening-out of returns between different uses of capital. What we want to find is: what determines the general rate of interest proper? The varying risk premiums added on top will give us the commercial interest rates we see in the marketplace.

Variations in Interest Rates

Now, it's clear that the biggest differences in what's ordinarily called interest are due to differences in risk. But it's also clear that between different countries and different time periods, there are considerable variations in the rate of interest proper.

In California at one time, two percent per month wouldn't have been considered an extravagant interest rate on the kind of security that could now command loans at seven or eight percent per year. Although some part of the difference may reflect a greater sense of general stability, the larger part is clearly due to some other cause. In the United States generally, the rate of interest has been higher than in England. In the newer states of the Union, it has been higher than in the older states. And the tendency of interest to decline as society progresses is well established and has long been noticed.

What is the law that will tie all these variations together and reveal their cause?

Mainstream Economics Has Failed Here

It's not worth spending more time than we already have on the failure of mainstream economics to determine the true law of interest. Its theories on this subject lack the precision and coherence that allowed the accepted doctrine of wages to hold up against the evidence, and they don't require the same detailed review. That they conflict with the facts is obvious. That interest doesn't depend on the productivity of labor and capital is proved by the general fact that where labor and capital are most productive, interest is lowest. That it doesn't vary inversely with wages — falling when wages rise and increasing when wages fall — is proved by the general fact that interest is high when and where wages are high, and low when and where wages are low.

The Cause of Interest

Let's begin at the beginning. The nature and functions of capital have already been sufficiently shown, but even at the risk of a bit of a digression, let's try to identify the cause of interest before considering its law. In addition to helping our inquiry by giving us a firmer and clearer grasp of the subject at hand, this may lead to conclusions whose practical importance will become apparent later.

What is the reason and justification of interest? Why should a borrower pay back to a lender more than they received? These questions are worth answering not merely for their theoretical interest, but for their practical importance. The feeling that interest is the robbery of industry is widespread and growing, and on both sides of the Atlantic it shows itself more and more in popular literature and political movements.

The defenders of mainstream economics say that there's no conflict between labor and capital, and they oppose as harmful to labor — as well as to capital — all schemes for restricting the returns that capital earns. Yet in those same works, they lay down the doctrine that wages and interest are inversely related: interest will be low when wages are high, and high when wages are low.36 Clearly, then, if this doctrine is correct, the only objection a worker could logically make to any scheme for reducing interest is that it won't work. That's obviously very weak ground, especially when belief in the power of legislatures to fix things remains so widespread. And while such an objection might kill any one particular scheme, it won't stop people from looking for another.

The "Abstinence" Theory Doesn't Work

Why should interest exist at all? Interest, we're told in all the standard works, is the reward of abstinence. But this clearly doesn't account for it. Abstinence isn't active — it's passive. It's not a doing; it's simply a not doing. Abstinence by itself produces nothing. So why should any part of what's produced be claimed for it?

If I have a sum of money that I lock away for a year, I've exercised just as much abstinence as if I had lent it out. Yet in the latter case, I'd expect it returned with an additional sum as interest, while in the former I'd have only the same sum, with no increase. But the abstinence was the same.

If you say that by lending I do the borrower a service, it could be replied that the borrower also does me a service by keeping my money safe — a service that under some conditions might be very valuable, and one I'd gladly pay for rather than go without. And for some forms of capital, this is even more obvious than it is for money. Many forms of capital won't keep and must be constantly renewed. Many are a burden to maintain if you have no immediate use for them. So if the person who accumulates capital helps the person who uses it by lending it, doesn't the user fully repay the debt when they hand it back? Isn't the secure preservation, maintenance, and recreation of capital a complete offset for the use?

Accumulation is the end goal of abstinence. Abstinence can go no further. And by itself, it can't even achieve that much. If we merely abstained from using wealth, how much of it would disappear in a year? And how little would be left after two? So if more is demanded for abstinence than the safe return of capital, isn't labor being wronged?

Ideas like these underlie the widespread belief that interest can only exist at the expense of labor — that it's a form of robbery that a just society would abolish.

Bastiat's Plane: A Closer Look

The attempts to refute these views don't always seem successful to me. As a good example of the typical reasoning, take the French economist Bastiat's often-quoted illustration of the plane.

One carpenter, James, at the cost of ten days' labor, makes himself a plane. It will last for 290 of the 300 working days of the year. Another carpenter, William, proposes to borrow the plane for a year, offering to give back an equally good new plane at the end of that time, when the original will be worn out. James objects, arguing that if he merely gets back a plane, he'll have nothing to compensate him for giving up the advantage of using the plane during the year. William agrees and offers not only to return a plane but also to give James a new plank. The deal is carried out to everyone's satisfaction. The plane is used up during the year, but at year's end James receives one just as good, plus a plank. He lends the new plane again and again, until eventually it passes to his son, "who still continues to lend it," receiving a plank each time. This plank, which represents interest, is said to be a natural and fair payment, because by giving it in exchange for the use of the plane, William "obtains the power which exists in the tool to increase the productiveness of labor," and is no worse off than if he hadn't borrowed. Meanwhile, James gets no more than he would have had if he'd kept and used the plane himself.

But Is This Really So?

Notice that it's not claimed that James could make a plane and William couldn't — that would make the plank the reward of superior skill. It's only that James had abstained from consuming the result of his labor until he accumulated it in the form of a plane — which is the essential idea of capital.

Now, if James hadn't lent the plane, he could have used it for 290 days, at which point it would have been worn out, and he would have needed the remaining ten working days to make a new one. If William hadn't borrowed the plane, he would have spent ten days making one himself, then used it for the remaining 290 days.

So if we take a plank to represent one day's output using a plane, at the end of the year — had no borrowing taken place — each would stand exactly where he started: James with a plane, William with none, and each with 290 planks as the result of the year's work.

If the terms of borrowing had been what William first proposed — simply returning a new plane — the same result would have been achieved. William would have worked for 290 days, then spent the last ten making the replacement plane for James. James would have spent the first ten days of the year making another plane, used it for 290 days, and then received a new one from William. The simple return of the plane would have put each in the same position as if no borrowing had occurred. James would have lost nothing to William's gain, and William would have gained nothing at James's loss. Each would have earned what his labor would have produced anyway — 290 planks — and James would still have the advantage he started with: a new plane.

But add the plank, and things change. When William gives James not only a replacement plane but also a plank, James ends the year better off than if there had been no borrowing, and William ends up worse. James has 291 planks and a new plane. William has 289 planks and no plane.

If William now borrows the plank as well as the plane on the same terms, at year's end he'll owe James a plane plus two planks and a fraction. If this difference is again borrowed, and so on, isn't it obvious that one person's income will progressively decline while the other's progressively increases? If the process continues long enough, James will eventually take the entire product of William's labor. William will have become, in effect, his slave.

What the Plane Really Shows

Is interest, then, natural and fair? There's nothing in this illustration to prove it. What Bastiat — and many others — identify as the basis of interest, "the power which exists in the tool to increase the productiveness of labor," is in fact neither the just nor the actual basis of interest.

The fallacy that makes Bastiat's illustration seem convincing to those who don't stop to analyze it, as we've done, is that with the loan of the plane they mentally associate the transfer of the increased productive power that a plane gives to labor. But this isn't really what's involved. The essential thing James lent William was not the increased power that comes from using planes. To suppose that, we'd have to assume that making and using planes was a trade secret or a patent right — which would make the plank a reward for monopoly, not for capital.

The essential thing James lent William was not the privilege of working more effectively, but the use of the concrete result of ten days' labor. If "the power which exists in tools to increase the productiveness of labor" were the cause of interest, then the rate of interest would increase with the march of invention. It doesn't. Nor would I be expected to pay more interest if I borrow a fifty-dollar sewing machine than if I borrow fifty dollars' worth of needles, or if I borrow a steam engine rather than a pile of bricks of equal value. Capital, like wealth, is interchangeable. It isn't one thing — it's anything of that value within the circle of exchange. And the improvement of tools doesn't add to the reproductive power of capital; it adds to the productive power of labor.

Inert Matter vs. Living Nature

I'm inclined to think that if all wealth consisted of things like planes, and all production was like carpentry — that is, if wealth consisted only of the inert matter of the universe, and production was only about reshaping that matter into different forms — then interest would be the robbery of industry, and couldn't last long.

This isn't to say there would be no accumulation. Although the hope of gain is one motive for turning wealth into capital, it's not the motive, or at least not the main one. Children save their pennies for Christmas. Pirates add to their buried treasure. Eastern princes accumulate hoards of coins. And people like the retail magnate A.T. Stewart or the railroad baron Cornelius Vanderbilt, once possessed by the passion for accumulating, would keep adding to their millions even if accumulation brought no increase. Nor is it to say there would be no borrowing or lending — mutual convenience would still prompt much of it. If William had a job starting immediately and James's wouldn't begin for ten days, there might be a mutual advantage in lending the plane, even without a plank changing hands.

The Reproductive Forces of Nature

But not all wealth is like planes, or planks, or money, which have no reproductive power. And not all production is merely the reshaping of inert matter.

It's true that if I put away money, it won't increase. But suppose instead I put away wine. At the end of a year, I'll have an increased value, because the wine will have improved in quality. Or suppose that in a country suited to them, I set out bees. At the end of a year, I'll have more swarms and the honey they've made. Or suppose, where there's open range, I turn out sheep, hogs, or cattle. At the end of a year, on average, I'll also have an increase.

What gives the increase in these cases is something that, while it generally requires labor to harness, is distinct and separable from labor: the active power of nature — the principle of growth, of reproduction, which characterizes all the forms of that mysterious thing we call life.

And it seems to me that this is the cause of interest — the increase of capital over and above what's due to labor. There are, so to speak, certain vital currents in the movements that make up the everlasting flow of nature that will, if we use them, aid us with a force independent of our own efforts in turning matter into the forms we desire — that is, into wealth.

How This Averages Across All Wealth

While many things — like money, planes, planks, engines, or clothing — have no innate power of increase, other things included in the terms "wealth" and "capital" will increase on their own. Wine improves in quality up to a certain point. Bees and cattle multiply. Seeds, though they may need labor to maintain the right conditions, will yield a return over and above what can be attributed to labor alone.

Now, the interchangeability of wealth necessarily averages out any special advantage that comes from holding one particular form of wealth. No one would keep capital in one form when it could be changed into a more advantageous one.

No one, for instance, would grind wheat into flour and keep it on hand for people who want to exchange wheat for flour, unless the exchange could yield an increase equal to what could be gained by planting the wheat instead.

No one who could keep them would trade a flock of sheep now for their net weight in mutton to be returned next year — because by keeping the sheep, they'd have not only the same amount of mutton next year, but also the lambs and the fleeces.

No one would dig an irrigation ditch unless those who, with its help, harness the reproductive forces of nature would give the ditch-builder a share of the increase — enough to make their capital yield as much as the farmers' capital does.

And so, in any circle of exchange, the power of increase that the reproductive forces of nature give to some forms of capital must average across all forms. Someone who lends or trades money, planes, bricks, or clothing is not cut off from obtaining an increase — any more than if they had lent or put to reproductive use the same amount of capital in a form capable of growth.

The Power of Exchange

There's also, in the way exchange harnesses variations in the powers of nature and of people, an increase that somewhat resembles what the vital forces of nature produce.

In one place, for example, a given amount of labor might produce 200 units of vegetable food or 100 units of animal food. In another place, the conditions are reversed: the same labor produces 100 units of vegetable food or 200 units of animal food. In the first place, the relative value of vegetable to animal food will be two to one; in the second, one to two. Assuming equal amounts of each are needed, the same amount of labor in either place would produce 150 of both.

But by devoting labor in the first place to growing vegetable food, and in the second to raising animals, then exchanging what's needed, the people of each place can obtain 200 of both (minus the costs of exchange) from the same amount of labor. In each place, the goods taken from personal use and devoted to exchange come back with an increase. This is how the legendary Dick Whittington's cat, sent to a far country where cats are scarce and rats plentiful, returns in bales of goods and bags of gold.

Time as an Element of Production

Of course, labor is necessary for exchange, just as it's necessary for harnessing the reproductive forces of nature. And the product of exchange, like the product of agriculture, is clearly the product of labor. But in both cases, there's a distinguishable additional force cooperating with labor. This makes it impossible to measure the result solely by the amount of labor expended — the amount of capital and the time it's in use become essential parts of the equation.

Capital aids labor in all the different modes of production, but there's a key distinction between two types. In production that consists merely of changing the form or location of matter — planing boards or mining coal — labor alone is the active cause. When labor stops, production stops. When the carpenter sets down the plane at sunset, the increase of value stops until work begins the next morning. When the factory bell rings for closing, when the mine shuts down, production ends until work resumes. The time in between might as well not exist, so far as production is concerned. The passing of days or the change of seasons plays no role in production that depends solely on labor.

But in the other modes of production I've described — where labor's role can be compared to lumberjacks who throw their logs into the stream, leaving the current to carry them to the sawmill miles below — time is an element. The seed in the ground germinates and grows while the farmer sleeps or plows new fields. And the ever-flowing currents of air and ocean carry Whittington's cat toward the rat-tormented ruler in the regions of legend.

Returning to Bastiat's Plane

Let's go back now to Bastiat's illustration. If there's any reason why William should return more than an equally good plane at the end of the year, it doesn't spring from the increased power that the tool gives to labor — as I've shown, that's not the relevant element. It springs from the element of time: the difference of a year between the lending and the return of the plane.

If we look only at the illustration, there's nothing to suggest how this element should matter, because a plane at the end of the year has no greater value than a plane at the beginning. But if we substitute a calf for the plane, it's easy to see that to put James in as good a position as if he hadn't lent, William must return at year's end not a calf, but a cow.

Or if we suppose the ten days' labor had been devoted to planting corn, James clearly wouldn't have been fully compensated by receiving at year's end only so much planted corn, because during the year the planted corn would have germinated, grown, and multiplied. And if the plane had been devoted to exchange, it might during the year have been turned over several times, each exchange yielding an increase to James.

Now, since James's labor could have been applied in any of these ways — or, what amounts to the same thing, since some of the labor devoted to making planes could have been redirected — he won't make a plane for William to use for the year unless he gets back more than a plane. And William can afford to give back more than a plane, because the same general averaging of advantages across different modes of production will enable him to gain from the element of time.

It's this general averaging — or as we might call it, "pooling" — of advantages, which necessarily takes place where society requires many different modes of production to run simultaneously, that gives to wealth incapable of increase by itself an advantage similar to that which attaches to wealth used in ways that benefit from the passage of time. And in the final analysis, the advantage that comes from the passage of time springs from the generative force of nature and the varying powers of nature and of people.

Interest Is Natural

If the quality and capacity of matter were everywhere the same, and all productive power resided solely in people, there would be no interest. The advantage of superior tools might sometimes be transferred on terms resembling interest, but such transactions would be irregular and occasional — the exception, not the rule. The power to earn such returns wouldn't, as it does now, inhere in the mere possession of capital, and the advantage of time would operate only in unusual circumstances.

The fact that I can certainly lend out a thousand dollars at interest doesn't arise from the fact that other people, who don't have a thousand dollars, would gladly pay me for the use of it if they can get it no other way. It arises from the fact that the capital my thousand dollars represents has the power of yielding an increase to whoever has it, even if they're already a millionaire. The price anything will bring depends less on what the buyer would be willing to pay rather than go without it, and more on what the seller could get otherwise.

For instance, a manufacturer who wants to retire has machinery worth $100,000. If, upon selling, they can't take this $100,000 and invest it at interest, then — risk aside — it doesn't matter whether they receive the whole price at once or in installments. And if the buyer has the necessary capital (which we must assume in order for the transaction to stand on its own merits), it doesn't matter whether they pay at once or later. If the buyer doesn't have the required capital, delayed payments might be convenient, but it would only be in exceptional cases that the seller would ask, or the buyer would agree, to pay any premium for the delay. And in such cases, that premium wouldn't properly be interest.

For interest is not properly a payment made for the use of capital, but a return arising from the increase of capital. If capital didn't yield an increase, the cases where an owner could get a premium would be few and exceptional. William would quickly figure out whether it paid him to give a plank for the privilege of deferring payment on James's plane.

Three Modes of Production

In short, when we analyze production, we find it falls into three modes:

Adapting — changing natural products either in form or location to fit them for satisfying human desires.

Growing — harnessing the vital forces of nature, as by raising plants or animals.

Exchanging — harnessing, to add to the general sum of wealth, the varying powers of natural forces that differ by location, or of human abilities that differ by situation, occupation, or character.

In each of these three modes, capital may aid labor. More precisely: in the first mode, capital may aid labor but isn't absolutely necessary. In the other two, capital must aid labor — it's essential.

Use vs. Increase

Now, by adapting capital into the right forms, we can increase the effective power of labor to transform matter into wealth — as when we shape wood and iron into a plane, or iron, coal, water, and oil into a steam engine, or stone, clay, timber, and iron into a building. But the key characteristic of this use of capital is that the benefit lies in the use. When, however, we employ capital in the second mode — planting grain, stocking a farm with animals, or putting away wine to improve with age — the benefit comes not from the use, but from the increase. And when we employ capital in the third mode, exchanging rather than using it directly, the benefit lies in the increase or greater value of what we receive in return.

Primarily, the benefits that arise from use go to labor, and the benefits that arise from increase go to capital. But since the division of labor and the interchangeability of wealth require and imply an averaging of benefits, these different modes of production become linked: the benefits from one will average out with the benefits from the others. Neither labor nor capital will be devoted to any mode of production while another open to them would yield a greater return.

In other words: labor expended in the first mode of production (adapting) will get not the whole return, but the return minus what's needed to give capital the kind of increase it could have earned in the other modes. And capital engaged in the second and third modes (growing and exchanging) will get not the whole increase, but the increase minus what's needed to give labor the reward it could have earned if devoted to the first mode.

The Verdict

Interest, then, springs from the power of increase that the reproductive forces of nature and the effectively similar capacity for exchange give to capital. It's not an arbitrary thing, but a natural one. It's not the result of a particular social arrangement, but of fundamental laws that underlie society. It is, therefore, just.

Those who talk about abolishing interest fall into an error similar to the one I pointed out earlier as giving plausibility to the doctrine that wages are drawn from capital. When they think of interest, they think only of what the user of capital pays to the owner of capital. But this is clearly not all interest — only some of it. Whoever uses capital and obtains the increase it's capable of giving receives interest.

If I plant and tend a tree until it matures, the fruit I receive is interest on the capital I accumulated through my labor. If I raise a cow, the milk she gives me morning and evening isn't merely the reward of the labor I exert at milking time — it's interest on the capital that my labor, spent in raising her, accumulated in the cow. And if I use my own capital to directly aid production, through machinery, or to indirectly aid it through exchange, I receive a special and distinguishable advantage from the reproductive character of capital. This advantage is as real, though perhaps not as obvious, as if I'd lent my capital to someone else and they'd paid me interest.

Of Spurious Capital and of Profits Often Mistaken for Interest

The belief that interest is the robbery of industry is, I'm convinced, largely due to a failure to distinguish between what is really capital and what isn't, and between profits that are genuinely interest and profits that come from other sources entirely. In everyday speech and writing, anyone who possesses something that yields a return without their labor is called a "capitalist," and whatever they receive is spoken of as the earnings of capital. We hear constantly about the conflict between labor and capital.

Whether there really is a conflict between labor and capital, I don't yet ask the reader to decide. But it will be useful here to clear away some misunderstandings that cloud the issue.

Land Values Are Not Capital

I've already called attention to the fact that land values — which make up an enormous part of what's commonly called capital — are not capital at all. And that rent, which is just as commonly counted among the receipts of capital and which takes an ever-growing share of production in an advancing community, is not the earnings of capital. It must be carefully separated from interest. There's no need to dwell on this point further.

Stocks and Bonds: Real and Fictitious

I've also pointed out that the stocks, bonds, and similar instruments that make up another large part of what's commonly called capital are not capital either. But in some of their forms, these certificates of debt so closely resemble capital, and in some cases actually perform — or seem to perform — the functions of capital, while yielding a return to their owners that is not only called interest but has every appearance of being interest, that it's worth examining them in more detail before we try to clear up the other confusions that surround the idea of interest.

Let it always be remembered: nothing can be capital that isn't wealth. That is, nothing can be capital that doesn't consist of actual, tangible things — not the spontaneous offerings of nature — that have in themselves, and not by proxy, the power to directly or indirectly satisfy human desires.

Government Bonds: A Case Study

A government bond is not capital, nor is it a representative of capital. The capital that the government originally received for it has been consumed unproductively — blown out of the mouths of cannons, used up in warships, spent on keeping soldiers marching, drilling, killing, and destroying. The bond can't represent capital that's been destroyed. It doesn't represent capital at all.

It's simply a solemn promise that the government will, at some future time, take by taxation from the existing wealth of the people a certain amount and turn it over to the bondholder. And that in the meantime, it will periodically take, in the same way, enough to give the bondholder the increase that so much actual capital would yield if the bondholder actually possessed it.

The enormous sums taken from the production of every modern country to pay interest on public debts are not the earnings or increase of capital. They are not truly interest in the strict sense. They are taxes levied on the products of labor and capital, leaving less for wages and less for real interest.

When Bonds Do Represent Capital

But suppose the bonds were issued for the deepening of a riverbed, the construction of lighthouses, or the building of a public market. Or suppose — to keep the same idea with a different example — they were issued by a railroad company. In these cases, they do represent real capital, existing and put to productive use. Like stock in a dividend-paying company, they can be considered evidence of capital ownership.

But they can be considered that way only to the extent that they actually represent real capital — not to the extent that they've been issued far in excess of the capital actually used.

Nearly all our railroad companies and other corporations are loaded down this way. Where one dollar's worth of capital has actually been invested, certificates for two, three, four, five, or even ten dollars have been issued, and on this fictitious amount, interest or dividends are paid with more or less regularity.

Now, whatever these companies earn and pay out in excess of what's due as interest on the real capital invested, along with the large sums absorbed by insider management rings and never accounted for — none of this is taken from the community's total production on account of the services rendered by capital. It is not interest. If we're limited to the terminology of economists who break profits down into interest, insurance, and wages of management, these excess returns must fall into the category of "wages of management."

The Real Culprit: Monopoly Power

But while "wages of management" clearly enough covers income derived from personal qualities like skill, tact, enterprise, organizing ability, inventive power, and character, there's another element contributing to the profits we're discussing — one that can only be lumped in with those qualities by stretching the category beyond recognition. That element is monopoly.

When King James I granted his favorite the Duke of Buckingham the exclusive privilege of making gold and silver thread, prohibiting everyone else from doing so under severe penalties, the income Buckingham enjoyed didn't come from the interest on capital invested in manufacturing, or from the skill of those who actually ran the operations. It came from what the king gave him: the exclusive privilege — in reality, the power to levy a private tax on every user of such thread.

A large part of the profits commonly confused with the earnings of capital comes from a similar source.

Returns from patents granted for a limited term to encourage invention are clearly from this source, as are the profits created by protective tariffs under the pretense of encouraging domestic industry. But there's another far more widespread and insidious form of monopoly. When large masses of capital are concentrated under a single control, a new and fundamentally different power develops — one quite distinct from the general power of increase that characterizes capital and gives rise to interest.

The latter is constructive in nature. But the power that rises as concentration proceeds is destructive. It's the same kind of power that James I granted to Buckingham, and it's often wielded with just as reckless a disregard for people's economic and personal rights.

How Monopoly Power Works in Practice

A railroad company approaches a small town like a highwayman approaches a victim. The threat — "If you don't agree to our terms, we'll bypass your town by two or three miles!" — is as effective as "Stand and deliver!" backed by a cocked pistol. The railroad's threat isn't merely to withhold benefits; it's to leave the town far worse off than if no railroad had been built at all.

Or consider where there's a waterway: a rival boat is put on the route, rates are slashed until the competitor is forced out, and then the public is made to pay the cost of the whole operation. It's like the case of the Rohillas, the Indian people who were forced to pay the forty lacs with which Surajah Dowlah hired an English force from the colonial governor Warren Hastings to help devastate their country and decimate their people.

And just as robbers band together to plunder in concert and divide the spoils, the major railroad trunk lines unite to raise rates and pool their earnings. Or the Pacific railroads form a combination with the Pacific Mail Steamship Company, establishing virtual toll gates on land and sea.

And just as Buckingham's agents, under authority of the gold thread patent, searched private homes and seized papers and people for purposes of extortion, so does the great telegraph company, which through the power of concentrated capital deprives the people of the United States of the full benefits of a transformative invention, tamper with correspondence and crush newspapers that displease it.

The Bigger Picture

It's only necessary to mention these things, not dwell on them. Everyone knows the tyranny and greed with which concentrated capital is frequently used to corrupt, rob, and destroy. What I want to draw the reader's attention to is that profits gained this way must not be confused with the legitimate returns of capital as an agent of production.

These abuses are mostly caused by corrupted legislatures, by blind adherence to outdated legal traditions, and by the superstitious reverence for technicalities that pervades the administration of law. Meanwhile, the deeper force that, in advancing communities, tends to concentrate power alongside the concentration of wealth, is the answer to the great problem we're seeking — but haven't yet found.

Separating Real Interest from False

Any careful analysis will show that much of the profit commonly confused with interest is actually due not to the power of capital, but to the power of concentrated capital — or of concentrated capital exploiting bad social arrangements. It will also show that what properly counts as wages of management is very often confused with the earnings of capital.

In the same way, profits that are really due to risk-taking are frequently confused with interest. Some people acquire wealth by taking gambles that for the majority must necessarily result in loss. This includes many forms of speculation, and especially the mode of gambling known as stock dealing. Nerve, judgment, access to capital, and skill in what, in cruder forms of gambling, would be called the arts of the con artist — these give advantage to the individual. But just as at a gaming table, whatever one person gains, someone else must lose.

The Great Fortunes

Now, consider the great fortunes so often pointed to as examples of the accumulative power of capital — the Dukes of Westminster and Marquises of Bute, the Rothschilds, Astors, Stewarts, Vanderbilts, Goulds, Stanfords, and Floods. On examination, it's readily apparent that they've been built up, in greater or lesser part, not by interest, but by the very elements we've been reviewing: monopoly power, exploitation of social maladjustments, risk-taking, and speculation.

Why These Distinctions Matter

How necessary it is to note these distinctions is shown by the way current debates keep talking past each other — the shield seeming white from one side and black from the other.

On one hand, we're urged to see in the existence of deep poverty alongside vast accumulations of wealth the aggressions of capital against labor. In reply, it's pointed out that capital helps labor, and we're asked to conclude that there's nothing unjust or unnatural about the vast gulf between rich and poor — that wealth is simply the reward of industry, intelligence, and thrift, and poverty simply the punishment of laziness, ignorance, and carelessness.

The Law of Interest

Let's turn now to the law of interest, keeping in mind two things we've already established:

First — it's not capital that employs labor, but labor that employs capital.

Second — capital is not a fixed quantity. It can always be increased or decreased in two ways: (1) by devoting more or less labor to producing capital, and (2) by converting wealth into capital or capital back into wealth. Because capital is simply wealth applied in a particular way, wealth is the broader and more inclusive term.

The Maximum and Minimum of Interest

It's clear that under free conditions, the maximum anyone would pay for the use of capital is the increase it produces. And the minimum — the zero point — is mere replacement of the capital used up. Above the maximum, borrowing capital would mean a net loss. Below the minimum, capital couldn't even maintain itself.

Now, notice carefully: it's not the increased efficiency that capital gives to labor in any particular form or use that sets this maximum. Rather, it's the average power of increase that belongs to capital in general. The ability to put capital to work in especially productive forms is a power of labor, not something that capital itself can claim credit for.

Here's an example. A bow and arrows might enable a hunter to kill, say, a buffalo every day, while with sticks and stones they could barely manage one a week. But the weapon maker of the tribe couldn't claim six out of every seven buffaloes as payment for the bow — nor will capital invested in a woolen factory yield its owner the full difference between what the factory produces and what the same workers could have made with a spinning wheel and hand loom. When William borrows a plane from James, he doesn't thereby gain the full advantage of using a plane over smoothing boards with a shell or a piece of flint. The progress of knowledge has made the advantage of planes a shared benefit available to all workers. What William actually gets from James is merely the advantage that a year's time gives to the possession of that much capital.

The Natural Rate of Interest

Now, if the vital forces of nature — the forces that give an advantage to the element of time — are the cause of interest, it would seem to follow that the maximum rate of interest would be determined by the strength of these forces and the extent to which they're involved in production.

But while the reproductive force of nature seems to vary enormously — between the salmon, which spawns thousands of eggs, and the whale, which gives birth to a single calf at intervals of years; between the rabbit and the elephant, the thistle and the gigantic redwood — it appears from how the natural balance is maintained that there's an equation between the reproductive and destructive forces of nature, which effectively brings the principle of increase to a uniform point.

Within narrow limits, humans have the power to disturb this natural balance. By modifying natural conditions, we can take advantage of the varying strength of nature's reproductive force. But when we do so, another principle arises from the wide range of human desires, creating in the increase of wealth a similar equation and balance to the one nature maintains between different forms of life. This equation shows itself through values. If, in a country suited to both, I go into raising rabbits and you go into raising horses, my rabbits may — until the natural limit is reached — multiply faster than your horses. But my capital won't increase faster, because the different rates of reproduction will lower the value of rabbits relative to horses and raise the value of horses relative to rabbits.

Does Industrial Development Change This?

Even though the varying strength of nature's vital forces is brought to uniformity in this way, there might still be a difference at different stages of social development in the proportion of total wealth production that relies on these vital forces. But there are two things to note about this.

First, although in a country like England the share of manufacturing in total wealth production has grown enormously compared to agriculture, this is true only of the political or geographical unit, not of the industrial community as a whole. Industrial communities aren't limited by political borders, or bounded by seas or mountains. They're limited only by the reach of their trade. The proportion that agriculture and livestock occupy in England's economy is averaged with Iowa and Illinois, with Texas and California, with Canada and India, with Queensland and the Baltic — in short, with every country touched by England's worldwide trade network.

Second, although the progress of civilization tends to increase manufacturing relative to agriculture — and therefore to proportionately reduce reliance on nature's reproductive forces — this is accompanied by a corresponding expansion of trade, which calls in more of the power of increase that trade itself creates. So these tendencies largely, and probably so far completely, balance each other out and preserve the equilibrium that fixes the average increase of capital, or the normal rate of interest.

The Equilibrium Between Wages and Interest

Now, this normal rate of interest — which falls between the necessary maximum and the necessary minimum of the return to capital — must settle at a point where, all things considered (such as feelings of security, the desire to save, and so on), the reward to capital and the reward to labor are equal. That is, they give an equally attractive return for the effort or sacrifice involved.

It may be impossible to state this point precisely, since wages are usually measured as a quantity and interest as a ratio. But if we imagine a given amount of wealth produced by a given amount of labor, working for a set time with a certain amount of capital, the proportion in which the product is divided between labor and capital would allow a comparison. There must be such an equilibrium point, at or around which interest tends to settle. Otherwise, labor wouldn't accept the use of capital, or capital wouldn't make itself available to labor.

The reason is that labor and capital are really just different forms of the same thing — human effort. Capital is produced by labor. It is, in fact, nothing but labor impressed upon matter — labor stored up in matter, to be released again as needed, just as the sun's heat stored in coal is released in the furnace. Using capital in production is therefore simply a mode of labor. Since capital can only be used by being consumed, its use is an expenditure of labor. And for capital to be maintained, its production by labor must keep pace with its consumption in aid of labor.

So the same principle that, under free competition, tends to bring wages to a common level and profits to rough equality — the principle that people seek to satisfy their desires with the least effort — works to establish and maintain this equilibrium between wages and interest.

No Real Conflict Between Wages and Interest

This natural relationship between interest and wages — this equilibrium at which both represent equal returns for equal effort — can be stated in a way that sounds like they're opposed to each other. But this opposition is only apparent.

In a partnership between Dick and Harry, saying that Dick receives a certain share of the profits implies that Harry's share is smaller when Dick's is larger. But when — as in this case — each partner gets only what they contribute to the common fund, one partner's gain doesn't reduce what the other receives.

With this relationship established, it's clear that interest and wages must rise and fall together. Interest can't increase without wages increasing too, and wages can't be pushed down without also depressing interest. If wages fall, interest must also fall in proportion — otherwise it would become more profitable to turn labor into capital than to apply it directly. And if interest falls, wages must likewise fall proportionately — otherwise the creation of new capital would stop.

We're not talking, of course, about particular wages or particular interest rates, but about the general rate of wages and the general rate of interest — always meaning by interest the return that capital can earn, minus insurance costs and management fees. In any particular case or particular job, the tendency of wages and interest toward equilibrium may be blocked. But between the general rate of wages and the general rate of interest, this tendency must act quickly.

Here's why. Even though in any particular industry the line between those who provide labor and those who provide capital may be clearly drawn, even in communities with the sharpest class distinction between workers and capitalists, these two classes shade into each other by imperceptible degrees. And at the point where the two classes overlap — where the same people are both workers and capitalists — the interaction that maintains equilibrium (or rather, prevents its disruption) can operate without obstruction, whatever barriers may exist where the classes are fully separate.

Furthermore, remember what we've said before: capital is just a portion of wealth, distinguished from wealth in general only by its purpose. Therefore, the whole body of wealth acts on the relationship between capital and labor the way a flywheel acts on machinery — absorbing capital when there's too much and releasing it when there's too little. Just as a jeweler might give diamonds to a spouse to wear when stock is plentiful, then put them back in the display case when stock runs low, the same conversion works in the economy at large.

Any tendency for interest to rise above its equilibrium with wages immediately creates not only a push to direct labor toward producing capital, but also a push to convert wealth into capital. And any tendency for wages to rise above their equilibrium with interest likewise creates not only a push to divert labor away from producing capital, but also a push to reduce capital by converting productive goods into consumer goods.

Summing Up the Law

To recap: there is a certain relationship or ratio between wages and interest, determined by causes that — if not absolutely permanent — change only slowly. At this ratio, enough labor will be converted into capital to supply the capital that production demands, given the current state of knowledge, technology, population density, types of occupations, and the variety, extent, and speed of trade. The interaction of labor and capital constantly maintains this ratio. Therefore, interest must rise and fall along with wages.

Here's an analogy. The price of flour is determined by the price of wheat and the cost of milling. The cost of milling changes slowly and only slightly — the difference, even over long periods, is hardly noticeable. But the price of wheat varies frequently and by large amounts. So we correctly say that the price of flour is governed by the price of wheat.

Or, to put it in the same form as the previous statement: there is a certain relationship between the value of wheat and the value of flour, fixed by the cost of milling, which the interaction of flour demand and wheat supply constantly maintains. Therefore, the price of flour must rise and fall with the price of wheat.

Connecting Interest to Rent

And just as, skipping the middle step (the price of wheat), we say that the price of flour depends on weather, wars, and so on, we can state the law of interest in a form that directly connects it to the law of rent: the general rate of interest will be determined by the return to capital on the poorest land to which capital is freely applied — that is, on the best land open to it without the payment of rent. This brings the law of interest into a form that shows it to be a direct consequence of the law of rent.

A Thought Experiment

We can prove this conclusion another way. That interest must decrease as rent increases, we can see plainly if we eliminate wages from the picture. To do this, we must imagine a universe organized on entirely different principles. But let's picture what Thomas Carlyle might call a fool's paradise, where wealth was produced without any labor at all, solely by the reproductive power of capital — where sheep grew ready-made clothing on their backs, cows produced butter and cheese, and oxen, when they reached the right degree of fatness, carved themselves into steaks and roasts; where houses grew from seeds, and a jackknife thrown on the ground would take root and eventually bear a crop of assorted cutlery.

Imagine a group of capitalists transported, with their capital in the right forms, to such a place. They would receive as their return the entire amount of wealth their capital produced — but only so long as none of that produce was claimed as rent. When rent arose, it would come out of the return to capital, and as rent increased, the return to capital owners would necessarily shrink.

If we imagine this place where capital could produce wealth without labor to be of limited size — say, an island — we can see that once capital had increased to the island's limit, the return to capital would fall to barely above its minimum of mere replacement. The landowners would receive nearly the entire product as rent, because the only alternative for capitalists would be to throw their capital into the sea.

Or, if we imagine such an island in contact with the rest of the world, the return to capital would settle at the rate prevailing elsewhere. Interest there would be neither higher nor lower than anywhere else. Rent would capture the entire superior advantage, and the island's land would have enormous value.

The Law of Interest Stated

To sum up, the law of interest is this:

The relationship between wages and interest is determined by the average power of increase that capital gains from its use in reproductive ways. As rent rises, interest will fall as wages fall, or will be determined by the margin of cultivation.

I've gone into this much detail tracing out and illustrating the law of interest more out of respect for the existing terminology and modes of thought than from the real needs of our inquiry, if it weren't weighed down by confusing debates. In truth, the primary division of wealth in distribution is twofold, not threefold. Capital is just a form of labor, and its distinction from labor is really just a subdivision — much as the division of labor into skilled and unskilled would be. Our examination has brought us to the same point we would have reached if we had simply treated capital as a form of labor and looked for the law that divides the product between rent and wages — that is, between the owners of the two fundamental factors of production: natural resources and human effort. These two factors, united, produce all wealth.

Wages and the Law of Wages

We've already arrived at the law of wages by inference. But to verify the deduction and strip the subject of all ambiguity, let's seek the law from an independent starting point.

What We Mean by Wages

There is, of course, no single common rate of wages in the same sense that there is, at any given time and place, a common rate of interest. Wages — which include all returns received from labor — not only vary with the differing abilities of individuals, but as society becomes more complex, vary widely between occupations. Nevertheless, there is a certain general relationship among all wages, so that we express a clear and well-understood idea when we say that wages are higher or lower in one time or place than in another. In their varying degrees, wages rise and fall according to a common law. What is this law?

The Fundamental Principle

The fundamental principle of human action — the law that is to economics what the law of gravitation is to physics — is that people seek to satisfy their desires with the least effort. This principle must, through the competition it creates, bring about an equality of reward for equal effort under similar circumstances.

When people work for themselves, this equalization largely happens through the adjustment of prices. And between those who work for themselves and those who work for others, the same tendency toward equalization operates.

Under this principle, what will be the terms, in conditions of freedom, at which one person can hire others? They'll be set by what those workers could earn if working for themselves. The same principle that prevents the employer from having to pay anything above this (except what's needed to make the job attractive enough) also prevents workers from accepting less. If they demanded more, competition from other workers would keep them from finding employment. If the employer offered less, no one would take the job, since they could do better working for themselves.

So although the employer wants to pay as little as possible and the employee wants to earn as much as possible, wages will be set by the value of such labor to the workers themselves. If wages are temporarily pushed above or below this line, a force immediately arises to push them back.

Land and the Determination of Wages

But the earnings of labor — as is easily seen in those primary and fundamental occupations in which labor first engages, and which even in the most developed societies still form the base of production — don't depend merely on the intensity or quality of the labor itself. Wealth is the product of two factors: land and labor. What a given amount of labor will yield varies with the productive power of the natural opportunities to which it's applied.

Given this, the principle that people seek to satisfy their desires with the least effort will fix wages at the product of labor at the point of highest natural productivity open to it. And by virtue of the same principle, the highest point of natural productivity open to labor will also be the lowest point at which production continues. People, driven by the fundamental law of the human mind to seek satisfaction with the least effort, won't work at a lower point of productivity while a higher one is available.

So the wages an employer must pay will be measured by the lowest point of natural productivity to which production extends. Wages will rise or fall as this point rises or falls.

A Simple Illustration

To illustrate: imagine a simple society where everyone works for themselves — some hunting, some fishing, some farming. Farming has just begun, and the land in use is all of the same quality, yielding similar returns for similar effort. Wages — for even though there are no employers or employees, wages still exist — will be the full product of labor. Making allowance for differences in pleasantness, risk, and so on among the three pursuits, wages will be roughly equal in each. That is, equal effort will yield equal results. If someone in this community wants to hire others to work for them instead of for themselves, they'll have to pay wages equal to this full average product of labor.

Now let some time pass. Farming has expanded to include lands of different quality. Wages will no longer equal the average product of labor. They'll equal the average product of labor at the margin of cultivation — the point of lowest return. Since people seek to satisfy their desires with the least effort, the lowest return in farming must yield as much as the average return in hunting and fishing.37 Labor will no longer yield equal returns for equal effort. Those who work the better land will produce more for the same effort than those on poorer land. But wages will still be equal, because the extra that cultivators of superior land receive is really rent. If land has been subjected to private ownership, this excess will give the land a market value.

Now, if under these changed circumstances someone wants to hire others, they'll only have to pay what labor yields at the lowest point of cultivation. If the margin of cultivation sinks to points of lower and lower productivity, wages must sink with it. If the margin rises, wages must rise too — for just as a falling object takes the shortest route to the earth's center, people seek the easiest path to satisfying their desires.

The Law of Wages Stated

Here, then, is the law of wages — a deduction from a principle that is both obvious and universal. That wages depend on the margin of cultivation — that they'll be higher or lower as the product that labor can obtain from the highest natural opportunities open to it is higher or lower — flows directly from the principle that people seek to satisfy their wants with the least effort.

From Simple to Complex Societies

Now, if we turn from simple social conditions to the complex realities of highly civilized societies, we'll find on examination that they follow this same law.

In such societies, wages differ widely, but they still bear a more or less definite and obvious relationship to each other. This relationship isn't fixed — at one time a well-known philosopher may earn many times the wages of the best mechanic, and at another can barely hope for the pay of a servant. In a great city, certain occupations may yield relatively high wages that in a frontier settlement would yield relatively low wages. Yet these variations can, under all conditions and despite arbitrary distortions caused by custom, law, and so on, be traced to certain circumstances.

In one of his most interesting chapters, Adam Smith lists the main circumstances "which make up for a small pecuniary gain in some employments and counterbalance a great one in others: First, the agreeableness or disagreeableness of the employments themselves. Secondly, the easiness and cheapness, or the difficulty and expense of learning them. Thirdly, the constancy or inconstancy of employment in them. Fourthly, the small or great trust which must be reposed in them. Fifthly, the probability or improbability of success in them."38

It's not necessary to dwell on these causes of wage differences between occupations in detail. They've been admirably explained and illustrated by Adam Smith and the economists who followed him, who worked out the details well even if they failed to grasp the main law.

Supply and Demand -- And Its Limits

The effect of all these circumstances can be grouped under the heading of supply and demand. It's perfectly correct to say that wages in different occupations will vary according to differences in the supply of and demand for labor — meaning by "demand" the call that the community makes for services of a particular kind, and by "supply" the relative amount of labor that, under existing conditions, can be directed to performing those services.

But while this is true for the relative differences of wages, when people say — as they commonly do — that the general rate of wages is determined by supply and demand, the words are meaningless. Supply and demand are relative terms. The supply of labor can only mean labor offered in exchange for labor or its products. The demand for labor can only mean labor or its products offered in exchange for labor. Supply is thus demand, and demand is supply, and in the whole community, one must equal the other.

This is clearly understood by mainstream economics when it comes to sales. The reasoning of Ricardo, Mill, and others, which proves that shifts in supply and demand can't produce a general rise or fall of values (though they may cause particular things to rise or fall in value), applies equally to labor.

What hides the absurdity of talking about supply and demand in this general sense with respect to labor is the habit of thinking of the demand for labor as coming from capital and being something separate from labor. But the analysis we've already conducted has thoroughly exposed that fallacy. It's obvious from the mere statement that wages can never permanently exceed what labor produces, and therefore there is no fund from which wages can be drawn for any length of time except the one that labor constantly creates.

Real vs. Apparent Wage Differences

Now, although all the circumstances that produce wage differences between occupations can be thought of as operating through supply and demand, their effects can be separated into two classes: those that tend only to raise apparent wages, and those that tend to raise real wages — that is, to increase the average reward for equal effort.

The high wages of some occupations are much like what Adam Smith compared them to: the prizes of a lottery, where the large winnings of one are made up from the losses of many others. This is true not only of the professions Smith used to illustrate the principle, but is largely true of management wages in business, as shown by the fact that over ninety percent of businesses that start up ultimately fail. The higher wages of occupations that can only be carried on in certain weather, or are otherwise irregular and uncertain, also belong to this class. Meanwhile, differences arising from hardship, social stigma, unhealthy conditions, and so on involve differences in sacrifice — the extra compensation only preserves the level of equal returns for equal effort.

All these differences are really equalizations, arising from circumstances that, in Adam Smith's words, "make up for a small pecuniary gain in some employments and counterbalance a great one in others."

But besides these merely apparent differences, there are real differences in wages between occupations, caused by the greater or lesser rarity of the qualities required. Greater ability or skill, whether natural or acquired, commands higher wages on average. These qualities — whether natural or acquired — are essentially similar to differences in strength and speed in manual labor. Just as in manual labor the higher wages paid to someone who can do more are based on the wages paid to those who can do only the average amount, wages in occupations requiring superior abilities must depend on the common wages paid for ordinary abilities and skill.

All Wages Depend on the Lowest Stratum

It's clear from observation, and must be from theory, that whatever circumstances produce the differences of wages between occupations — and although these frequently shift in relation to each other, producing greater or lesser relative differences from time to time and place to place — the rate of wages in one occupation always depends on the rate in another, and so on down, until we reach the lowest and widest level of wages, in occupations where demand is most nearly uniform and where there's the greatest freedom to enter.

For although barriers of greater or lesser difficulty may exist, the amount of labor that can flow into any particular pursuit is never absolutely fixed. All skilled tradespeople could work as laborers, and many laborers could readily become skilled workers. All storekeepers could work as clerks, and many clerks could easily become storekeepers. Many farmers would, given reason, become hunters or miners, fishers or sailors — and many hunters, miners, fishers, and sailors know enough about farming to turn their hands to it when needed. In every occupation, some people combine it with others or alternate between occupations, while the young people constantly entering the workforce are drawn in the direction of the strongest incentives and least resistance.

Beyond this, all the gradations of wages shade into each other by imperceptible degrees rather than being separated by clearly defined gaps. The wages even of the lower-paid skilled workers are generally higher than the wages of unskilled laborers, but there are always some skilled workers who don't, on the whole, earn as much as some laborers. The best-paid lawyers earn much more than the best-paid clerks, but the best-paid clerks earn more than some lawyers — and in fact, the worst-paid clerks earn more than the worst-paid lawyers.

So on the boundary of each occupation stand people for whom the incentives between one job and another are so finely balanced that the slightest change is enough to tip their labor one way or the other. Any increase or decrease in the demand for a certain kind of labor can't, except temporarily, push wages in that occupation above or below the relative level with wages in other occupations — a level determined by the circumstances we've discussed, such as relative pleasantness or regularity of employment. Even where artificial barriers are imposed — such as licensing laws, guild regulations, or the creation of social castes — they may interfere with, but cannot prevent, the maintenance of this equilibrium. They work only like dams, which raise the water of a stream above its natural level but can't prevent it from overflowing.

The General Law

So although wages in different occupations may shift in relation to each other as circumstances change, it's clear that wages in all layers must ultimately depend on wages in the lowest and widest layer — the general rate of wages rising or falling as these rise or fall.

Now, the primary and fundamental occupations — the ones upon which all others are built — are those that produce wealth directly from nature. The law of wages in those occupations must therefore be the general law of wages. And since wages in such occupations clearly depend on what labor can produce at the lowest point of natural productivity to which it's regularly applied, wages in general depend on the margin of cultivation — or, to put it more precisely, on the highest point of natural productivity to which labor is free to apply itself without the payment of rent.

The Law Confirmed by Observation

This law is so obvious that it's often grasped without being formally recognized. People frequently say of places like California and Nevada that cheap labor would enormously aid their development, since it would allow the working of poorer but more extensive mineral deposits. Those who talk this way perceive a relationship between low wages and a low point of production, but they invert cause and effect. It's not low wages that would cause the working of low-grade ore. It's the extension of production to lower-grade deposits that would reduce wages.

If wages could be forced down by decree, as has sometimes been attempted, the poorer mines wouldn't be worked as long as richer ones were available. But if the margin of production were artificially pushed down — as it would be if the owners of superior natural opportunities chose to hold them out of use while waiting for their value to increase — wages would necessarily fall.

The Complete Demonstration

The demonstration is complete. The law of wages we've obtained here is the same one we previously derived as the consequence of the law of rent, and it completely harmonizes with the law of interest. It is this:

Wages depend on the margin of production, or on the product that labor can obtain at the highest point of natural productivity open to it without the payment of rent.

This law of wages fits and explains universal facts that without it seem unrelated and contradictory. It shows that:

Where land is free and labor is unassisted by capital, the whole product will go to labor as wages.

Where land is free and labor is assisted by capital, wages will consist of the whole product, less the portion necessary to motivate the storing up of labor as capital.

Where land is subject to ownership and rent arises, wages will be fixed by what labor could earn from the highest natural opportunities open to it without the payment of rent.

Where natural opportunities are all monopolized, wages may be forced by competition among workers down to the minimum at which workers will consent to reproduce.

This necessary minimum of wages — which Adam Smith and Ricardo called the point of "natural wages," and which Mill supposed to regulate wages based on the standard of living at which the working classes consent to reproduce — is included in the law of wages as stated above. It's clear that the margin of production can't fall below the point at which enough remains as wages to maintain the workforce.

Self-Evident, Like the Law of Rent

Like Ricardo's law of rent, of which it is the consequence, this law of wages carries its own proof and becomes self-evident once stated. It's simply an application of the central truth that is the foundation of economic reasoning — that people seek to satisfy their desires with the least effort.

The average worker won't work for an employer for less, all things considered, than they can earn working for themselves. Nor will they work for themselves for less than they can earn working for an employer. Therefore, the return that labor can get from whatever natural opportunities are freely available must set the wages that labor receives everywhere. The line of rent is the necessary measure of the line of wages.

In fact, the accepted law of rent depends for its recognition on a prior — though often unconscious — acceptance of this law of wages. What makes it obvious that land of a particular quality will yield as rent the surplus of its product over that of the least productive land in use? It's the recognition that the owner of the better land can get workers by paying them what they could produce on the poorer land.

Hiding in Plain Sight

In its simpler forms, this law of wages is recognized by people who never think about economics, just as the fact that heavy objects fall to the earth was long recognized by people who never thought about the law of gravitation. It doesn't take an expert to see that if natural opportunities were opened up in any country that would enable workers to earn more than the current lowest wages, the general rate of wages would rise. The most uneducated of the placer miners in early California knew that as the gold deposits gave out or were monopolized, wages had to fall.

It takes no elaborate theory to explain why wages are so high relative to production in new countries where land hasn't yet been monopolized. The cause is right on the surface. No one will work for another for less than their labor really produces when they can move to the next quarter section and start a farm for themselves. It's only as land becomes monopolized and these natural opportunities are shut off from labor that workers are forced to compete with each other for employment. That's when it becomes possible for a farmer to hire hands to do the work while living on the difference between what their labor produces and what they're paid for it.

Adam Smith Saw It

Adam Smith himself saw the cause of high wages where land was still open to settlement, though he failed to appreciate the importance and broader significance of the fact. In discussing the Causes of the Prosperity of New Colonies (Chapter VII, Book IV, Wealth of Nations), he says:

"Every colonist gets more land than he can possibly cultivate. He has no rent and scarce any taxes to pay. ... He is eager, therefore, to collect laborers from every quarter and to pay them the most liberal wages. But these liberal wages, joined to the plenty and cheapness of land, soon make these laborers leave him in order to become landlords themselves, and to reward with equal liberality other laborers who soon leave them for the same reason they left their first masters."

This chapter of Smith's contains numerous passages which, like the opening sentence of his chapter on The Wages of Labor, show that Adam Smith failed to grasp the true laws of distribution only because he turned away from simpler forms of society to look for first principles amid complex social conditions, where he was blinded by an already-accepted theory about the role of capital — and, it seems to me, by a vague acceptance of the doctrine that, two years after his death, was formulated by Malthus.

And it's impossible to read the economists who since Smith's time have tried to build up and clarify the science of economics without seeing how, over and over, they stumble over the law of wages without ever recognizing it. And yet, as the saying goes, "if it were a dog, it would bite them!"

Indeed, it's hard to resist the impression that some of them actually saw this law of wages but, fearful of the practical conclusions it would lead to, preferred to ignore and bury it rather than use it as the key to problems that without it are so baffling. A great truth, to an age that has rejected and trampled on it, is not a word of peace but a sword!

A Final Clarification

Perhaps it's worth reminding the reader, before closing this chapter, of what was stated earlier: I'm using the word "wages" not in the sense of a quantity but in the sense of a proportion. When I say that wages fall as rent rises, I don't mean that the amount of wealth workers receive is necessarily less. I mean that the proportion it bears to the total product is necessarily less. The proportion may shrink while the quantity stays the same or even increases.

If the margin of cultivation drops from a productive level we'll call 25 to a level we'll call 20, the rent on all land that previously paid rent will increase by this difference, and the proportion of total production going to workers as wages will decrease by the same amount. But if, in the meantime, advances in technology or the efficiencies that come with a larger population have increased the productive power of labor so that at level 20 the same effort produces as much wealth as it used to at level 25, workers will receive just as much as before. The relative fall in wages won't show up as any reduction in workers' necessities or comforts, but only in the increased value of land and the greater incomes and more lavish spending of the rent-receiving class.

Correlation and Coördination of These Laws

The conclusions we've reached about the laws governing the distribution of wealth rewrite a large and critically important part of economics as currently taught. They overturn some of its most elaborately constructed theories and shed new light on some of its most important problems. Yet in doing this, we haven't occupied any disputed ground. Not a single fundamental principle we've advanced isn't already recognized.

The law of interest and the law of wages that we've put forward to replace the current ones are necessary deductions from the great law that alone makes any science of economics possible — the all-compelling law that is as inseparable from the human mind as gravitational attraction is inseparable from matter, and without which it would be impossible to predict or calculate any human action, the most trivial or the most important.

This fundamental law — that people seek to satisfy their desires with the least effort — becomes, when viewed in relation to one factor of production, the law of rent; in relation to another, the law of interest; and in relation to a third, the law of wages. In accepting the law of rent, which since Ricardo's time has been accepted by every economist of standing, and which, like a geometric axiom, needs only to be understood to compel agreement, the law of interest and the law of wages as I've stated them are implicitly accepted as necessary consequences.

In fact, they can only relatively be called consequences, since in recognizing the law of rent, they too must be recognized. For what does the recognition of the law of rent depend on? It depends on recognizing that the effect of competition is to prevent the return to labor and capital from being anywhere greater than what's earned on the poorest land in use. It's in seeing this that we see that the landowner can claim as rent everything the land produces beyond what an equal application of labor and capital would yield on the poorest land in use.

Two Systems Compared

The harmony and correlation of the laws of distribution as we've now understood them stand in striking contrast with the lack of harmony that characterizes these laws as presented by mainstream economics. Let's state them side by side:

THE MAINSTREAM STATEMENT:

- Rent depends on the margin of cultivation, rising as it falls and falling as it rises. - Wages depend on the ratio between the number of workers and the amount of capital devoted to employing them. - Interest depends on the balance between the supply of and demand for capital; or, as it is stated regarding profits, it depends on wages (or the cost of labor), rising as wages fall and falling as wages rise.

THE TRUE STATEMENT:

- Rent depends on the margin of cultivation, rising as it falls and falling as it rises. - Wages depend on the margin of cultivation, falling as it falls and rising as it rises. - Interest (its ratio with wages being fixed by the net power of increase that comes from capital's use) depends on the margin of cultivation, falling as it falls and rising as it rises.

In the mainstream statement, the laws of distribution have no common center, no mutual relationship. They aren't the correlating parts of a whole, but measurements of different things entirely. In our statement, they spring from a single point, support and supplement each other, and form the correlating parts of a complete whole.

The Statics of the Problem Thus Explained

We now have a clear, simple, and consistent theory of the distribution of wealth — one that fits first principles and matches existing facts, and that, once understood, will recommend itself as self-evident.

Why the Demolition Came First

Before working out this theory, I thought it necessary to conclusively demonstrate the inadequacy of the current theories. In thought, as in action, the majority of people simply follow their leaders. A theory of wages that has not only the support of the biggest names in economics but is firmly rooted in common opinions and prejudices will, until it's proven untenable, prevent any other theory from even being considered. It's like the old theory that the earth was the center of the universe — until it was clearly shown that the observed movements of the heavenly bodies couldn't be explained by a fixed earth, no one would consider the theory that the earth revolves on its axis and circles the sun.

The Copernican Revolution in Economics

There is, in truth, a striking resemblance between economics as currently taught and astronomy as it was taught before Copernicus. The devices by which mainstream economics tries to explain the social phenomena now forcing themselves on the attention of the civilized world are like the elaborate system of cycles and epicycles that medieval scholars constructed to explain the movements of the heavens in a way that agreed with the dogmas of authority and the crude impressions of the untrained.

And just as the observations showing that this system of cycles and epicycles couldn't account for all celestial phenomena cleared the way for the simpler theory that replaced it, recognizing the inadequacy of current economic theories to account for social phenomena will clear the way for a theory that gives economics all the simplicity and harmony that the Copernican theory gave to astronomy.

Simpler Than Copernicus

But at this point the parallel breaks down. That "the fixed and steadfast earth" should actually be whirling through space at inconceivable speed is an idea repugnant to first impressions in every age and situation. But the truth I want to make clear is one that's naturally perceived and has been recognized in the early stages of every civilization, becoming obscured only by the complexities of advanced societies, the distortions of selfish interests, and the wrong direction that scholarly speculation has taken. To recognize it, we need only return to first principles and pay attention to simple observations.

Nothing could be clearer than this proposition: the failure of wages to increase with increasing productive power is due to the increase of rent.

The Core Argument

Three things come together to produce wealth: labor, capital, and land.

Three parties divide the product: the worker, the capitalist, and the landowner.

If, when production increases, the worker gets no more and the capitalist gets no more, it's a necessary conclusion that the landowner reaps the entire gain.

And the facts match the conclusion. Though neither wages nor interest anywhere increase as material progress goes on, the invariable companion and hallmark of material progress is the increase of rent — the rise of land values.

Rent Explains Everything

The increase of rent explains why wages and interest don't increase. The cause that gives to the landowner is the cause that takes from the worker and the capitalist.

That wages and interest are higher in new countries than in old ones is not, as the standard economists say, because nature gives a greater return to labor and capital there. It's because land is cheaper. Since a smaller share of the return is taken by rent, labor and capital can keep a larger share of what nature does return. It's not the total product, but the net product — after rent has been taken out — that determines what can be divided as wages and interest.

The rate of wages and interest is therefore everywhere determined not so much by the productivity of labor as by the value of land. Wherever land values are relatively low, wages and interest are relatively high. Wherever land values are relatively high, wages and interest are relatively low.

Hidden by Complexity

If production had never moved beyond the simple stage in which all labor is applied directly to the land and all wages are paid in its produce, the fact that when the landowner takes a larger share, the worker must accept a smaller one could never be lost sight of.

But the complexities of production in civilized society — where so much of the process involves exchange, and so much labor is applied to materials after they've been separated from the land — may disguise this fact to the unthinking. They don't alter it. All production is still the union of two factors, land and labor. Rent (the landowner's share) cannot increase except at the expense of wages (the worker's share) and interest (the share of capital).

Just as the portion of the crop that a landowner receives as rent at harvest time reduces the amount left for the farmer as wages and interest, so does the rent of land on which a manufacturing or commercial city is built reduce the amount available for wages and interest among the workers and capital engaged in producing and exchanging wealth there.

The Bottom Line

In short, since the value of land depends entirely on the power that ownership gives to appropriate wealth created by labor, the increase of land values is always at the expense of the value of labor. And so the reason that increasing productive power doesn't increase wages is that it does increase the value of land. Rent swallows up the whole gain, and poverty accompanies progress.

The Evidence Is Everywhere

It's unnecessary to cite specific facts. They'll suggest themselves to the reader. It is the general fact, observable everywhere, that as land values increase, so does the contrast between wealth and want. It is the universal fact that where land values are highest, civilization displays the greatest luxury side by side with the most desperate poverty.

To see human beings in the most degraded, most helpless and hopeless condition, you must go not to the unfenced prairies and the log cabins of new clearings in the backwoods, where a lone individual is beginning the struggle with nature and land is still worth nothing — but to the great cities, where the ownership of a little patch of ground is a fortune.

Book IV: Effect of Material Progress upon the Distribution of Wealth

The Dynamics of the Problem Yet to Seek

By identifying rent as the recipient of the increased production that material progress delivers — but that labor fails to receive — and by seeing that the real conflict of interests is not between labor and capital (as is commonly believed), but between labor and capital on one side and land ownership on the other, we've reached a conclusion with enormous practical implications. But it's not worth dwelling on those implications now, because we haven't yet fully solved the problem we set out to investigate. To say that wages stay low because rent goes up is like saying a steamboat moves because its wheels turn around. The deeper question is: What causes rent to rise? What force or necessity ensures that, as productive power increases, a greater and greater share of what's produced goes to rent?

The only cause that Ricardo pointed to as driving rent upward is population growth, which, by requiring larger food supplies, forces farming onto inferior land — or to less productive points on the same land. And in the standard textbooks by other authors, attention is so exclusively focused on this expansion of production from better to worse land as the cause of rising rents that Henry Carey (followed by Professor Perry and others) imagined he had overthrown the Ricardian theory of rent simply by denying that agricultural progress moves from better land to worse.39

Now, while it's absolutely true that growing population pressure — which forces production onto inferior land — will raise rents, and does raise rents, I don't think all the conclusions commonly drawn from this principle are valid. Nor do I think it fully explains the rise of rent as material progress advances. There are clearly other forces at work that also push rent upward, but these have been partly or wholly hidden by the mistaken views about the role of capital and the origins of wages that have dominated economic thinking. To see what these forces are and how they operate, let's trace the effect of material progress on the distribution of wealth.

The changes that constitute or contribute to material progress fall into three categories: (1) increase in population; (2) improvements in the methods of production and exchange; and (3) improvements in knowledge, education, government, law enforcement, social customs, and moral standards — insofar as these increase the power to produce wealth. Material progress, as commonly understood, consists of all three, and the progressive nations have been advancing along all three fronts, though to different degrees. Since, viewed as material forces or efficiencies, the growth of knowledge, better government, and similar advances have the same effect as improvements in technology, we won't need to consider them separately here. What bearing intellectual or moral progress, purely as such, has on our problem, we may consider later. For now, we're dealing with material progress — to which these things contribute only by increasing the power to produce wealth — and we'll see their effects when we examine the effect of technological improvements.

To determine how material progress affects the distribution of wealth, then, let's first consider the effects of population growth apart from technological improvement, and then the effect of technological improvement apart from population growth.

Effect of Increase of Population upon the Distribution of Wealth

The way that growing population advances rent, as explained and illustrated in standard economic textbooks, is that increased demand for food forces production onto inferior soil or to less productive points. So if, with a given population, the margin of cultivation is at 30, all land with productive power above 30 will pay rent. If the population doubles, an additional food supply is required, and that supply can't be obtained without expanding cultivation to land that previously yielded no rent. If the expansion pushes the margin down to 20, then all land between 20 and 30 will now yield rent and have value for the first time, and all land above 30 will yield increased rent and have increased value.

The Malthusian Connection

This is where the Malthusian theory gets the support from the theory of rent that I mentioned earlier when listing the reasons that doctrine has gained such dominance in mainstream economic thought. According to the Malthusian theory, the pressure of population against food supply grows progressively harder as population increases. Although two hands come into the world with every new mouth, it becomes — to borrow the phrase of the economist John Stuart Mill — harder and harder for the new hands to feed the new mouths. According to Ricardo's theory of rent, rent arises from the difference in productivity between the lands in use, and as Ricardo and the economists who followed him explained it, the rise in rents that accompanies population growth is caused by the inability to get more food except at greater cost. This forces the margin of cultivation to lower and lower points of production, increasing rent proportionally. The two theories are thus made to harmonize and blend, with the law of rent becoming a specific application of the more general law proposed by Malthus, and the advance of rents with growing population serving as proof of its relentless operation.

I bring this up in passing because it's now in our path to see the misunderstanding that has enlisted the theory of rent in support of a theory it actually doesn't support at all. The Malthusian theory has already been disposed of, and the final cumulative disproof that will prevent any lingering doubt will come when we show, further on, that the very phenomena attributed to population pressure against food supply would, under existing conditions, appear even if population stayed the same.

The Key Misunderstanding

The misunderstanding I want to address now — one that must be cleared up to properly understand how population growth affects the distribution of wealth — is the assumption, stated or implied in all standard reasoning about rent and population, that the resort to less productive land necessarily means a smaller total output relative to the labor expended. This assumption is wrong, though the opposite is clearly recognized when it comes to agricultural improvements, which, in Mill's words, are considered "as a partial relaxation of the bonds which confine the increase of population." But the assumption isn't valid even where there's no advance in technology, and the resort to less productive land is clearly the result of increased demand from increased population.

Here's why: increased population, by itself and without any technological advance, implies an increase in the productive power of labor. The labor of 100 people, all else being equal, will produce much more than a hundred times what one person can produce. And the labor of 1,000 people will produce much more than ten times what 100 people can produce. With every additional pair of hands that growing population brings, there's a more-than-proportional addition to the productive power of labor.

So with an increasing population, production may extend to land with lower natural productivity — not only without any reduction in average wealth produced per unit of labor, but without any reduction even at the lowest point. If population doubles, land rated at only 20 in productivity may yield the same return to the same amount of labor as land rated at 30 could have yielded before. Because we must not forget — though it's often forgotten — that the productivity of either land or labor isn't to be measured in any single product, but in all desired things.

A settler family may raise as much corn on land a hundred miles from the nearest neighbor as they could on land in the center of a populous district. But in the populous district, they could earn just as good a living from much poorer land — or from equally good land while paying a high rent — because in the midst of a large population their labor has become more effective. Not necessarily in growing corn, but in producing wealth generally — in obtaining all the goods and services that are the real purpose of their labor.

Diminishing Returns Don't Tell the Whole Story

But even where there is a reduction in the productivity of labor at the lowest point — that is, where growing demand for wealth has pushed production to a point of natural productivity so low that the added labor power from population growth isn't enough to compensate — it doesn't follow that total production relative to total labor has decreased.

Let's suppose land of diminishing quality. The best would naturally be settled first, and as population grew, production would expand to the next lower quality, and so on. But as population growth allows greater efficiencies, it adds to the effectiveness of labor — so the same cause that brings each quality of land successively into cultivation would also increase the amount of wealth that the same labor could produce from it. And it would do more than this: it would increase the power of producing wealth on all the superior lands already in use.

If the balance of quantity and quality is such that growing population adds to the effectiveness of labor faster than it forces a resort to less productive land, then even though the margin of cultivation falls and rent rises, the minimum return to labor would increase. That is, wages as a proportion would fall, but wages as an actual amount would rise. Average production of wealth would increase.

If the balance is such that increasing labor effectiveness just compensates for the decreasing natural productivity of land as it's brought into use, then population growth would increase rent by lowering the margin of cultivation without reducing wages as an amount, and average production would still increase.

Now suppose population keeps growing, but between the poorest quality of land currently in use and the next lower quality, there's a gap so large that the increased labor power from the additional population that brings it into cultivation can't compensate. In this case, the minimum return to labor will fall, and with rising rents, wages will decline not only as a proportion but as an actual amount. But unless the drop-off in land quality is far steeper than we can reasonably imagine — or than, I believe, ever actually exists — average production will still increase. This is because the increased effectiveness that comes from the larger population applies to all labor, and the gains on the superior lands will more than offset the reduced production on the worst land brought into use. Total wealth production, compared to total labor, will be greater — even though its distribution will be more unequal.

Summary of Population's Effect on the Margin

So population growth, as it extends production to lower natural levels, tends to increase rent and reduce wages as a proportion. It may or may not reduce wages as an actual amount. But it rarely, if ever, reduces total wealth production relative to total labor. On the contrary, it increases it — and frequently increases it substantially.

The Greater Force: Population Creates Value in Land

But while population growth does increase rent by lowering the margin of cultivation, it's a mistake to see this as the only way rent rises as population grows. Increasing population increases rent without lowering the margin of cultivation. And despite the claims of writers like the economist McCulloch, who asserts that rent would never arise if there were an unlimited extent of equally good land, population growth increases rent regardless of the natural qualities of land. The reason is that the increased powers of cooperation and exchange that come with more people are equivalent to — indeed, I think we can say without exaggeration that they actually give — an increased capacity to land itself.

I don't mean simply that, like an improvement in tools or methods, the increased power that comes with more population gives the same labor an increased result, which amounts to an increase in the natural powers of land. I mean that it brings out a superior power in labor that is localized on specific land — that attaches not to labor in general, but only to labor performed on particular land. This power thus belongs to the land as much as any quality of soil, climate, mineral deposit, or natural location, and passes, as they do, with ownership of the land.

An improvement in farming methods that, for the same investment, gives two crops a year instead of one, or an improvement in tools and machinery that doubles the output of labor, will obviously have the same effect on a particular piece of ground as a doubling of its natural fertility. But there's a crucial difference: the improvement in methods or tools can be used on any land, while the improvement in fertility can be used only on the specific land it applies to. Now, a large part of the increased productivity that arises from population growth can be utilized only on particular land — and on particular land to vastly different degrees.

The Parable of the First Settler

Here, let us imagine an unbounded prairie, stretching in unbroken sameness of grass and wildflowers, trees and streams, until the traveler tires of the monotony. Along comes the wagon of the first immigrant. Where to settle, they can't tell — every acre seems as good as every other acre. In terms of wood, water, soil fertility, and location, there's absolutely no advantage of one spot over another, and our settler is overwhelmed by the embarrassment of riches. Exhausted from searching for one place that's better than another, they stop — somewhere, anywhere — and start to make a home.

The soil is virgin and rich. Game is plentiful. The streams sparkle with the finest trout. Nature is at her very best. Our settler has what, in a populated region, would mean great wealth — but they are very poor. Setting aside the deep human craving for companionship, which would make them welcome even the most miserable stranger, they suffer under every material disadvantage of solitude. They can get no temporary help for any work requiring more strength than their own family provides, or than whatever permanent help they can afford to keep. Though they have cattle, they can rarely enjoy fresh meat — to get a steak they have to slaughter a whole steer. They must be their own blacksmith, wagon maker, carpenter, and cobbler — in short, a jack of all trades and master of none. They can't send their children to school, because they'd have to hire and support a teacher themselves. Supplies they can't produce they must buy in bulk and store, or go without, since they can't constantly leave their work for the long journey to civilization. And when they're forced to make that trip, getting a bottle of medicine or replacing a broken tool may cost days of labor for the whole family and their horses. Under such conditions, though nature is generous, the family is poor. Getting enough to eat is easy, but beyond that, their labor can satisfy only the simplest needs in the crudest way.

Soon another immigrant arrives. Though every quarter section of the boundless plain is as good as every other, there's no confusion about where to settle. Though the land is identical, there's one place clearly better than any other — and that's where there's already a settler, so they can have a neighbor. They settle beside the first arrival, whose life immediately improves enormously. Many things are now possible that were impossible before, because two families can help each other do things one family never could.

Another immigrant comes, drawn by the same pull, and settles where there are already two. Then another, and another, until our first settler has a score of neighbors. Labor now has an effectiveness that, in solitude, it could never approach. If heavy work needs doing, the settlers organize a logrolling and together accomplish in a day what one person working alone would need years to finish. When one family slaughters a steer, the others take their share, returning the favor when they slaughter theirs — so everyone has fresh meat all the time. Together they hire a schoolteacher, and each family's children are educated for a fraction of what it would have cost the first settler alone. Sending to the nearest town becomes easy, since someone is always going. But there's less need for such trips anyway. A blacksmith and a wheelwright soon set up shop, and our settler can get tools repaired for a small fraction of the labor it used to cost. A general store opens, and supplies are available as needed. A post office gives regular contact with the outside world. Then come a cobbler, a carpenter, a harness maker, a doctor, and a small church soon rises.

Satisfactions become possible that were impossible in solitude. There are social and intellectual pleasures — those distinctly human things that raise us above mere animal existence. The power of shared feeling, the sense of companionship, the spark that comes from comparing and contrasting yourself with others, all open up a wider, fuller, more varied life. In times of joy, there are others to celebrate with. In sorrow, the grieving don't grieve alone. There are harvest gatherings, and apple-peeling parties, and quilting bees. Though the dance floor may be rough-hewn and the orchestra nothing but a fiddle, the magic of music is still in the air, and young love dances with the dancers. At a wedding, there are others to share the happiness. In a house of death, there are people to keep vigil. By the open grave, human sympathy sustains the mourners.

Occasionally, a traveling lecturer comes through and opens up glimpses of science, literature, or art. At election time, stump speakers arrive, and the citizen rises to a sense of dignity and power as the great issues of the day are debated before them, as candidates compete for their support and vote. And eventually comes the circus — talked about for months in advance — opening to children whose whole horizon has been the prairie all the realms of imagination: princes and princesses from fairy tales, armored crusaders and turbaned warriors, Cinderella's fairy coach, and the giants of nursery stories; lions like those that crouched before Daniel, or that tore the early Christians in the Roman amphitheater; ostriches that bring to mind the sandy deserts; camels like those that stood by when Joseph's wicked brothers pulled him from the well and sold him into slavery; elephants like those that crossed the Alps with Hannibal, or faced the swords of the Maccabees; and glorious music that thrills and builds in the imagination's chambers like the stately pleasure dome of Kubla Khan.

The Land Gains Value Without Changing

Go to our settler now, and say: "You have planted fruit trees, built fences, dug a well, put up a barn and a house — in short, you've added a certain amount of value to this farm through your labor. Your land itself is actually not quite as good as it was. You've been cropping it, and eventually it will need fertilizer. I'll pay you the full value of all your improvements if you'll hand over the farm and move your family beyond the edge of settlement again."

They would laugh at you. Their land yields no more wheat or potatoes than before, but it yields far more of all the necessities and comforts of life. Their labor on it will bring no heavier crops — and, we'll assume, no more valuable crops — but it will bring far more of everything else people work for. The presence of other settlers — the increase of population — has added to the productivity of labor on this land, and this added productivity gives it an advantage over land of equal natural quality where there are no settlers yet.

If no land remains available except land as remote from population as our settler's was when they first arrived, the value or rent of this land will equal the full measure of this added capability. If, however, as we've supposed, there's a continuous stretch of equal land over which population is spreading, the new settler won't have to go into the wilderness as the first one did. They'll settle just beyond the existing settlers and gain the advantage of proximity to them. The value or rent of our first settler's land will thus depend on the advantage that its central location gives it over land at the edge. In one case, the margin of production stays the same as before. In the other, the margin of production is raised.

From Farm to City

Population continues to increase, and with it grow the efficiencies that effectively add to the productivity of land. Our first settler's farm, being at the center of population, attracts the store, the blacksmith's forge, and the wheelwright's shop. A village springs up on or near the land and rapidly grows into a town — the center of trade for the whole district. With no greater farming productivity than it had at first, this land begins to develop a higher kind of productivity. For labor spent growing corn, wheat, or potatoes, it yields no more of those things than before. But for labor spent in the specialized branches of production that require proximity to other producers — and especially for labor spent in that final stage of production which consists of distribution — it yields much larger returns.

The wheat grower can go farther out and find land where their labor will produce just as much wheat, and nearly as much wealth overall. But the artisan, the manufacturer, the shopkeeper, the professional — they find that their labor spent here, at the center of trade, yields them far more than if spent even a short distance away. And this excess productivity for such purposes the landowner can claim, just as they could claim an excess in wheat-producing power. So our settler is able to sell a few acres in building lots for prices the land would never bring for farming, even if its fertility had been multiplied many times over. With the proceeds, they build a fine house and furnish it handsomely. To reduce the transaction to its simplest terms: the people who want to use the land build and furnish the house for the settler, in exchange for being allowed to take advantage of the superior productivity that population growth has given the land.

Population keeps growing, giving ever greater value to the land and ever more wealth to its owner. The town has grown into a city — a St. Louis, a Chicago, a San Francisco — and still it grows. Production here is carried on at a grand scale, with the best machinery and the most favorable conditions. The division of labor becomes extraordinarily refined, multiplying efficiency wonderfully. Trade reaches such volume and speed that it's conducted with minimal friction and loss. This is the heart, the brain, of the vast social organism that has grown from the seed of the first settlement — one of the great nerve centers of the human world. All roads lead here. All currents flow here, from the vast surrounding regions. If you have something to sell, here is the market. If you have something to buy, here is the largest and choicest selection. Here intellectual activity reaches a critical mass, and here springs the creative stimulus born of mind meeting mind. Here are the great libraries, the storehouses of knowledge, the distinguished professors, the famous specialists. Here are museums and art galleries, scientific collections, and everything rare, valuable, and best of its kind. Here come great actors, orators, and singers from all over the world. Here, in short, is a center of human life in all its varied forms.

So enormous are the advantages this land now offers for productive work that instead of one person with a team of horses scratching over acres, you can count in places thousands of workers per acre, laboring tier upon tier, on floors stacked one above another, five, six, seven, and eight stories from the ground, while underground, engines throb with the force of thousands of horses.

All these advantages attach to the land. It is on this land and no other that they can be used, because this is the center of population — the hub of trade, the marketplace and workshop of the highest forms of industry. The productive powers that population density has given this land are equivalent to multiplying its original fertility a hundredfold, a thousandfold. And rent, which measures the difference between this added productivity and that of the least productive land in use, has increased accordingly.

Our settler, or whoever has inherited their claim to the land, is now a millionaire. Like a modern Rip Van Winkle, they could have simply fallen asleep — and still they'd be rich. Not from anything they did, but from the increase of population. There are lots where, for every foot of street frontage, the owner can draw more income than an average skilled worker can earn. There are lots that would sell for more than enough to pave them with gold coins. On the main streets tower buildings of granite, marble, iron, and plate glass, finished in the most expensive style, equipped with every convenience. Yet they're not worth as much as the land they sit on — the very same land, unchanged in any way, that when our first settler arrived had no value at all.

The Real Driver of Rising Rent

That this is how population growth powerfully increases rent, anyone in a growing country can see by looking around. The process is happening before their eyes. The increasing difference in productivity between the lands in use — which causes rent to rise — results not so much from population growth forcing production onto inferior land, as from the increased productivity that population growth gives to the land already in use. The most valuable land on Earth, the land that yields the highest rent, is not land of extraordinary natural fertility. It's land to which extraordinary usefulness has been given by population growth.

The increased productivity or usefulness that population gives to certain land operates, as it were, through the simple quality of physical space. The valuable quality of land that has become a population center is its surface area — it makes no difference whether it's fertile river soil like Philadelphia's, rich bottomland like New Orleans's, a filled-in marsh like St. Petersburg's, or a sandy waste like most of San Francisco.

And where value seems to arise from superior natural qualities — such as deep water and good harbors, rich deposits of coal and iron, or heavy timber — observation also shows that these qualities are brought out, made valuable, by population. The coal and iron fields of Pennsylvania, worth enormous sums today, were worthless fifty years ago. What is the real cause of the difference? Simply the difference in population. The coal and iron deposits of Wyoming and Montana, worthless today, will be worth many millions fifty years from now — simply because, in the meantime, population will have greatly increased.

The Ship Metaphor

It is a well-provisioned ship, this vessel on which we sail through space. If the bread and beef above decks seem to grow scarce, we merely open a hatch and there is a new supply, one we never dreamed of. And very great power over the labor of others comes to those who, as the hatches are opened, are allowed to say, "This is mine!"

Recap

To sum up: the effect of population growth on the distribution of wealth is to increase rent — and consequently to shrink the share going to capital and labor — in two ways:

First, by lowering the margin of cultivation.

Second, by bringing out special capabilities in land that would otherwise remain hidden, and by attaching special capabilities to particular locations.

I'm inclined to think that the second way, which has received little attention from economists, is actually the more important one. But for our purposes, this distinction doesn't matter.

Effect of Improvements in the Arts upon the Distribution of Wealth

Setting aside technological improvements, we've seen the effects of population growth on the distribution of wealth. Now, setting aside population growth, let's see what effect improvements in the methods of production have on distribution.

We've seen that population growth increases rent more by increasing the productivity of labor than by decreasing it. If we can now show that, independent of population growth, improvements in methods of production and exchange also increase rent, the disproof of the Malthusian theory — and of all the doctrines derived from or related to it — will be final and complete. We will have explained the tendency of material progress to push down wages and worsen the condition of the poorest class without resorting to any theory about increasing pressure against the food supply.

That this is indeed the case will, I think, be clear on the slightest consideration.

Labor-Saving Means Land-Demanding

The effect of inventions and improvements in production is to save labor — that is, to achieve the same result with less labor, or a greater result with the same labor.

Now, in a society where the existing power of labor was enough to satisfy all material desires, and there was no possibility of new desires being awakened by the opportunity to fulfill them, the effect of labor-saving improvements would simply be to reduce the amount of labor performed. But such a society, if it exists anywhere (which I doubt), exists only where humans most closely resemble animals. In civilized society — the kind we're concerned with in this investigation — the very opposite is the case. Demand is not a fixed quantity that grows only as population grows. In each individual, it rises with their power to obtain the things demanded. A human being is not an ox that lies down to chew its cud when it has eaten its fill; human desire constantly asks for more. "When I get some money," said the Renaissance scholar Erasmus, "I will buy me some Greek books and afterward some clothes." The amount of wealth produced is nowhere equal to the desire for wealth, and desire grows with every additional opportunity for satisfaction.

This being the case, the effect of labor-saving improvements will be to increase the production of wealth. Now, the production of wealth requires two things: labor and land. Therefore, the effect of labor-saving improvements will be to extend the demand for land, and wherever the limit of land quality in use has been reached, to bring into cultivation lands of less natural productivity, or to push cultivation on the same lands to points of lower natural productivity. And so, while the primary effect of labor-saving improvements is to increase the power of labor, the secondary effect is to extend cultivation — and, where this lowers the margin of cultivation, to increase rent.

Thus, where land is entirely owned by private parties, as in England, or where it's either already claimed or can be claimed as fast as it's needed, as in the United States, the ultimate effect of labor-saving machinery and improvements is to increase rent without increasing wages or interest.

It's important that this be fully understood, because it shows that effects attributed by mainstream theories to population growth are really caused by technological progress. And it explains the otherwise baffling fact that labor-saving machinery everywhere fails to benefit the workers.

The Interchangeability of Wealth

Yet to fully grasp this truth, it's necessary to keep in mind something I've already pointed out more than once: the interchangeability of wealth. I mention it again only because it's so persistently forgotten or ignored by writers who talk about agricultural production as if it were something separate from production in general, and about food or basic needs as if these were not included in the term "wealth."

Let me ask the reader to bear in mind what has already been sufficiently illustrated: that possessing or producing any form of wealth is virtually the same as possessing or producing any other form of wealth for which it can be exchanged. Once you see this clearly, you'll see that it's not just improvements that directly save labor applied to land that tend to increase rent, but all improvements that save labor in any way.

That any individual's labor is applied exclusively to producing one form of wealth is solely the result of the division of labor. The goal of any individual's labor is not to obtain wealth in one particular form, but to obtain wealth in all the forms that match their desires. An improvement that saves labor in producing one of the things people want is, in effect, an increase in the power to produce all the other things as well.

If it takes half a person's labor to feed themselves, and the other half to provide clothing and shelter, an improvement that doubled their power to produce food would also increase their power to provide clothing and shelter. If their desires for better food and better clothing and shelter were equal, an improvement in either area would have exactly the same overall effect. If the improvement doubled their food-producing power, they'd spend one-third less labor on food and one-third more on clothing and shelter. If it doubled their power to provide clothing and shelter, they'd spend one-third less on those things and one-third more on food. Either way, the result would be the same: they could get one-third more, in quantity or quality, of everything they wanted — with the same total labor.

And so, where production is carried on through the division of labor among individuals, an increase in the power to produce one thing adds to the power to obtain others, and will increase the production of others — to a degree determined by the proportion that the labor saved bears to the total labor expended, and by the relative strength of desires. I can't think of any form of wealth whose demand wouldn't increase if it became cheaper to produce everything else. Hearses and coffins have been cited as examples of things for which demand is unlikely to grow. But this is true only of quantity. That increased wealth would lead to demand for more expensive hearses and coffins, no one can doubt who has noticed how strong is the desire to honor the dead with costly funerals.

Nor is the demand for food limited, as economic reasoning frequently but incorrectly assumes. Basic food needs are often spoken of as though they were a fixed quantity. But they're fixed only in having a definite minimum. Below a certain amount, a person can't stay alive, and below a somewhat larger amount, they can't stay healthy. But above this minimum, the food a person can consume may increase almost without limit.

Adam Smith says — and Ricardo endorses the statement — that the desire for food is limited in every person by the narrow capacity of the human stomach. But this is obviously true only in the sense that when your belly is full, hunger is satisfied. Your demands for food have no such limit. The stomach of a King Louis XIV, XV, or XVI could hold no more food than the stomach of a French peasant of equal build. Yet while a small garden plot could supply the black bread and herbs that made up the peasant's diet, it took hundreds of thousands of acres to supply the demands of the king, who — besides his own wasteful consumption of the finest foods — required immense supplies for his servants, horses, and dogs.

And in the common facts of daily life — in the unsatisfied desires, perhaps barely conscious, that each of us has — we can see how every increase in the power to produce any form of wealth must increase the demand for land and its direct products. A person who now eats cheap food and lives in a small place will, if their income increases, generally eat better food and move to a larger home. If they grow richer and richer, they'll acquire horses, hire servants, cultivate gardens and lawns — their demand for the use of land constantly growing with their wealth. In the city where I write, there is a man — but he's typical of people found everywhere — who used to cook his own beans and fry his own bacon, but who, now that he's gotten rich, keeps a townhouse that takes up a whole city block and could serve as a first-class hotel, along with two or three country estates with extensive grounds, a large stable of racehorses, a breeding farm, a private track, and more. It certainly takes at least a thousand times, perhaps several thousand times, as much land to supply this man's demands now as it did when he was poor.

Every Improvement Tends to Increase Rent

And so every improvement or invention, no matter what it is, that gives labor the power to produce more wealth causes an increased demand for land and its direct products, and thus tends to push down the margin of cultivation — just as growing population would. This being the case, every labor-saving invention — whether it's a steam plow, a telegraph, an improved process of smelting ore, a high-speed printing press, or a sewing machine — has a tendency to increase rent.

Or to state this truth concisely:

Since all wealth is the product of labor applied to land or the products of land, any increase in the power of labor — as long as the desire for wealth remains unsatisfied — will be used to produce more wealth, and thus increase the demand for land.

An Illustration

To illustrate this effect of labor-saving machinery and improvements, let's suppose a country where, as in all civilized countries, the land is owned by only a portion of the people. Let's suppose a permanent barrier is fixed against any further increase of population. Let the margin of cultivation, or production, be represented by 20. So land or other natural resources that yield a return of 20 from the application of labor and capital will just provide the ordinary rate of wages and interest, without yielding any rent — while all land yielding more than 20 will yield the excess as rent.

With population fixed, let inventions and improvements now reduce by one-tenth the labor and capital needed to produce the same amount of wealth. Now, either one-tenth of the labor and capital can be freed up while production stays the same as before, or the same amount of labor and capital can be employed and production can increase proportionally.

But the way the economy is organized — as in all civilized countries — is such that labor and capital, and especially labor, must compete for employment on whatever terms they can get. The economic system is such that ordinary workers aren't in a position to demand their fair share under the new arrangement. Any reduction in the need for labor will, at first at least, take the form not of giving each worker the same output for less work, but of throwing some workers out of work and giving them nothing.

Now, thanks to the increased efficiency of labor from the new improvements, the same return can be obtained at the productivity level of 18 as was previously obtained at 20. The unsatisfied desire for wealth and the competition of labor and capital for employment will push the margin of production down to, say, 18 — and thus rent will increase by the difference between 18 and 20, while wages and interest as actual amounts will be no more than before. As a proportion of the total output, they'll be less. There will be greater production of wealth, but landowners will get the whole benefit (subject to temporary exceptions that will be discussed later).

If invention and improvement continue, labor efficiency will increase further, and the labor and capital needed to produce a given result will decrease further. The same forces will channel this new productive power into producing more wealth. The margin of cultivation will be pushed down again, and rent will increase — both in proportion and in amount — without any increase in wages and interest. And so, as invention and improvement march on, constantly adding to the efficiency of labor, the margin of production will be pushed lower and lower, and rent will rise constantly, even if population stays the same.

The Nuances

I don't mean that the lowering of the margin would always exactly match the increase in productive power, any more than I mean the process would happen in clearly defined steps. Whether, in any particular case, the lowering of the margin lags behind or exceeds the increase in productive power depends on what might be called the area of productivity available before cultivation is forced to the next lowest point.

For instance: if the margin of cultivation is at 20 and improvements enable the same output with one-tenth less capital and labor, the margin won't fall to 18 if the available land with productivity of 19 is sufficient to employ all the labor and capital displaced from the superior lands. In that case, the margin would rest at 19. Rents would increase by the difference between 19 and 20, and wages and interest would gain the difference between 18 and 19.

But if, with the same increase in productive power, the available land between 20 and 18 isn't sufficient to employ all the displaced labor and capital, the margin must — assuming the same amount of labor and capital is seeking employment — be pushed below 18. In that case, rent would gain more than the increase in output, and wages and interest would actually be less than before the improvements that increased productive power.

Nor is it exactly true that all the labor freed by each improvement will be driven to seek employment producing more wealth. The increased satisfaction that each new improvement gives to a certain portion of the community will be used to demand leisure or personal services, as well as goods. Some workers will therefore become idle, and some will shift from productive to unproductive labor — the proportion of which, as observation shows, tends to grow as society progresses.

But since I'll shortly turn to a cause, not yet considered, that constantly tends to lower the margin of cultivation, to accelerate the advance of rent, and even to push it beyond the level that the actual margin of cultivation would determine, it's not worth accounting for these minor fluctuations in the downward movement of the margin and the upward movement of rent. All I want to make clear is this: without any increase in population, the progress of invention constantly tends to give a larger share of the total output to landowners, and a smaller and smaller share to labor and capital.

The Logical Extreme

And since we can set no limits to the progress of invention, we can set no limits to the increase of rent — short of the entire product. For if labor-saving inventions advanced to absolute perfection, eliminating the need for labor in the production of wealth entirely, then everything the earth could yield could be obtained without labor, and the margin of cultivation would be pushed to zero. Wages would be nothing. Interest would be nothing. Rent would take everything.

For the landowners, able to obtain all wealth from nature without labor, there would be no use for either labor or capital, and no possible way for either to claim any share of the wealth produced. No matter how small the population might be, if anyone besides the landowners continued to exist, it would be at the landowners' whim or by their charity. Non-owners would be kept either for the amusement of the landowners or maintained as paupers by their generosity.

This point — the absolute perfection of labor-saving technology — may seem very remote, if not impossible to reach. But it is a point toward which the march of invention is heading every day more powerfully. In the thinning out of rural populations in the agricultural districts of Great Britain, where small farms are being consolidated into larger ones, and in the great machine-worked wheat fields of California and Dakota, where you can ride for miles through waving grain without seeing a single house, there are already glimpses of the final destination toward which the whole civilized world is rushing. The steam plow and the reaping machine are creating in the modern world the same kind of vast estates that the influx of slaves from foreign wars created in ancient Italy. And to many a poor worker, shoved out of their accustomed place and forced to move on — just as the Roman farmers were forced to join the masses of the great city, or sell their blood for bread in the ranks of the legions — it seems as though these labor-saving inventions were in themselves a curse. And we hear people talking about work as though the exhausting strain of physical labor were, in itself, something to be desired.

A Note on Monopoly and Diffusion

In what I've said above, I've of course been speaking of inventions and improvements once they are widely adopted. It hardly needs saying that as long as an invention or improvement is used by so few that they derive a special advantage from it, it doesn't, to the extent of that special advantage, affect the general distribution of wealth.

The same applies to the limited monopolies created by patent laws, or by the conditions that give a similar character to railroads, telegraph lines, and the like. Although commonly mistaken for profits of capital, the special profits arising from these monopolies are really returns on monopoly power, as was explained in a previous chapter. To the extent that they capture the benefits of an improvement, they don't directly affect general distribution.

For instance, the benefits of a railroad or similar improvement in cheapening transportation are either shared widely or monopolized, depending on whether charges are reduced to a rate that yields ordinary interest on the capital invested, or kept high enough to yield extraordinary returns — or to cover the theft of the builders or directors. And, as is well known, the rise in rent or land values corresponds with how much the charges are reduced.

Government Reform Increases Rent Too

As I've said before, the improvements that advance rent include not only those that directly increase productive power, but also improvements in government, social customs, and morality that indirectly increase it. Considered as material forces, the effect of all these is to increase productive power — and like improvements in technology, their benefit is ultimately captured by the owners of land.

A striking example of this is England's abolition of trade protections. Free trade has enormously increased the wealth of Great Britain without reducing poverty. It has simply increased rent.

And if the corrupt governments of our great American cities were reformed into models of integrity and efficiency, the effect would simply be to increase land values — not to raise either wages or interest.

Effect of the Expectation Raised by Material Progress

We've now seen that while growing population tends to push up rent, so do all the forces that in a progressive society increase the productive power of labor. They too advance rent, without advancing wages or interest. The increased production of wealth ultimately flows to landowners in the form of higher rent. And although, as progress continues, certain advantages may accumulate in the hands of individuals who don't own land — concentrating considerable portions of the increased output in their hands — there is nothing in any of this improvement that tends to increase the general return to either labor or capital.

But there is another cause, not yet discussed, that must be taken into account to fully explain the influence of material progress on the distribution of wealth.

That cause is the confident expectation that land values will keep rising in the future — an expectation that arises in all progressive countries from the steady increase of rent, and that leads to speculation: the holding of land for a higher price than it would otherwise command at the present time.

The Gap Between Actual and Necessary

Up to now, we've assumed — as is generally assumed in explanations of the theory of rent — that the actual margin of cultivation always coincides with what we might call the necessary margin of cultivation. That is, we've assumed that cultivation extends to less productive land only when it becomes necessary because all the more productive land is fully in use.

This is probably the case in stationary or very slowly growing communities. But in rapidly growing communities, where the swift and steady rise of rent gives people confidence that the rise will continue, it's not the case. In such communities, the confident expectation of higher prices acts almost like a conspiracy among landowners. It tends to cause land to be withheld from use in anticipation of higher prices, forcing the margin of cultivation further out than the actual needs of production require.

This force operates to some extent in all growing communities. In countries like England, where the tenant farming system prevails, it may show up more in the selling price of land than in the agricultural margin of cultivation or actual rents. But in communities like the United States, where people who use land generally prefer to own it if they can, and where there's a vast extent of land to be settled, this force operates with enormous power.

The American Example

The immense area over which the American population is scattered shows this. A person who sets out from the Eastern seaboard in search of the margin of cultivation — where they might obtain land without paying rent — must, like someone who swam across a river to get a drink, pass for long distances through half-worked farms and traverse vast areas of virgin soil before reaching the point where land can be had free of rent — that is, by homestead entry or preemption. They are forced so much farther than they'd otherwise need to go by the speculation that is holding these unused lands in expectation of increased future value. And when they settle, they will in turn take up more land than they can use, if they can, in the belief that it will soon become valuable. So those who follow are again pushed farther than the needs of production require, carrying the margin of cultivation to still less productive — because still more remote — locations.

The same thing can be seen in every rapidly growing city. If the best-located land were always fully used before worse-located land was resorted to, no vacant lots would be left as a city expanded, and we wouldn't find miserable shacks in the midst of expensive buildings. These lots, some of them extremely valuable, are withheld from use — or from the full use they could be put to — because their owners, unable or unwilling to develop them, prefer to hold them in expectation of rising land values rather than sell at a price that current developers would pay. And because this land is withheld from use, or from its full potential use, the city's edge is pushed that much farther from the center.

Speculative Value Beyond the City's Edge

But when we reach the limits of the growing city — the actual margin of building, which corresponds to the margin of cultivation in agriculture — we won't find land available at its value for farming purposes, as it would be if rent were determined simply by current needs. Instead, we'll find that for a long distance beyond the city, land carries a speculative value based on the expectation that it will be needed for urban purposes in the future. To reach the point where land can be bought at a price not based on urban rent, we'd have to go far beyond the actual margin of urban use.

Or take a different kind of example — the sort of thing that can probably be found in every part of the country. In Marin County, within easy reach of San Francisco, there's a fine belt of redwood timber. Naturally, this would be the first timber used before going to timber lands much farther away to supply the San Francisco market. But it remains uncut, and lumber hauled from many miles beyond is shipped past it on the railroad every day, because its owner prefers to hold it for the greater price it will bring in the future. By withholding this timber from use, the margin of production for redwood lumber is pushed that much farther up and down the Coast Range.

That mineral land, once it falls into private ownership, is frequently withheld from use while poorer deposits are worked is well known. And in new states it's common to find people who are called "land poor" — that is, people who remain poor, sometimes nearly destitute, because they insist on holding land they can't use themselves at prices at which no one else can profitably use it either.

How Speculation Amplifies the Effect of Progress

Let's return now to the illustration we used in the preceding chapter. With the margin of cultivation standing at 20, an increase in the power of production occurs that makes the same output achievable with one-tenth less labor. For reasons already stated, the margin of production must now be forced down. If it settles at 18, the return to labor and capital will be the same as before, when the margin stood at 20. Whether it actually falls to 18 or falls further depends on what I've called the available area of productivity between 20 and 18.

But if the confident expectation of further rent increases leads landowners to demand a rent of 3 on land rated at 20, a rent of 2 on land rated at 19, and a rent of 1 on land rated at 18 — and to withhold their land from use until these terms are met — the available area of productivity may be so reduced that the margin of cultivation must fall to 17 or even lower. And thus, as a result of the increase in labor efficiency, workers would actually get less than before, interest would be proportionally reduced, and rent would increase by more than the increase in productive power.

Speculation as a Driving Force

Whether we describe it as an extension of the margin of production, or as a pushing of the rent line beyond the margin of production, the influence of land speculation in increasing rent is a major fact that cannot be ignored in any complete theory of the distribution of wealth in progressive countries.

It is the force, generated by material progress itself, that constantly tends to increase rent faster than progress increases production — and thus constantly tends, as material progress advances and productive power grows, to reduce wages not merely in relative terms, but in absolute terms. It is this expansive force that, operating with great power in new countries, brings to them — seemingly long before their time — the social diseases of older countries. It produces homeless wanderers on virgin acres and breeds paupers on half-worked soil.

The Feedback Loop

In short, the general and steady advance of land values in a progressive community necessarily produces that additional tendency to accelerate which appears whenever any general and continuous cause operates to increase the price of something. Just as during the rapid collapse of the Confederate currency in the final days of the Southern Confederacy, the fact that whatever was bought one day could be sold for a higher price the next drove up prices even faster than the currency was depreciating — so does the steady increase in land values that material progress produces act to further accelerate the increase.

We see this secondary cause operating at full force in the frenzied land speculation that marks the growth of new communities. But though these are the dramatic and occasional outbreaks, there's no denying that the cause operates steadily, with greater or lesser intensity, in all progressive societies.

The Natural Limit

The force that limits speculation in commodities — the tendency of rising prices to call forth additional supply — cannot limit the speculative advance of land values, because land is a fixed quantity that human action can neither increase nor diminish. But there is nevertheless a limit to the price of land: the minimum that labor and capital require as a condition for engaging in production at all.

If it were possible to continuously reduce wages all the way to zero, it would be possible to continuously increase rent until it swallowed up the entire product. But since wages can't be permanently pushed below the point at which workers will consent to work and have families, nor interest below the point at which capital will be devoted to production, there's a floor that restrains the speculative advance of rent.

This is why speculation can't push rent as far in countries where wages and interest are already near the minimum as it can in countries where they're considerably above it. Yet I believe that in all progressive countries there's a constant tendency for the speculative advance of rent to overshoot the limit where production would cease. This is shown, I think, by the recurring seasons of economic paralysis — a subject we'll examine more fully in the next book.

Book V: The Problem Solved

The Primary Cause of Recurring Paroxysms of Industrial Depression

Our long investigation is finished. Now we can pull the results together.

Let's start with industrial depressions — the recurring economic collapses that so many contradictory and self-contradictory theories have been put forward to explain.

Land Speculation as the Root Cause

When you consider how the speculative rise in land values cuts into the earnings of labor and capital, and how it chokes off production, I think the conclusion becomes irresistible: this is the main cause of those periodic industrial depressions that every civilized country — and all civilized countries together — seem increasingly prone to.

I don't mean to say there aren't other contributing causes. The growing complexity and interdependence of the machinery of production, which makes every shock or disruption ripple through a widening circle. The fundamental flaws in currency systems that contract exactly when they're needed most. The enormous swings in the volume of commercial credit, which — far more than currency in any form — actually serves as the medium of exchange. Protective tariffs that create artificial barriers to the flow of productive forces. And other similar causes undoubtedly play important roles in producing and continuing what we call hard times. But, both from reasoning through principles and from observing what actually happens, it's clear that the great initiating cause is the speculative run-up in land values.

In the previous chapter, I showed that the speculative advance in land values tends to push the margin of cultivation — the least productive land still worth working — beyond its normal limit. This forces labor and capital to accept smaller returns, or (and this is the only way they can resist the trend) to stop producing altogether. Now, it's not only natural that labor and capital would resist the squeezing down of wages and interest by this speculative advance of rent — they're driven to resist in self-defense, because there's a minimum return below which workers can't survive and capital can't be maintained. So from the simple fact of land speculation, we can predict all the symptoms that mark these recurring seasons of industrial depression.

The Boom-and-Bust Cycle

In any growing community — where population is increasing and one improvement follows another — land values will naturally and steadily rise. This steady increase naturally leads to speculation, in which future increases are anticipated and land values are pushed beyond the point where, under current conditions of production, the usual returns would be left for labor and capital. Production, therefore, starts to shut down. Not that there's necessarily an absolute decline in production. But in a growing community, a failure of production to keep increasing proportionally — because new workers and new capital can't find employment at the usual rates — has the same effect as an absolute decline would in a community that wasn't growing.

This stoppage of production at some points inevitably shows up at other points in the industrial network as a drop in demand, which checks production there too. And so the paralysis spreads through all the interconnections of industry and commerce, producing everywhere a partial breakdown in production and exchange. The result looks like overproduction or overconsumption, depending on which way you're looking at it.

The period of depression that follows would continue until one of three things happens: (1) the speculative advance in rents collapses; (2) the increasing efficiency of labor — thanks to population growth and technological improvement — enables the normal rent line to catch up with the speculative rent line; or (3) workers and investors resign themselves to accepting lower returns. Most likely, all three of these forces cooperate to establish a new equilibrium, at which all the forces of production re-engage and a period of activity follows. Then rent starts climbing again, speculation takes off again, production gets choked again, and the whole cycle repeats.

In the elaborate and complicated system of production that characterizes modern civilization — where, moreover, no country forms a distinct and independent economic community, but geographically and politically separate countries blend and interweave their industrial systems in different ways and to different degrees — we shouldn't expect cause and effect to be as clear and clean as they would be in a simpler economy forming a complete and self-contained whole. Still, the actual phenomena of these alternating seasons of activity and depression clearly correspond to what we'd predict from the speculative advance of rent.

Reasoning from principles thus shows the actual phenomena as resulting from the cause. If we reverse the process, it's just as easy to reach the cause by tracing back through the phenomena.

The Overproduction vs. Overconsumption Debate

These seasons of depression are always preceded by seasons of activity and speculation, and everyone agrees the two are connected — the depression is seen as a reaction to the speculation, the way the morning headache is a reaction to the previous night's binge. But as to exactly how the depression results from the speculation, there are two camps, as the competing attempts on both sides of the Atlantic to explain industrial depression clearly show.

One school says the speculation produced the depression by causing overproduction. They point to warehouses filled with goods that can't be sold at profitable prices, to mills closed or running at half capacity, to mines shut down and steamships laid up, to money sitting idle in bank vaults, and workers forced into idleness and hardship. They point to all this as evidence that production has outstripped consumer demand. They also point out that when government enters the field during wartime as an enormous consumer, prosperous times follow — as in the United States during the Civil War and in England during the Napoleonic Wars.

The other school says the speculation produced the depression by leading to overconsumption. They point to the same full warehouses, rusting steamships, closed mills, and idle workers as evidence of a collapse in purchasing power, which they say clearly results from the fact that people, made extravagant by a fictitious prosperity, lived beyond their means and are now forced to cut back — that is, to consume less wealth. They point, moreover, to the enormous consumption of wealth in wars, in the building of unprofitable railroads, in loans to bankrupt governments, and so on, as extravagances which, though not felt at the time — just as a spendthrift doesn't immediately feel their fortune shrinking — must now be paid for through a period of reduced consumption.

Now, each of these theories clearly captures one side of the picture, but each one clearly fails to grasp the whole truth. As complete explanations, both are equally and utterly absurd.

Because while the great masses of people want more wealth than they can get, and while they're willing to give for it the very basis and raw material of wealth — their labor — how can there be overproduction? And while the machinery of production sits idle and producers are condemned to involuntary unemployment, how can there be overconsumption?

When the desire to consume more coexists with the ability and willingness to produce more, you can't blame the industrial and commercial paralysis on either overproduction or overconsumption. The trouble, clearly, is that production and consumption can't reach each other.

Tracing the Cause

How does this inability arise? It's obviously, and by common agreement, the result of speculation. But speculation in what?

Certainly not speculation in things that are products of labor — agricultural goods, mineral products, or manufactured goods. The effect of speculation in such things, as standard textbooks demonstrate (sparing me the need for illustration), is simply to equalize supply and demand and to smooth out the interplay of production and consumption — an action like that of a flywheel in a machine.

Therefore, if speculation is the cause of these industrial depressions, it must be speculation in things that are not products of labor, but are still necessary for labor to produce wealth — things of fixed quantity. That is to say, it must be speculation in land.

That land speculation is the true cause of industrial depression is, in the United States, plainly evident. In each period of industrial activity, land values have steadily risen, culminating in speculation that sent them soaring in great leaps. This has been invariably followed by a partial shutdown of production and its companion, a collapse in purchasing power (dull trade), generally accompanied by a commercial crash. Then comes a period of comparative stagnation, during which equilibrium is slowly reestablished and the same cycle begins again. This pattern is visible throughout the civilized world. Periods of industrial activity always culminate in a speculative run-up of land values, followed by the symptoms of choked production — generally showing up first as a drop in demand from the newer countries, where the run-up in land values has been greatest.

That this must be the main explanation of these periods of depression will be clear from an analysis of the facts.

Why Reduced Demand Really Means Reduced Production

Remember that all trade is the exchange of commodities for commodities. So the drop in demand for some commodities that marks a depression is really a decline in the supply of other commodities. When dealers find their sales falling and manufacturers find orders drying up — even though the things they sell or stand ready to make are things people still very much want — it simply means the supply of other things, which in the course of trade would be exchanged for them, has declined. In everyday language we say "buyers have no money" or "money is getting scarce," but in talking this way we forget that money is just the medium of exchange. What would-be buyers really lack is not money but commodities they can turn into money. What's really getting scarcer is production of some kind. The shrinking of consumer demand is therefore just a result of the shrinking of production.

This is crystal clear to shopkeepers in a manufacturing town when the mills shut down and workers are laid off. It's the halt in production that strips workers of the means to make the purchases they want, leaving the shopkeeper with what — given the reduced demand — is now excess inventory, forcing the shopkeeper to let some clerks go and cut back in other ways. And the drop in demand that left the manufacturer with excess stock and forced the layoffs must arise in the same way. Somewhere — maybe on the other side of the world — a check in production has produced a check in the demand for goods. The fact that demand falls even though people's wants remain unsatisfied proves that production has been checked somewhere.

People want what the manufacturer makes just as much as ever, just as the laid-off workers want what the shopkeeper has to sell. But they don't have as much to give in exchange. Production has been checked somewhere, and this reduction in the supply of some things has shown itself as a drop in demand for others — the check spreading through the whole framework of industry and exchange.

The Industrial Pyramid

Now, the industrial pyramid clearly rests on the land. The primary and fundamental occupations, which create demand for all others, are those that extract wealth from nature. So if we trace this check to production — this decreased purchasing power — from one exchange point to another, from one occupation to another, we must ultimately find it in some obstacle that prevents labor from working on land. And that obstacle, it's clear, is the speculative advance in rent, or in land values, which produces the same effects as — because it effectively is — a lockout of labor and capital by landowners. This check to production, beginning at the foundation of interconnected industry, spreads from exchange point to exchange point, with each drop in supply becoming a drop in demand, until, so to speak, the whole machine is thrown out of gear. And everywhere the same spectacle appears: labor going to waste while workers suffer from want.

Unemployment as Proof

This strange and unnatural spectacle of large numbers of willing workers who can't find employment is enough to suggest the true cause to anyone who can think clearly. For, even though familiarity has dulled us to it, it is a strange and unnatural thing that people who want to work in order to satisfy their needs can't find the opportunity. Since labor is what produces wealth, someone offering to exchange labor for food, clothing, or any other form of wealth is like someone offering to trade bullion for coin, or wheat for flour. We talk about the "supply of labor" and the "demand for labor," but clearly these are just relative terms. The supply of labor is everywhere the same — two hands always come into the world with one mouth, twenty-one boys to every twenty girls. And the demand for labor must always exist as long as people want things that only labor can produce. We talk about the "shortage of work," but clearly it's not work that's in short supply while want continues. The supply of labor can't be too great, and the demand for labor can't be too small, when people are suffering for lack of things that labor produces. The real trouble must be that supply is somehow prevented from satisfying demand — that somewhere there's an obstacle that keeps labor from producing what workers need.

Take any one of these vast masses of unemployed people, to whom — though they've never heard of Malthus — it seems there are too many people in the world. In their own wants, in the needs of their anxious families, in the demands of their half-cared-for, perhaps even hungry and shivering children, there is demand enough for labor, Heaven knows! In their own willing hands is the supply. Put such a person on a solitary island, and though cut off from all the enormous advantages that the cooperation, combination, and machinery of a civilized community give to productive power, their two hands can fill the mouths and keep warm the backs that depend on them. Yet where productive power is at its highest development, they cannot. Why? Is it not because in the one case they have access to the materials and forces of nature, and in the other this access is denied?

Isn't it the fact that labor is shut off from nature that alone can explain the state of things that forces people to stand idle who would willingly supply their needs by their labor? The immediate cause of enforced idleness in one group of workers may be the drop in demand from other people for the particular things they produce. But trace this cause from point to point, from occupation to occupation, and you'll find that enforced idleness in one trade is caused by enforced idleness in another, and that the paralysis which produces dullness in all trades can't be attributed to too great a supply of labor or too small a demand for labor. It must come from the fact that supply can't meet demand by producing the things that satisfy wants and are the purpose of labor.

Labor Needs Land

Now, what labor needs in order to produce these things is land. When we say that labor "creates" wealth, we're speaking metaphorically. People create nothing. The entire human race, laboring forever, couldn't create the tiniest particle floating in a sunbeam — couldn't make this spinning planet one atom heavier or lighter. In producing wealth, labor, with the help of natural forces, simply works up preexisting matter into desired forms. And to produce wealth, labor must therefore have access to this matter and these forces — that is to say, to land. The land is the source of all wealth. It is the mine from which the ore must be drawn that labor fashions. It is the substance to which labor gives form. And so, when labor can't satisfy its needs, can we not say with certainty that the cause must be that labor is denied access to land?

When in every trade there's a "shortage of employment" — when everywhere labor goes to waste while desire remains unsatisfied — the obstacle that prevents labor from producing the wealth it needs must lie at the very foundation of the industrial structure. And that foundation is land. Milliners, optical instrument makers, gilders, and polishers aren't the pioneers of new settlements. Miners didn't go to California or Australia because shoemakers, tailors, machinists, and printers were already there. Those trades followed the miners, just as they were then following the gold diggers into the Black Hills of South Dakota and the diamond diggers into South Africa. It's not the shopkeeper who creates the farmer, but the farmer who brings the shopkeeper. It's not the growth of the city that develops the countryside, but the development of the countryside that makes the city grow. And so, when across all trades people willing to work can't find the opportunity, the difficulty must lie in the employment that creates demand for all other employments — it must be because labor is shut out from land.

The San Francisco Example

In Leeds or Lowell, in Philadelphia or Manchester, in London or New York, it may take a grasp of first principles to see this. But where industrial development hasn't become so elaborate, and the chain linking cause to effect is shorter, you only have to look at the obvious facts. Though not yet thirty years old, the city of San Francisco, in both population and commercial importance, ranked among the great cities of the world and, next to New York, was the most cosmopolitan of American cities. Though not yet thirty years old, it had for some years a growing number of unemployed people. Clearly, the reason so many were unemployed in the city was that people couldn't find work in the country. When the harvest opened, they went trooping out; when it was over, they came trooping back to the city. If these unemployed people had been producing wealth from the land, they wouldn't only have been employing themselves — they'd have been giving work to every mechanic in the city, giving business to the shopkeepers, trade to the merchants, audiences to the theaters, and subscribers and advertisers to the newspapers — creating purchasing power that would be felt in New England and Old England, and wherever in the world the goods come from that such a population consumes when it has the means to pay.

Now, why couldn't this unemployed labor put itself to work on the land? Not because the land was all in use. Though all the symptoms that in older countries are taken as signs of surplus population were beginning to appear in San Francisco, it was absurd to talk about surplus population in a state that, with greater natural resources than France, didn't yet have a million people. Within a few miles of San Francisco there was enough unused land to give employment to everyone who wanted it. I don't mean that every unemployed person could have become a farmer or built a house if given the land. But enough could and would have done so to give employment to the rest. What, then, was preventing labor from putting itself to work on this land? Simply that the land had been monopolized and was being held at speculative prices based not on present value, but on the added value that would come with future population growth.

What could be seen in San Francisco by anyone willing to look, could, I have no doubt, be seen just as clearly in other places.

Railroads and Land Speculation

The commercial and industrial depression which first clearly appeared in the United States in 1872, and spread with greater or lesser intensity across the civilized world, is largely attributed to the overbuilding of the railroad system, and there's much that seems to support this connection. I fully recognize that building railroads before they're actually needed can divert capital and labor from more to less productive uses, making a community poorer instead of richer. When the railroad mania was at its peak, I pointed this out in a political pamphlet addressed to the people of California.40 But to blame such a widespread industrial deadlock on this waste of capital seems to me like attributing an unusually low tide to the drawing of a few extra buckets of water. The waste of capital and labor during the Civil War was enormously greater than it could possibly be from building unnecessary railroads, yet it produced no such result. And there's certainly little sense in blaming railroad construction for this depression, when the most prominent feature of the depression has been the surplus of capital and labor looking for something to do.

Yet there is a connection between rapid railroad construction and industrial depression — one that anyone who understands what rising land values mean, and who has noticed the effect railroad construction has on land speculation, can easily see. Wherever a railroad was built or even planned, land prices shot up under the influence of speculation, and thousands of millions of dollars were added to the nominal values that capital and labor were being asked to pay — outright or in installments — as the price of being allowed to go to work and produce wealth. The inevitable result was to choke off production, and this check to production spread as a drop in demand, which checked production to the furthest edge of the vast circle of exchanges, hitting with accumulated force in the centers of the great industrial system that commerce links together across the civilized world.

The California Case Study

The workings of this cause can perhaps be most clearly traced in California, which, because of its comparative isolation, formed an unusually well-defined economic community.

Until nearly its close, the last decade was marked in California by the same industrial activity that characterized the Northern States and, indeed, the entire civilized world — when you take into account the disruption of trade and industry caused by the Civil War and the blockade of Southern ports. This activity couldn't be attributed to currency inflation or to lavish federal spending, which in the Eastern States has since been offered as the explanation for the prosperity of the same period. Despite legal tender laws, the Pacific Coast stuck to gold and silver currency, and federal taxation took away far more than was returned in federal spending. The activity was due solely to normal causes: though placer mining was declining, the Nevada silver mines were opening up, wheat and wool were beginning to replace gold as the leading exports, and a growing population along with improvements in production and trade were steadily increasing the efficiency of labor.

Alongside this material progress came a steady rise in land values — its natural consequence. This steady advance gave birth to a speculative advance which, with the coming of the railroad era, sent land values soaring in every direction. If California's population had grown steadily even when the long, costly, fever-plagued route across the Isthmus of Panama was the main connection to the Atlantic states, it must — so the reasoning went — grow enormously with the opening of a railroad that would bring New York harbor and San Francisco Bay within seven days' easy travel. And within the state itself, the locomotive was replacing the stagecoach and freight wagon. The expected increase in land values was discounted in advance. Lots on the outskirts of San Francisco rose hundreds and thousands of percent, and farmland was snapped up and held at high prices in every direction an immigrant might go.

But the anticipated rush of immigrants never came. Labor and capital couldn't pay so much for land and still earn fair returns. Production was checked, if not absolutely, then at least relatively. As the transcontinental railroad approached completion, instead of increased activity, the symptoms of depression began to appear. And when it was completed, the season of activity gave way to a period of depression that has not since been fully recovered from — during which wages and interest have steadily fallen. What I've called the actual rent line, or margin of cultivation, has been gradually approaching the speculative rent line (aided by the steady march of improvement and population growth, which, though slower than it otherwise would have been, still continues). But the stubbornness with which a speculative advance in land prices is maintained in a developing community is well known.41

Now, what happened in California happened in every growing section of the country. Everywhere a railroad was built or planned, land was monopolized in anticipation, and the benefit of the improvement was captured in advance through higher land values. The speculative advance in rent, outrunning the normal advance, choked production, shrank demand, and pushed labor and capital back from occupations closely tied to the land into those where land values are a less obvious factor. This is how the rapid expansion of railroads is connected to the depression that followed.

And what happened in the United States happened to a greater or lesser degree all over the progressive world. Everywhere land values had been steadily rising with material progress, and everywhere this increase bred a speculative advance. The shock wave of the primary cause not only radiated from the newer parts of the country to the older, and from the United States to Europe, but everywhere the primary cause was at work independently too. And hence, a worldwide depression of industry and commerce, born of worldwide material progress.

Why Depressions Strike Suddenly

There's one thing I may seem to have overlooked in attributing these industrial depressions to the speculative advance of rent or land values as the main and primary cause. The operation of such a cause, though it may be rapid, must be gradual — more like a steadily increasing pressure than a sudden blow. But these depressions seem to come suddenly — they have, at their start, the character of a seizure, followed by a lethargy as if from exhaustion. Everything seems to be humming along as usual, commerce and industry vigorous and expanding, when suddenly there comes a shock like a thunderbolt from a clear sky — a bank fails, a great manufacturer or merchant goes under, and, as if a blow has been struck through the entire industrial system, failure follows failure, workers are discharged on every side, and capital retreats into profitless safety.

Let me explain what I think accounts for this. We need to take into account how exchanges are made, because it's through exchanges that all the varied forms of industry are linked into one mutually connected and interdependent system. To enable exchanges between producers far removed in space and time, large stocks must be kept in store and in transit, and this, as I've already explained, is the great function of capital — in addition to providing tools and seed. These exchanges are, perhaps necessarily, largely made on credit — that is, the advance on one side is made before the return is received on the other.

Now, without stopping to investigate all the reasons why, it's clear that these advances generally flow from the more highly organized and later-developed industries to the more fundamental ones. The West African trader, for example, who exchanges palm oil and coconuts for colorful cloth and Birmingham trinkets, gets a return immediately. The English merchant, by contrast, must wait a long time before getting paid. A farmer can sell a crop as soon as it's harvested, and for cash. A large manufacturer must maintain big inventories, ship goods long distances to agents, and usually sell on credit. So, since advances and credits generally flow from what we might call the secondary industries to what we might call the primary ones, it follows that any check to production coming from the primary industries won't immediately show itself in the secondary ones. The system of advances and credits acts like an elastic connection: it will stretch considerably before it snaps. But when it snaps, it snaps hard.

The Pyramid Analogy

Or, to illustrate the same point another way: the Great Pyramid of Giza is built of layers of masonry, with the bottom layer, of course, supporting all the rest. If we could somehow gradually shrink this bottom layer, the upper part of the pyramid would hold its shape for a while. Then, when gravity finally overcame the cohesion of the material, it wouldn't shrink gradually and evenly — it would break off suddenly, in large chunks. Now, the industrial system can be compared to such a pyramid. The exact proportion that various industries bear to each other at any given stage of social development is hard, maybe impossible, to pin down. But clearly there is such a proportion, just as in a printer's font of type there's a set ratio between the various letters. Each form of industry, as it develops through division of labor, grows out of the others, and all rest ultimately on land — because without land, labor is as powerless as a person floating in empty space.

To make the illustration closer to a growing country, imagine a pyramid of stacked layers — the whole thing constantly growing and expanding. Imagine the growth of the layer nearest the ground is checked. The other layers will keep expanding for a while. In fact, the tendency will temporarily be toward faster expansion, because the vital energy denied an outlet at the ground level will try to find one in the layers above — until finally there's a decisive imbalance and a sudden crumbling all along the faces of the pyramid.

Summing Up

That the main cause and general pattern of the recurring paroxysms of industrial depression, which are becoming such a prominent feature of modern life, are explained this way is, I think, clear. And let the reader remember that it is only the main causes and general patterns of such phenomena that we're seeking to trace — or that, in fact, it's possible to trace with any precision. Economics can deal, and needs to deal, only with general tendencies. The secondary forces are so numerous, the actions and reactions so varied, that the exact character of the phenomena can't be predicted in advance. We know that if a tree is cut through it will fall, but the precise direction will be determined by the lean of the trunk, the spread of the branches, the angle and force of the cuts, the direction and strength of the wind. Even a bird landing on a twig, or a startled squirrel leaping from branch to branch, will have some influence. We know that an insult will arouse resentment in the human breast, but to say exactly how far and in what way it will be expressed would require reconstructing the entire person and all their circumstances, past and present.

The way in which the cause I've identified explains the main features of these industrial depressions stands in striking contrast to the contradictory and self-contradictory attempts to explain them using the conventional theories of how wealth is distributed. That a speculative advance in rent or land values invariably precedes each of these seasons of industrial depression is clear everywhere. That they bear to each other the relation of cause and effect is obvious to anyone who considers the necessary relationship between land and labor.

And that the current depression is running its course, and that a new equilibrium is being established in the manner I've described — which will produce another season of comparative activity — can already be seen in the United States. The normal rent line and the speculative rent line are being brought together: (1) By the fall in speculative land values, clearly visible in the drop in rents and the shrinkage of real estate values in the major cities. (2) By the increased efficiency of labor, arising from population growth and the use of new inventions and discoveries — some of them almost as important as the discovery of steam power, which we seem on the verge of grasping. (3) By the lowering of the customary standard of interest and wages. The decline in interest is shown by the government's ability to place a loan at four percent; the decline in wages is too widely evident to need specific examples. When the equilibrium is thus reestablished, a season of renewed activity, culminating in a new speculative advance in land values, will begin.42 But wages and interest will not recover their lost ground. The net result of all these ups and downs is the gradual forcing of wages and interest toward their minimum. These temporary and recurring depressions are, in fact, just the intensified form of the general movement that accompanies material progress — as we noted in the opening chapter.

The Persistence of Poverty amid Advancing Wealth

The great problem — of which these recurring seasons of industrial depression are just particular symptoms — is now, I believe, fully solved. The social phenomena that all over the civilized world appall the philanthropist and perplex the statesman, that hang clouds over the future of the most advanced societies, and raise doubts about the reality and ultimate goal of what we've proudly called progress — these are now explained.

The reason why, despite the increase in productive power, wages constantly tend toward a minimum that provides only a bare living, is that as productive power increases, rent tends to increase even more — constantly forcing wages down.

The Promise of Progress

In every direction, the direct tendency of advancing civilization is to increase the power of human labor to satisfy human desires — to wipe out poverty and banish want and the fear of want. All the things that progress consists of, all the conditions that progressive communities are striving for, have as their direct and natural result the improvement of the material (and consequently the intellectual and moral) condition of everyone within their influence. The growth of population, the increase and extension of trade, the discoveries of science, the march of invention, the spread of education, the improvement of government, and the refinement of social conduct — considered as material forces — all have a direct tendency to increase the productive power of labor. Not of some labor, but of all labor. Not in some industries, but in all industries. For the law of wealth production in society is the law of "each for all, and all for each."

How Rent Intercepts the Gains

But labor cannot reap the benefits that advancing civilization brings, because they are intercepted. Land being necessary to labor, and land being held as private property, every increase in the productive power of labor merely increases rent — the price that labor must pay for the opportunity to use its powers. And so all the advantages gained by the march of progress go to the owners of land, and wages do not increase. Wages cannot increase, because the greater labor's earnings, the greater the price labor must pay out of those earnings for the opportunity to earn anything at all. The ordinary worker has no more stake in the general advance of productive power than an enslaved person had in a rise in the price of sugar. And just as a rise in the price of sugar could make the enslaved person's condition worse by driving the master to work them harder, so can the condition of the free worker be changed for the worse — not just relatively, but absolutely — by the increase in labor's productive power. Because the continuous advance of rents gives rise to a speculative tendency that discounts the effect of future improvements through a still further advance of rent. And this tends, even where the normal advance of rent hasn't already done so, to drive wages down to the slave point — the point at which workers can just barely survive.

And so, robbed of all the benefits of increasing productive power, labor is exposed to certain effects of advancing civilization which, stripped of the advantages that naturally accompany them, are pure negatives — and which by themselves tend to reduce the free worker to the helpless and degraded condition of a slave.

The Trap of Specialization

For all the improvements that add to productive power as civilization advances consist in, or require, an ever finer division of labor. The efficiency of the workforce as a whole is increased at the expense of the independence of its individual members. Each individual worker learns and masters only an infinitesimal part of the many processes needed to supply even the most basic wants. The total output of labor in a tribal community is small, but each member is capable of independent life. They can build their own shelter, carve or stitch together their own canoe, make their own clothing, manufacture their own weapons, snares, tools, and ornaments. They possess all the knowledge of nature their people have accumulated — they know which plants are safe to eat and where to find them, know the habits and habitats of animals, birds, fish, and insects, can navigate by the sun or the stars, by the turning of blossoms or the moss on the trees. They are, in short, capable of supplying all their own needs. They may be cut off from their community and still live. And this independent capability makes them a free partner in their relationship to the community they belong to.

Compare this with workers in the lowest ranks of civilized society, whose lives are spent producing just one thing — or more often just a tiny fragment of one thing — out of the vast array of things that make up the wealth of society and supply even the most basic wants. Workers who not only can't make the tools their work requires, but often work with tools they don't own and can never hope to own. Compelled to labor even more intensely and continuously than people in tribal societies, and getting no more from it than those societies provide — the bare necessities of life — they lose the independence that tribal life offers. They can't apply their own powers to the direct satisfaction of their own wants, and without the cooperation of many others, they can't apply them indirectly either. They're just a link in an enormous chain of producers and consumers, unable to separate themselves, unable to move unless the whole chain moves. The worse their position in society, the more dependent on society they are — the more utterly unable to do anything for themselves. Their very power to work for the satisfaction of their needs passes out of their own control and may be taken away or restored by the actions of others, or by general forces over which they have no more influence than they have over the motions of the solar system. The ancient curse of toil comes to be looked on as a blessing, and people think, and talk, and agitate, and legislate as though monotonous manual labor were itself a good and not a burden, an end and not a means. Under such circumstances, people lose the essential quality of humanity — the power to shape and control conditions. They become slaves, machines, commodities — things, in some respects, lower than animals.

No Romantic Illusions

I'm no sentimental admirer of tribal life. I don't get my ideas of nature's "untutored children" from Rousseau, or Chateaubriand, or Cooper. I'm well aware of its material and mental poverty, its low and narrow range. I believe that civilization is not only the natural destiny of humanity, but the path to the liberation, elevation, and refinement of all our powers. I think it's only in moods that might lead someone to envy cud-chewing cattle that a person with access to the advantages of civilization could look back with longing on tribal existence. But I also think that no one who opens their eyes to the facts can resist the conclusion that there are, in the heart of our civilization, large classes with whom the most destitute tribal people could not afford to trade places. It is my deliberate opinion that if, standing on the threshold of being, someone were given the choice of entering life as a Tierra del Fuegan, an Aboriginal Australian, an Inuit in the Arctic Circle, or among the lowest classes in a highly civilized country like Great Britain, they would make infinitely the better choice by choosing the life of a tribal people. For those classes who in the midst of wealth are condemned to want suffer all the deprivations of tribal life, without its sense of personal freedom. They are condemned to more than its narrowness and confinement, without the opportunity for the growth of its rough virtues. If their horizon is wider, it is only to reveal blessings they cannot enjoy.

There are some to whom this may seem like exaggeration, but only because they've never allowed themselves to truly comprehend the condition of those upon whom the iron heel of modern civilization presses with full force. As the political thinker Alexis de Tocqueville observed in one of his letters to Madame Swetchine, "We so soon become used to the thought of want that we do not feel that an evil which grows greater to the sufferer the longer it lasts becomes less to the observer by the very fact of its duration." And perhaps the best proof of the truth of this observation is that in cities where there exists a pauper class and a criminal class, where young girls shiver as they sew for bread and ragged, barefoot children make a home in the streets, money is regularly raised to send missionaries to "the heathen!" Send missionaries to the heathen! It would be laughable if it weren't so sad. The ancient god Baal no longer stretches forth his hideous, sloping arms — but in Christian lands, mothers kill their infants for a burial fee! And I challenge anyone to produce from any authentic accounts of tribal life such descriptions of degradation as can be found in the official documents of highly civilized countries — in reports of health inspectors and inquiries into the condition of the laboring poor.

The Simple Theory That Explains Everything

The simple theory I've outlined (if indeed it can be called a theory, when it's really just the recognition of the most obvious relationships) explains this pairing of poverty with wealth, of low wages with high productive power, of degradation amid enlightenment, of virtual slavery in the midst of political liberty. It harmonizes, as results flowing from a general and inexorable law, facts that are otherwise baffling. It reveals the sequence and connection between phenomena that without it seem random and contradictory. It explains why interest and wages are higher in new communities than in older ones, even though average and total production of wealth is less. It explains why improvements that increase the productive power of labor and capital increase the reward of neither. It explains what is commonly called the conflict between labor and capital, while proving the real harmony of interest between them. It cuts the last inch of ground from under the fallacies of protectionism, while showing why free trade fails to permanently benefit the working classes. It explains why want increases alongside abundance, and why wealth tends toward greater and greater concentration. It explains the periodically recurring depressions of industry without resorting to the absurdity of "overproduction" or the absurdity of "overconsumption." It explains the enforced idleness of large numbers of would-be producers, which wastes the productive power of advanced societies, without the absurd assumption that there's too little work to do or too many to do it. It explains the damage that the introduction of machinery often does to the working classes, without denying the natural advantages that machinery provides. It explains the vice and misery that appear amid dense population, without attributing to the laws of a wise and benevolent Creator defects that belong only to the shortsighted and selfish arrangements of human beings.

This explanation fits all the facts.

The Evidence from Around the World

Look over the world today. In countries that differ the most widely — under the most diverse conditions of government, industry, tariffs, and currency — you'll find distress among the working classes. But everywhere that you find distress and destitution in the midst of wealth, you'll find that the land is monopolized — that instead of being treated as the common property of all the people, it is treated as the private property of individuals, and that for the use of it, large revenues are extracted from the earnings of labor. Look over the world today, comparing different countries with each other, and you'll see that it's not the abundance of capital or the productiveness of labor that makes wages high or low, but the extent to which the monopolizers of land can levy a tribute on the earnings of labor through rent. Isn't it a notorious fact, known to the most uninformed, that new countries — where total wealth is small but land is cheap — are always better countries for working people than rich countries where land is expensive? Wherever you find land relatively cheap, don't you find wages relatively high? And wherever land is expensive, don't you find wages low? As land increases in value, poverty deepens and pauperism appears. In new settlements where land is cheap, you'll find no beggars, and the differences in condition are very slight. In the great cities, where land is so valuable it's measured by the foot, you'll find the extremes of poverty and luxury. And this gap in condition between the top and bottom of the social scale can always be measured by the price of land. Land in New York is more valuable than in San Francisco, and in New York, a San Franciscan could see squalor and misery that would make them stand aghast. Land is more valuable in London than in New York, and in London, there is squalor and destitution worse than New York's.

The Evidence Across Time

Compare the same country at different times, and the same relationship is obvious. After much investigation, the historian Henry Hallam concluded that the wages of manual labor were greater in amount in England during the Middle Ages than they are now. Whether this is exactly right or not, it's clear they couldn't have been much less, if at all. The enormous increase in the efficiency of labor — estimated at seven or eight hundred percent even in agriculture, and almost incalculable in many branches of industry — has only added to rent. The rent of agricultural land in England is now, according to Professor Thorold Rogers, 120 times as great measured in money as it was 500 years ago, and 14 times as great measured in wheat — while the rent of building land and mineral land has advanced enormously more. According to Professor Henry Fawcett's estimate, the total capitalized rental value of the land of England now amounts to about $22 billion — which means that a few thousand people in England hold a claim on the labor of the rest whose capitalized value is more than twice what the nation's entire population would be worth, at average 1860 slave prices, if they were all enslaved.

In Belgium and Flanders, in France and Germany, the rent and selling price of agricultural land has doubled within the last thirty years.43 In short, increased productive power has everywhere added to the value of land. Nowhere has it added to the value of labor. Though actual wages may have risen somewhat in some places, that rise is clearly due to other causes. In more places wages have fallen — that is, where it was possible for them to fall, since there's a minimum below which workers can't sustain their numbers. And everywhere, wages as a share of total production have decreased.

Historical Proof: The Black Death and the Enclosures

How the Black Death brought about the great rise of wages in England in the fourteenth century is clearly visible in the efforts of the landowners to regulate wages by law. That that terrible reduction in population actually reduced the effective power of labor, rather than increasing it, there can be no doubt. But the decrease in competition for land reduced rent even more dramatically, and wages rose so sharply that force and criminal penalties were invoked to hold them down. The reverse effect followed the monopolization of land that took place in England during the reign of Henry VIII, through the enclosure of common lands and the division of church properties among the hangers-on and favorites who were thus enabled to found noble families. The result was the same as what a speculative increase in land values tends to produce. According to the economist Thomas Malthus (who, in his Principles of Political Economy, mentions the fact without connecting it to land ownership), in the reign of Henry VII, half a bushel of wheat would buy little more than a day's common labor. But by the latter part of Elizabeth's reign, half a bushel of wheat would buy three days' common labor. I can hardly believe the reduction in wages was really as severe as this comparison suggests. But that there was a real reduction in wages, and great distress among the working classes, is clear from the complaints about "sturdy vagrants" and the laws passed to suppress them. The rapid monopolization of the land, the pushing of the speculative rent line beyond the normal rent line, produced homeless drifters and paupers, just as similar causes have lately been producing similar effects in the United States.

"Land which went heretofore for twenty or forty pounds a year," said the reformer Hugh Latimer, "now is let for fifty or a hundred. My father was a yeoman, and had no lands of his own; only he had a farm at a rent of three or four pounds by the year at the uttermost, and thereupon he tilled so much as kept half a dozen men. He had walk for a hundred sheep, and my mother milked thirty kine; he was able and did find the King a harness with himself and his horse when he came to the place that he should receive the King's wages. I can remember that I buckled his harness when he went to Blackheath Field. He kept me to school; he married my sisters with five pound apiece, so that he brought them up in godliness and fear of God. He kept hospitality for his neighbors and some alms he gave to the poor. And all this he did of the same farm, where he that now hath it payeth sixteen pounds rent or more by year, and is not able to do anything for his Prince, for himself, nor for his children, nor to give a cup of drink to the poor."

"In this way," said Sir Thomas More, referring to the eviction of small farmers that accompanied this rise in rents, "it comes to pass that these poor wretches, men, women, husbands, orphans, widows, parents with little children, householders greater in number than in wealth, all of these emigrate from their native fields, without knowing where to go."

And so from the stock of the Latimers and the Mores — from the sturdy spirit that amid the flames of the Oxford stake cried, "Play the man, Master Ridley!" and the mingled strength and sweetness that neither prosperity could corrupt nor the executioner's ax could daunt — were bred thieves and vagrants, the mass of criminality and pauperism that still blights the innermost petals and gnaws like a worm at the root of England's rose.

But it would be as pointless to cite historical illustrations of this as it would be to give examples of the law of gravity. The principle is equally universal and equally obvious. That rent must reduce wages is as clear as the fact that the larger the amount subtracted, the smaller the remainder. That rent does reduce wages is something anyone, anywhere, can see by simply looking around.

What Actually Raises Wages

There's no mystery about the cause that so suddenly and dramatically raised wages in California in 1849, and in Australia in 1852. It was the discovery of placer gold mines on unowned land to which labor had free access that sent the wages of cooks in San Francisco restaurants to $500 a month and left ships rotting in the harbor without officers or crew until their owners agreed to pay rates that would have seemed outrageous anywhere else on the globe. If those mines had been on privately owned land, or if they had been immediately monopolized so that rent could be charged, it would have been land values that soared, not wages. The Comstock silver lode in Nevada has been richer than the placer mines, but the Comstock lode was quickly monopolized. It's only by virtue of the powerful Miners' Association — and the fear of the damage it could do — that workers are able to get four dollars a day for parboiling themselves two thousand feet underground, where the air they breathe must be pumped down to them. The wealth of the Comstock lode has been added to rent. The selling price of these mines runs into the hundreds of millions, and they've produced individual fortunes whose monthly returns can only be estimated in the hundreds of thousands, if not millions. Nor is there any mystery about the cause that has been reducing wages in California from the sky-high levels of the early days to nearly the same level as wages in the Eastern States — and that is still pushing them lower. The productivity of labor hasn't decreased; on the contrary, it has increased, as I've already shown. But out of what it produces, labor now has to pay rent. As the placer deposits were exhausted, workers had to turn to the deeper mines and to agricultural land. But since monopolization of these was permitted, people now walk the streets of San Francisco ready to work for almost anything — because natural opportunities are no longer freely available to labor.

The Thought Experiments

The truth is self-evident. Put to anyone capable of consecutive thought this question:

"Suppose a new island were to rise from the English Channel or the North Sea — a no-man's-land on which common labor in unlimited amounts could earn ten shillings a day, and which remained unowned and freely accessible, like the commons that once made up so large a part of English soil. What would be the effect on wages in England?"

They would immediately tell you that common wages throughout England would soon rise to ten shillings a day.

And in response to another question — "What would be the effect on rents?" — they would, after a moment's thought, say that rents would necessarily fall. And if they thought through the next step, they would tell you that all this would happen without any very large portion of English labor actually moving to the new land, or the forms and direction of industry changing much. The only production that would be abandoned would be the kind that currently yields less to labor and landlord together than labor could earn on the new land. The great rise in wages would come at the expense of rent.

Now take the same person — or another. Some hardheaded business person who has no theories, but knows how to make money. Say to them: "Here is a little village. In ten years it will be a great city — in ten years the railroad will have replaced the stagecoach, the electric light will have replaced the candle. It will overflow with all the machinery and improvements that so enormously multiply the effective power of labor. Will interest be any higher in ten years?"

They'll tell you, "No!"

"Will the wages of common labor be any higher? Will it be easier for someone with nothing but their labor to make an independent living?"

They'll tell you, "No. The wages of common labor won't be any higher. On the contrary, the odds are they'll be lower. It won't be easier for the ordinary worker to make an independent living; the chances are it will be harder."

"What, then, will be higher?"

"Rent. The value of land. Go get yourself a piece of ground, and hold on to it."

And if, under such circumstances, you take their advice, you need do nothing more. You may sit down and smoke your pipe. You may lounge around like the idlers of Naples or Mexico City. You may go up in a balloon or down a hole in the ground. And without doing one stroke of work, without adding one iota to the wealth of the community, in ten years you will be rich! In the new city you may have a luxurious mansion. But among its public buildings will be a poorhouse.

The Simple Truth

In all our long investigation, we have been advancing toward this simple truth: that since land is necessary for labor to produce wealth, to control the land that labor needs is to command all the fruits of labor — save just enough to keep labor alive. We have been advancing as through enemy territory, where every step must be secured, every position fortified, and every side path explored. For this simple truth, in its application to social and political problems, is hidden from the great majority of people, partly by its very simplicity, and in larger part by the widespread fallacies and mistaken habits of thought that lead them to look in every direction but the right one for an explanation of the evils that oppress and threaten the civilized world. And behind these elaborate fallacies and misleading theories stands an active, energetic power — a power that in every country, whatever its political form, writes laws and shapes thought: the power of a vast and dominant financial interest.

But so simple and so clear is this truth, that to see it fully once is always to recognize it afterward. There are pictures which, though looked at again and again, present only a confused maze of lines and scrollwork — a landscape, trees, or something of the kind — until someone points out that these things make up a face or a figure. Once this is recognized, it is always afterward clear. It is so in this case. In the light of this truth, all social facts arrange themselves in an orderly pattern, and the most diverse phenomena are seen to spring from one great principle. It is not in the relations of capital and labor; it is not in the pressure of population against the food supply, that an explanation of the unequal development of our civilization is to be found. The great cause of inequality in the distribution of wealth is inequality in the ownership of land. The ownership of land is the great fundamental fact that ultimately determines the social, the political, and consequently the intellectual and moral condition of a people. And it must be so. For land is the home of humanity, the storehouse from which we must draw for all our needs, the material to which our labor must be applied for the fulfillment of all our desires. Even the products of the sea cannot be harvested, the light of the sun enjoyed, or any of the forces of nature harnessed, without the use of land or its products. On the land we are born, from it we live, to it we return again — children of the soil as truly as the blade of grass or the flower of the field. Take away from us all that belongs to land, and we are but disembodied spirits. Material progress cannot free us from our dependence on land; it can only add to the power of producing wealth from land. And so, when land is monopolized, progress could go on to infinity without raising wages or improving the condition of those who have nothing but their labor. It can only add to the value of land and to the power that ownership of land confers. Everywhere, in all times, among all peoples, the possession of land is the foundation of aristocracy, the basis of great fortunes, the source of power. As the Brahmins said, ages ago —

"To whomsoever the soil at any time belongs, to him belong the fruits of it. White parasols and elephants mad with pride are the flowers of a grant of land."

Book VI: The Remedy

Insufficiency of Remedies Currently Advocated

In tracing the cause of increasing poverty amid advancing wealth back to its source, we've already discovered the remedy. But before we turn to that part of our argument, it will be worth reviewing the solutions that are currently relied on or being proposed. The remedy our conclusions point to is at once radical and simple — so radical that, on one hand, it won't get a fair hearing as long as anyone still has faith in less drastic measures; so simple that, on the other hand, its real power and scope are likely to be overlooked until the effects of more elaborate plans have been assessed.

The proposals and trends that show up in current writing and debate as supposed cures for poverty and hardship among the masses can be grouped into six categories. I don't mean there are six distinct political parties or schools of thought — only that, for the purposes of our inquiry, the prevailing opinions and proposed remedies can be usefully sorted this way. Proposals that we'll examine separately are often combined in practice.

Many people still cling to the comforting belief that material progress will eventually eliminate poverty, and many others look to restraint on population growth as the most effective solution. But we've already shown the flaws in both of these views. Let us now consider what might be hoped for:

1. From greater economy in government.

2. From better education of the working classes and improved habits of hard work and thrift.

3. From labor unions pushing for higher wages.

4. From cooperation between labor and capital.

5. From government direction and intervention.

6. From a more widespread distribution of land.

Under these six headings, I believe we can review, in their essential forms, all the hopes and proposals for relieving social distress that fall short of the simple but far-reaching measure I'm going to propose.

I

From Greater Economy in Government

Until very recently, it was an article of faith among Americans — a belief shared by European liberals — that the poverty of the downtrodden masses of the Old World was caused by aristocratic and monarchical institutions. This belief has rapidly faded as the United States, under its republican institutions, has begun to show social distress of the same kind, if not the same severity, as Europe's. But social distress is still widely blamed on the enormous burdens that existing governments impose — the huge national debts, the military and naval establishments, the extravagance that's characteristic of republican rulers just as much as monarchs, and especially characteristic of big-city government. To these burdens we must add, in the United States, the robbery involved in the protective tariff, which for every twenty-five cents it puts in the treasury takes a dollar — and maybe four or five — out of the consumer's pocket. There does seem to be an obvious connection between the immense sums taken from the people this way and the hardships of the lower classes, and it's natural, on first glance, to suppose that reducing these enormous and needless burdens would make it easier for the poorest to get by. But if we consider the matter in light of the economic principles we've already traced out, we'll see that this wouldn't actually be the result. A reduction in the amount that taxation takes from a community's total output would simply be equivalent to an increase in the power of net production. In effect, it would add to the productive power of labor in exactly the same way as increasing population density and improvements in technology do. And just as the advantage in those cases goes — and must go — to landowners in the form of higher rent, so would the advantage in this case.

From the output of England's labor and capital, the country currently supports the burden of an immense national debt, an established church, an expensive royal family, a large number of people in do-nothing government jobs, a great army, and a great navy. Now suppose the debt were repudiated, the church disestablished, the royal family set adrift to make their own living, the holders of fake government jobs cut off, the army disbanded, and the officers and sailors of the navy discharged and the ships sold. An enormous reduction in taxation would become possible. There would be a huge addition to the net output remaining to be divided among those involved in production. But it would only be the same kind of addition that improvements in technology have been constantly making for a long time, and not as great an addition as steam and machinery have made in the last twenty or thirty years. And since those additions haven't relieved poverty but have only increased rent, this one would do the same. English landowners would reap the entire benefit. I won't argue that if all these things could be done suddenly, and without the destruction and expense of a revolution, there might be a temporary improvement in the condition of the lowest class. But such a sudden and peaceful reform is clearly impossible. And even if it weren't, any temporary improvement would eventually be swallowed up by increased land values, through the same process we now see happening in the United States.

And the same holds true in the United States. If we were to reduce public spending to the lowest possible point, and cover it through revenue-based taxation, the benefit certainly couldn't be greater than what the railroads have brought. There would be more wealth left in the hands of the people as a whole, just as the railroads have put more wealth in their hands. But the same inexorable laws of distribution would operate. The condition of those who live by their labor would not ultimately be improved.

A dim awareness of this pervades — or, rather, is beginning to pervade — the masses, and it's one of the grave political difficulties closing in around the American republic. Those who have nothing but their labor, and especially the urban working poor — a growing class — care little about government waste, and in many cases are inclined to see it as a good thing: "providing jobs" or "putting money in circulation." Boss Tweed, who robbed New York the way a guerrilla chief might plunder a captured town (and who was just a representative example of the new breed of political bandits seizing control of all our cities' governments), was undoubtedly popular with a majority of voters, even though his thievery was notorious and his spoils were displayed in big diamonds and lavish personal spending. After his indictment, he was triumphantly elected to the state Senate. Even as a recaptured fugitive, he was frequently cheered on his way from court to prison. He had robbed the public treasury of many millions, but the working poor felt he hadn't robbed them. And the verdict of economics is the same as theirs.

Let me be clearly understood. I'm not saying that government economy isn't desirable — only that reducing government expenses can have no direct effect in eliminating poverty or raising wages, as long as land is monopolized.

Although this is true, even with sole regard to the interests of the lowest class, every effort should be made to keep down useless spending. The more complex and extravagant government becomes, the more it turns into a power separate from and independent of the people, and the harder it becomes to bring real questions of public policy to a popular decision. Look at our elections in the United States — what do they turn on? The most momentous problems are pressing on us, yet there's so much money in politics, and so many personal interests at stake, that the most important questions of government barely get considered. The average American voter has prejudices, party loyalties, and vague notions of a certain kind, but gives about as much thought to the fundamental questions of government as a streetcar horse does to the profits of the line. If this weren't the case, so many longstanding abuses couldn't have survived, and so many new ones couldn't have been added. Anything that tends to make government simpler and cheaper tends to put it under the people's control and to bring truly important questions to the front. But no reduction in government expenses can, by itself, cure or lessen the evils that arise from the constant tendency toward unequal distribution of wealth.

II

From the Spread of Education and Improved Habits of Hard Work and Thrift

There is, and always has been, a widespread belief among the more comfortable classes that the poverty and suffering of the masses are caused by their lack of hard work, thrift, and intelligence. This belief, which soothes the conscience and flatters with its suggestion of superiority, is probably even more widespread in countries like the United States, where everyone is politically equal and where, because the society is so new, the division into classes has been between individuals rather than between old families, than it is in older countries where the lines of separation have been drawn longer and more sharply. It's only natural for those who can trace their own better circumstances to the superior work ethic and thrift that gave them their start, and the superior intelligence that let them seize every opportunity,44 to imagine that those who remain poor simply lack these qualities.

But anyone who has grasped the laws of distribution, as we've traced them out in previous chapters, will see the mistake in this idea. The fallacy is like claiming that every runner in a race could win. That any one of them might win is true. That every one of them could win is impossible.

Here's why. As soon as land acquires value, wages — as we've seen — don't depend on the real earnings or output of labor, but on what's left over after rent is taken out. And when all the land is monopolized, as it is everywhere except in the newest communities, rent must drive wages down to the point where the lowest-paid workers can just barely live and reproduce. Wages are forced to a minimum set by what's called the standard of comfort — the level of necessities and small luxuries that, by force of habit, the working classes demand as the lowest they'll accept while still maintaining their numbers. This being the case, hard work, skill, thrift, and intelligence can only help an individual to the extent that they're above the general level — just as speed can help a runner only to the extent that it exceeds that of the other runners. If one person works harder, or with superior skill or intelligence, they'll get ahead. But if the average level of effort, skill, or intelligence is raised across the board, the increased effort will only earn the old rate of wages, and whoever wants to get ahead will have to work harder still.

An individual might save money from their wages by living the way Benjamin Franklin did during his apprenticeship and early working days, when he decided to try vegetarianism. And many poor families might be made more comfortable by being taught to prepare the cheap dishes Franklin tried to limit his employer Keimer's appetite to — as a condition of Franklin accepting the job of debating opponents of the new religion Keimer wanted to found.45 But if working people generally came to live that way, wages would eventually fall by the same amount, and whoever wanted to get ahead through frugality, or to relieve poverty by teaching it, would have to invent some still cheaper way of keeping body and soul together. If, under current conditions, American workers came down to the Chinese standard of living, they'd eventually have to come down to the Chinese standard of wages. If English laborers were content with the rice diet and scanty clothing of the Bengali worker, labor would soon be as poorly paid in England as in Bengal. The introduction of the potato into Ireland was expected to improve the condition of the poorer classes by increasing the gap between the wages they received and their cost of living. What actually happened was a rise in rent and a drop in wages. And when the potato blight came, famine ravaged a population that had already lowered its standard of comfort so far that the next step was starvation.

Similarly, if one person works more hours than the average, they'll increase their earnings. But the wages of everyone can't be increased this way. It's well known that in occupations where the hours are long, wages are no higher than where hours are shorter — generally the reverse. The longer the working day, the more helpless the worker becomes: the less time they have to look around, develop other abilities beyond those their job requires, and the less able they are to switch occupations or take advantage of opportunities. And in the same way, an individual worker who gets their spouse and children to help may increase the family income. But in occupations where it's become customary for the whole family to supplement the main earner's work, the wages earned by the entire family don't, on average, exceed what one worker earns in occupations where only one person works. Swiss family labor in watchmaking competes in cheapness with American machinery. The Bohemian cigar makers of New York, who work — men, women, and children — in their tenement-house rooms, have driven the price of cigar making below what the Chinese in San Francisco were getting.

These general facts are well known. They're fully recognized in standard economics textbooks, where, however, they're explained by the Malthusian theory that population tends to multiply up to the limit of what the land can support. The true explanation, as I've shown in detail, is the tendency of rent to reduce wages.

As for the effects of education, it may be worth saying a few words specifically, because there's a common tendency to attribute to it something almost magical. But education is only education to the extent that it helps a person use their natural abilities more effectively — and a great deal of what we call education fails to do this. I remember a little girl, pretty far along in her school geography and astronomy, who was amazed to discover that the ground in her mother's backyard really was the surface of the earth. If you talk to them, you'll find that a good deal of the knowledge of many college graduates is much like that little girl's. They seldom think any better, and sometimes not as well, as people who never went to college.

A gentleman who had spent many years in Australia and knew the Aboriginal people's customs intimately (the Reverend Dr. Bleesdale), after describing some instances of their remarkable skill in using their weapons, predicting changes in wind and weather, and trapping the shyest birds, once said to me: "I think it's a great mistake to look on these people as ignorant. Their knowledge is different from ours, but within it they're generally better educated. As soon as they begin to toddle, they're taught to play with little boomerangs and other weapons, to observe and to judge. By the time they're old enough to take care of themselves, they're fully able to do so — in fact, in relation to the kind of knowledge they need, they're what I'd call well-educated. Which is more than I can say for many of our young people who've had what we call the best advantages but who enter adulthood unable to do anything either for themselves or for others."

Be that as it may, it's clear that intelligence — which is or should be the goal of education — until it drives and enables the masses to discover and remove the cause of unequal distribution of wealth, can only affect wages by increasing the effective power of labor. It has the same effect as increased skill or effort. And it can raise any individual's wages only to the extent that it makes them superior to others. When reading and writing were rare accomplishments, a clerk commanded high respect and large wages. But now, the ability to read and write has become so nearly universal as to give no advantage. Among the Chinese, literacy seems virtually universal, but wages in China touch the lowest possible point. The spread of intelligence — except to the extent that it makes people dissatisfied with a system that condemns producers to a life of toil while non-producers lounge in luxury — cannot tend to raise wages generally, or in any way improve the condition of the lowest class, the foundation of society, who must rest on the ground no matter how high the structure above them is built. No increase in the effective power of labor can raise general wages, as long as rent swallows up all the gains. This isn't merely a deduction from principles — it's a fact, proved by experience. The growth of knowledge and the march of invention have multiplied the effective power of labor over and over again without raising wages. In England there are over a million people on public relief. In the United States, poorhouses are growing in number and wages are declining.

It's true that greater effort and skill, greater prudence and higher intelligence are, as a rule, found alongside a better material condition among the working classes. But this is effect, not cause — as the relationship between the facts shows. Wherever the material condition of working people has improved, improvement in their personal qualities has followed. Wherever their material condition has worsened, these qualities have deteriorated. But nowhere can improvement in material condition be shown to result from the increased effort, skill, prudence, or intelligence of a class condemned to toil for a bare living — though these qualities, once gained (or rather, their companion — an improved standard of comfort), offer strong and often sufficient resistance to a decline in material condition.

The fact is that the qualities that raise humans above animals are built on top of the qualities we share with animals. It's only when people are freed from the demands of their animal nature that their intellectual and moral nature can grow. Force someone to drudge for the bare necessities of survival, and they'll lose the motivation to be productive — the motivation that's the parent of skill — and will do only what they're forced to do. Make their condition such that it can't get much worse, while there's little hope that anything they do will make it much better, and they'll stop thinking beyond today. Deny them leisure — and by leisure I don't mean lack of work, but freedom from the need that forces them into work they hate — and you can't make them intelligent, even by running the child through school and providing the adult with a newspaper.

It's true that improvement in the material condition of a people or class may not show immediately in mental and moral improvement. Higher wages may at first be spent on idleness and bad habits. But they will ultimately bring increased effort, skill, intelligence, and thrift. Comparisons between different countries, between different classes in the same country, between the same people at different periods, and between the same people when their conditions change through emigration, show one invariable result: these personal qualities appear as material conditions improve, and disappear as material conditions decline. Poverty is Bunyan's Slough of Despond — the swamp of despair from The Pilgrim's Progress — into which good books may be tossed forever without effect. To make people hardworking, prudent, skillful, and intelligent, they must be freed from want. If you would have the slave show the virtues of a free person, you must first make them free.

III

From Labor Unions

It's clear from the laws of distribution, as previously traced, that labor unions can raise wages — and not at the expense of other workers, as is sometimes claimed, nor at the expense of capital, as is generally believed, but ultimately at the expense of rent. The idea that no general increase in wages can be won through collective action, or that any increase in particular wages must reduce other wages or eat into the profits of capital, or both — these ideas spring from the mistaken notion that wages are drawn from capital. The flaw in these ideas is demonstrated not only by the laws of distribution as we've worked them out, but by experience so far. The many examples of wages being raised in particular trades through union action have nowhere shown any effect in lowering wages in other trades or reducing the rate of profit. Except as it may affect an employer's fixed capital or current contracts, a drop in wages can benefit, and an increase can harm, an employer only to the extent that it gives them an advantage or puts them at a disadvantage compared to other employers. The employer who first manages to cut workers' wages, or is first forced to pay higher ones, gains an advantage or suffers a disadvantage relative to competitors — but that edge disappears when the change spreads to everyone. However, to the extent that the wage change affects existing contracts or inventory, by changing relative production costs, it may represent a real gain or loss to a specific employer — though this gain or loss, being purely relative, disappears when we consider the whole community. And if the wage change shifts relative demand, it may make capital that's fixed in machinery, buildings, or other forms more or less profitable. But a new equilibrium is soon reached, because — especially in a growing country — fixed capital is only somewhat less mobile than circulating capital. If there's too little in a certain form, the natural tendency of capital to flow into that form soon brings it up to the needed amount. If there's too much, the halt in new investment soon restores the balance.

But while a change in wages in any particular occupation may shift relative demand for labor, it can produce no change in the total demand. For instance, suppose a union of workers in some particular industry raises wages in one country, while a combination of employers cuts wages in the same industry in another country. If the change is big enough, demand in the first country will now be partly met by imports of those goods from the second country. But clearly, this increase in one kind of imports must mean either a corresponding decrease in imports of other kinds, or a corresponding increase in exports. A country can only demand and obtain the products of another country's labor and capital by trading the products of its own. The idea that lowering wages can increase a country's trade, or that raising wages can diminish it, is as baseless as the idea that a country's prosperity can be boosted by taxes on imports or damaged by removing trade restrictions. If all wages in a particular country were doubled, that country would continue to export and import the same things, in the same proportions — because trade is determined not by absolute but by relative cost of production. But if wages in some industries were doubled while in others they weren't raised at all, or not raised as much, there would be a change in the mix of things imported, but no change in the overall balance between exports and imports.

While most of the objections raised against unions pushing for higher wages are thus baseless, and while their success can't reduce other wages, or cut into the profits of capital, or harm national prosperity, the difficulties standing in the way of effective labor organizing are so great that the good that can be accomplished is extremely limited, and the process carries inherent drawbacks.

Raising wages in a particular occupation or group of occupations — which is all any union has yet attempted — is clearly a task that gets progressively harder. The higher the wages in any particular trade are pushed above their normal level relative to other wages, the stronger the forces pushing them back. For example, if a printers' union, through a successful or threatened strike, raises the wages of typesetting ten percent above the normal rate compared to other wages, supply and demand are immediately affected. On one hand, there's a tendency to reduce the amount of typesetting demanded. On the other, the higher wages tend to attract more typesetters in ways even the strongest union can't entirely prevent. If the increase is twenty percent, these pressures are much stronger. At fifty percent, stronger still, and so on. So in practice — even in countries like England, where the lines between different trades are much more distinct and harder to cross than in countries like the United States — what unions can do in the way of raising wages, even when supporting each other, is relatively small. And even this small gain is confined to their own sphere and doesn't reach the lower layer of unorganized workers, whose condition most needs relief and ultimately determines the condition of everyone above them. The only way wages could be raised substantially and permanently through this method would be through a universal combination, like the one the International Workers' Association aimed at, that would include workers of all kinds. But such a combination can be considered practically impossible, because the difficulties of organizing — already great in the highest-paid and smallest trades — become greater and greater as you go down the industrial ladder.

And in the struggle of endurance — the only method by which unions refusing to work below a certain minimum can actually force wages up — we must not forget who the real opponents are. It's not labor versus capital. It's workers on one side and landowners on the other. If the contest were between labor and capital, it would be on much more equal terms. Capital's ability to hold out is only slightly greater than labor's. Capital not only stops earning anything when it's not being used, but it goes to waste — since in nearly all its forms it can only be maintained by constant replacement. But land doesn't starve like workers or go to waste like capital. Its owners can wait. They may be inconvenienced, it's true, but what's merely an inconvenience to them means ruin for capital and starvation for labor.

The agricultural laborers in certain parts of England are currently trying to organize to get an increase in their miserably low wages. If it were capital receiving the enormous difference between what their labor actually produces and the pittance they get, they would only need to form an effective union to succeed — because the farmers, their direct employers, can afford to go without labor barely any better than the laborers can afford to go without wages. But the farmers can't give much without a reduction in rent. So the real struggle must come between the landowners and the laborers. Suppose the organization were so thorough as to include all agricultural laborers, and prevented anyone else from taking their places. The laborers refuse to work unless wages are substantially raised. The farmers can only pay the increase by securing a substantial reduction in rent, and they have no way to back their demands except by the same method the laborers use: refusing to continue production. If farming thus comes to a standstill, the landowners would lose only their rent, while the land actually improved by lying fallow. But the laborers would starve. And if English workers of all kinds were united in one grand league for a general increase of wages, the real contest would be the same, under the same conditions. Wages could only go up at the expense of rent. And in a general standstill, landowners could survive, while workers of every kind would starve or emigrate. The owners of the land of England are, by virtue of their ownership, the masters of England. So true is the old saying: "To whomsoever the soil at any time belongs, to him belong the fruits of it." Power and privilege follow the ownership of land, and ordinary people can never regain their power until that ownership is reclaimed. What is true of England is true everywhere.

It may be said that such a complete halt in production could never happen. That's true — but only because no such thorough combination of labor as might produce it is possible. Yet the fixed and definite nature of land enables landowners to combine much more easily and effectively than either workers or capitalists. History provides many examples of how easy and effective their combination is. And the absolute necessity for land, combined with the certainty in all growing countries that its value will increase, produces among landowners — without any formal agreement — all the effects that the most rigorous organization of workers or capitalists could produce. Take away a worker's opportunity for employment, and they'll soon be desperate to get work on any terms. But when the receding wave of speculation leaves the stated price of land clearly above its real value, anyone who has lived in a growing country knows with what stubbornness landowners hold on.

Beyond these practical difficulties with the strategy of forcing higher wages through endurance, there are inherent drawbacks in such methods that workers shouldn't ignore. I speak without prejudice — I'm still an honorary member of the union I always loyally supported while working at my trade. But consider: the methods available to a trade union are necessarily destructive. Its organization is necessarily authoritarian. A strike — the only weapon by which a union can enforce its demands — is a destructive contest, much like the one proposed by an eccentric known as "The Money King" in early San Francisco, who challenged a man who had taunted him about his stinginess to go down to the wharf and take turns tossing twenty-dollar gold pieces into the bay until one of them gave in. The endurance struggle of a strike is really what it's often been compared to — a war. And like all war, it destroys wealth. The organization required for it must, like the organization for war, be authoritarian. Just as even someone who would fight for freedom must, upon entering an army, give up personal freedom and become a mere cog in a great machine, so it must be with workers who organize for a strike. These combinations therefore tend to destroy the very things workers seek through them — wealth and freedom.

There's an ancient Hindu method of compelling payment of a legitimate debt, traces of which the legal scholar Sir Henry Maine found in the laws of the Irish Brehons. It's called "sitting dharna" — the creditor tries to enforce the debt by sitting down at the debtor's door and refusing to eat or drink until they're paid.

Labor unions use a similar method. In their strikes, they sit dharna. But unlike the Hindu, they don't have the power of superstition to back them up.

IV

From Cooperation

It is now, and has been for some time, fashionable to preach cooperation as the ultimate remedy for the grievances of the working classes. But unfortunately for cooperation as a cure for social ills, these ills — as we've seen — don't arise from any conflict between labor and capital. And if cooperation were universal, it couldn't raise wages or relieve poverty. Here's why.

Cooperation is of two kinds: cooperation in supply and cooperation in production. Cooperation in supply, no matter how far it goes in cutting out middlemen, only reduces the cost of exchanges. It's simply a way to save labor and eliminate risk, and its effect on distribution can only be the same as all the improvements and inventions that have so wonderfully cheapened and streamlined trade in modern times — namely, to increase rent. And cooperation in production is simply a return to the form of wages that still prevails in the whaling industry, where it's called a "lay." It's the substitution of proportional wages for fixed wages — a substitution that pops up occasionally in almost all types of work. Or, if the workers handle the management themselves while the capitalist simply takes a share of the net output, it's just the system that has prevailed widely in European agriculture since the days of the Roman Empire — the sharecropping system. All that's claimed for cooperation in production is that it makes workers more energetic and productive — in other words, that it increases the efficiency of labor. Its effect therefore goes in the same direction as the steam engine, the cotton gin, the reaping machine — everything that material progress consists of — and it can only produce the same result: the increase of rent.

It's a striking proof of how basic principles get ignored when dealing with social problems that current economics writing attaches so much importance to cooperation as a way of raising wages and relieving poverty. That it can have no such general tendency is clear.

Setting aside all the difficulties that currently beset cooperation in either supply or production, and suppose it expanded so far as to replace present methods — that cooperative stores connected producer and consumer at minimum expense, and cooperative workshops, factories, farms, and mines eliminated the employing capitalist who pays fixed wages while greatly increasing the efficiency of labor. What then? Simply that it would become possible to produce the same amount of wealth with less labor, and consequently that the owners of land — the source of all wealth — could demand a greater amount of wealth for the use of their land. This isn't mere theory; it's proved by experience and existing facts. Improved methods and improved machinery have exactly the effect that cooperation aims at — reducing the cost of getting goods to consumers and increasing the efficiency of labor. And it's in these respects that older countries have the advantage over new settlements. But as experience has abundantly shown, improvements in the methods and machinery of production and trade have no tendency to improve the condition of the lowest class. Wages are lower and poverty deeper where trade operates at minimum cost and production has the benefit of the best machinery. The advantage simply adds to rent.

But what about cooperation between producers and landowners? That would simply amount to paying rent in kind — the same arrangement under which much land is rented in California and the Southern states, where the landowner gets a share of the crop. Except as a matter of calculation, it's no different from the English system of a fixed money rent. Call it cooperation if you like — the terms of the deal would still be determined by the laws that govern rent, and wherever land was monopolized, any increase in productive power would simply give landowners the power to demand a larger share.

The reason so many people believe cooperation is the answer to "the labor question" is that, where it's been tried, it has in many cases visibly improved the condition of those directly involved. But this is simply because these cases are isolated. Just as hard work, thrift, or skill may improve the condition of workers who possess these qualities to a higher degree, but stop having this effect when the improvement becomes general, so a special advantage in obtaining supplies or a special boost to some workers' efficiency may bring benefits that would vanish as soon as these improvements spread widely enough to affect the overall distribution of wealth. The truth is that, aside perhaps from its educational effects, cooperation can produce no general results that competition wouldn't also produce. Just as cheap cash-and-carry stores have a similar effect on prices as cooperative supply associations, so does competition in production lead to a similar arrangement of forces and division of proceeds as cooperative production would. The reason increasing productive power doesn't increase the reward of labor is not because of competition, but because competition is one-sided. Land — without which there can be no production — is monopolized, and the competition of producers for its use forces wages to a minimum and hands all the advantage of increasing productive power to landowners, in the form of higher rents and rising land values. Destroy this monopoly, and competition could only serve the purpose that cooperation aims at — giving each person what they fairly earn. Destroy this monopoly, and industry must become the cooperation of equals.

V

From Government Direction and Intervention

The limits within which I want to keep this book won't allow a detailed examination of every proposal for relieving or eliminating poverty through government regulation of industry and accumulation — proposals that, in their most thoroughgoing form, are called socialistic. Nor is it necessary, since the same flaws run through them all. These flaws are: the substitution of government direction for the play of individual initiative, and the attempt to achieve by restriction what can better be achieved by freedom. I'll have more to say later about the truths contained in socialist ideas, but it's clear that anything that involves regulation and restriction is bad in itself, and shouldn't be resorted to if there's any other way to accomplish the same end. Take, for instance, one of the simplest and mildest measures in this category — a graduated tax on incomes. The goal it aims at — reducing or preventing immense concentrations of wealth — is good. But the means involves employing a large number of officials with intrusive powers, creating temptations to bribery, perjury, and every other form of evasion that breeds a corruption of public morals, puts a premium on dishonesty and a tax on conscience. And ultimately, to the extent that the tax actually works, it weakens the incentive to accumulate wealth — one of the powerful engines of industrial progress. Meanwhile, if the elaborate schemes for regulating everything and finding a place for everybody could be carried out, we'd have a society resembling ancient Peru, or the one the Jesuits — to their eternal credit — established and long maintained in Paraguay.

I won't say that such a state wouldn't be better than the one we now seem to be heading toward. In ancient Peru, though production operated under enormous disadvantages — they lacked iron and domesticated animals — there was no such thing as want, and the people went to their work singing. But this we don't need to debate. Socialism in anything approaching such a form is something modern society cannot successfully attempt. The only force that has ever proved adequate to make it work — a strong and definite religious faith — is absent and growing weaker every day. We've passed out of the socialism of the tribal state and can't reenter it except by going backward in a way that would involve anarchy and perhaps barbarism. Our governments, as is already painfully obvious, would break down in the attempt. Instead of an intelligent assignment of duties and earnings, we'd get a Roman-style distribution of free grain, and the demagogue would soon become the dictator.

The ideal of socialism is grand and noble. And I'm convinced it's possible to achieve. But such a state of society can't be manufactured — it must grow. Society is an organism, not a machine. It can live only through the individual life of its parts. In the free and natural development of all the parts, the harmony of the whole will be secured. All that's necessary for social regeneration is contained in the motto of those Russian reformers sometimes called Nihilists: "Land and Liberty!"

VI

From a More Widespread Distribution of Land

There's a rapidly growing feeling that the way land is owned is somehow connected to the social distress that shows up in the most progressive countries. But this feeling mostly expresses itself in proposals for a more even division of landed property — in England, through free trade in land, tenant rights, or equal partition of estates among heirs; in the United States, through limits on the size of individual holdings. It has also been proposed in England that the state should buy out the landlords, and in the United States that money should be granted to help settle colonies on public lands. The first proposal we'll set aside for now. The second, as far as its distinctive feature goes, falls into the category of government measures we just considered. It needs no argument to show what abuses and corruption grants of public money or credit would lead to.

How what English writers call "free trade in land" — the removal of duties and restrictions on property transfers — could actually promote smaller land ownership in agricultural areas, I can't see, though it might have some effect with urban property. Removing restrictions on buying and selling would merely let land ownership take on whatever form it naturally tends toward more quickly. And the tendency in Great Britain is clearly toward concentration, as shown by the fact that, despite the difficulties created by the high cost of transfers, land ownership has been and is steadily concentrating there. That this tendency is a general one is shown by the same process of concentration happening in the United States. I say this without hesitation, even though statistical tables are sometimes cited to show a different trend. But it's easy to see how, in a country like the United States, land ownership may be truly concentrating even while census tables show a decline in the average size of holdings. As land is brought into use and, with population growth, shifts from a lower to a higher or more intensive use, the size of holdings tends to shrink. A small cattle range would be a large farm. A small farm would be a large orchard, vineyard, nursery, or vegetable garden. And a patch of land that would be small even for those purposes would make a very large piece of city property. So the growth of population, which puts land to higher and more intensive uses, naturally reduces the size of holdings — a process very visible in new countries. But alongside this can go a tendency toward concentration of ownership that, though invisible in tables showing average holding sizes, is just as real. Average holdings of one acre in a city may represent a much greater concentration of ownership than average holdings of 640 acres in a newly settled township. I mention this to show the flaw in the conclusions drawn from tables that are frequently paraded in the United States to claim that land monopoly is a problem that will cure itself. On the contrary, the proportion of landowners to the total population is constantly shrinking.

And there is in the United States, just as in Great Britain, a strong tendency toward the concentration of land ownership in farming. Just as in England and Ireland small farms are being absorbed into larger ones, so in New England — according to reports from the Massachusetts Bureau of Labor Statistics — the size of farms is increasing. This tendency is even more clearly visible in the newer states and territories. Only a few years ago, under the style of farming common in the northern United States, a 320-acre farm would have been a large one anywhere — probably as much as one person could cultivate effectively. In California today, there are farms (not cattle ranges) of five, ten, twenty, forty, and sixty thousand acres, while the model farm of Dakota covers 100,000 acres. The reason is obvious. It's the application of machinery to agriculture and the general trend toward large-scale production. The same force that replaced many independent hand-loom weavers with the factory and its army of workers is now making itself felt in farming.

Now, the existence of this trend shows two things. First, any measures that merely permit or encourage the division of land into smaller holdings would be ineffective. Second, any measures that would force such division would tend to reduce production. If large farms can be cultivated more cheaply than small ones, restricting ownership to small parcels will reduce the total production of wealth. To the extent that such restrictions are imposed and take effect, they will tend to diminish the overall productivity of labor and capital.

The effort to secure a fairer distribution of wealth through such restrictions therefore carries the drawback of shrinking the amount to be distributed. The strategy is like the old story of the monkey dividing a piece of cheese between two cats: he evened things up by taking a bite off the bigger piece.

But this isn't the only objection, and with every proposal to restrict land ownership, it grows stronger the more effective the proposed measure would be. There's a further and fatal objection: restriction won't achieve the only end worth pursuing — a fair division of what's produced. It won't reduce rent, and therefore it can't increase wages. It may make the comfortable classes larger, but it won't improve the condition of the lowest class.

If what's known as the Ulster tenant right were extended to all of Great Britain, it would simply carve out of the landlord's estate an estate for the tenant. The condition of the laborer wouldn't be improved one bit. If landlords were prohibited from raising rent on their tenants and from evicting a tenant as long as the fixed rent was paid, the mass of producers would gain nothing. Economic rent would still increase and would still steadily reduce the share of production going to labor and capital. The only difference would be that the original tenants, having become landlords in their turn, would profit from the increase.

If, through restrictions on how much land anyone could hold, through regulation of inheritances, or through cumulative taxation, the few thousand landholders of Great Britain were increased by two or three million, those two or three million people would gain. But the rest of the population would gain nothing. They'd have no more share in the advantages of land ownership than before. And if — which is clearly impossible — a fair distribution of the land were made among the entire population, giving each person an equal share, and laws were enacted to prevent concentration by forbidding anyone from holding more than the fixed amount, what would happen as population grew?

Exactly what can be accomplished by the wider distribution of land can be seen in those districts of France and Belgium where extremely small holdings prevail. Such a division of land is, on the whole, much better than what exists in England, and it gives a far more stable foundation to the state. Of that there's no doubt. But that it doesn't make wages any higher, or improve the condition of the class that has only their labor, is equally clear. These French and Belgian peasants practice a rigid economy unknown to any English-speaking people. And if the same striking symptoms of poverty and distress among the lowest class aren't as visible as across the English Channel, the reason, I think, is not only this strict thrift, but also another factor — the one that explains the continued survival of the small-holding system itself: material progress hasn't been as rapid.

Population hasn't increased at the same rate (it's been nearly stagnant), nor have improvements in production been as great. Nevertheless, Emile de Laveleye — whose sympathies all lie with small holdings, and whose testimony therefore carries more weight than that of English observers who might be suspected of bias toward their own country's system — states in his paper on the Land Systems of Belgium and Holland, published by the Cobden Club, that the condition of the laborer is actually worse under this system of tiny landholdings than it is in England. The tenant farmers — for tenancy prevails widely even where the smallest holdings are most common — are rack-rented with a ruthlessness unknown in England and even in Ireland. And the right to vote, "so far from raising them in the social scale, is but a source of mortification and humiliation to them, for they are forced to vote according to the dictates of the landlord instead of following the dictates of their own inclination and convictions."

And while the subdivision of land can do nothing to cure the evils of land monopoly — while it can have no effect in raising wages or improving the condition of the lowest classes — its tendency is to prevent the adoption or even discussion of more thorough-going solutions, and to strengthen the existing unjust system by giving more people a stake in maintaining it. De Laveleye, in concluding the paper from which I've quoted, urges the wider distribution of land as the surest way to protect England's great landowners from something far more radical. Although in the districts where land is most minutely divided the condition of the laborer is, by his own account, the worst in Europe and the renting farmer is much more ground down by his landlord than the Irish tenant, yet "feelings hostile to social order," de Laveleye says, "do not manifest themselves," because —

"The tenant, although ground down by the constant rise of rents, lives among his equals, peasants like himself who have tenants whom they use just as the large land holder does his. His father, his brother, perhaps the man himself, possesses something like an acre of land, which he lets at as high a rent as he can get. In the public house peasant proprietors will boast of the high rents they get for their lands, just as they might boast of having sold their pigs or potatoes very dear. Letting at as high a rent as possible comes thus to seem to him to be quite a matter of course, and he never dreams of finding fault with either the land owners as a class or with property in land. His mind is not likely to dwell on the notion of a caste of domineering landlords, of 'bloodthirsty tyrants,' fattening on the sweat of impoverished tenants and doing no work themselves; for those who drive the hardest bargains are not the great land owners but his own fellows. Thus, the distribution of a number of small properties among the peasantry forms a kind of rampart and safeguard for the holders of large estates, and peasant property may without exaggeration be called the lightning conductor that averts from society dangers which might otherwise lead to violent catastrophes.

"The concentration of land in large estates among a small number of families is a sort of provocation of leveling legislation. The position of England, so enviable in many respects, seems to me to be in this respect full of danger for the future."

To me, for the very same reason de Laveleye expresses, the position of England seems full of hope.

Let us abandon all attempts to get rid of the evils of land monopoly by restricting land ownership. An equal distribution of land is impossible, and anything short of that would be only a partial fix, not a cure — and a partial fix that would prevent the adoption of a real cure. Nor is any remedy worth considering that doesn't align with the natural direction of social development and swim, so to speak, with the current of the times. That concentration is the direction of development is unmistakable — the concentration of people in large cities, the concentration of crafts in large factories, the concentration of transportation in railroad and steamship lines, the concentration of farming in large operations. Even the most trivial businesses are being concentrated in the same way — errands are run and luggage is carried by companies. All the currents of the time flow toward concentration. To resist it successfully, we'd have to put steam back in the bottle and discharge electricity from human service.

The True Remedy

We have traced the unequal distribution of wealth — the curse and menace of modern civilization — to the institution of private property in land. We have seen that as long as this institution exists, no increase in productive power can permanently benefit the masses. On the contrary, it must tend to push their condition even further down. We have examined every remedy short of abolishing private property in land that is currently relied on or proposed for relieving poverty and distributing wealth more fairly, and we have found them all ineffective or impractical.

There is only one way to remove an evil — and that is to remove its cause. Poverty deepens as wealth increases, and wages are forced down while productive power grows, because land — the source of all wealth and the field of all labor — is monopolized. To wipe out poverty, to make wages what justice demands they should be — the full earnings of the worker — we must therefore replace individual ownership of land with common ownership. Nothing else will strike at the root of the evil. In nothing else is there the slightest hope.

This, then, is the remedy for the unjust and unequal distribution of wealth that disfigures modern civilization, and for all the evils that flow from it:

We must make land common property.

We have reached this conclusion by an investigation in which every step has been proved and secured. In the chain of reasoning, no link is missing and no link is weak. Deduction and induction have brought us to the same truth: that the unequal ownership of land makes the unequal distribution of wealth inevitable. And since, by its very nature, unequal ownership of land is inseparable from the recognition of individual property in land, it necessarily follows that the only remedy for the unjust distribution of wealth is to make land common property.

But this is a truth that, in the present state of society, will provoke the fiercest opposition and must fight its way inch by inch. It will be necessary, therefore, to answer the objections of those who, even when forced to admit this truth, will insist that it can't be put into practice.

In doing this, we'll put our reasoning to a new and decisive test. Just as we check addition by subtraction and multiplication by division, so can we, by testing whether the remedy works, verify our conclusions about the cause of the problem.

The laws of the universe are harmonious. And if the remedy we've been led to is the true one, it must be consistent with justice. It must be practical to apply. It must align with the direction of social development. And it must harmonize with other reforms.

All this I intend to show. I intend to answer every practical objection that can be raised, and to show that this simple measure is not only easy to apply but is a sufficient remedy for all the evils that arise, as modern progress advances, from the greater and greater inequality in the distribution of wealth — that it will replace inequality with equality, want with plenty, injustice with justice, social weakness with social strength, and will open the way to grander and nobler advances of civilization.

I intend to show, in other words, that the laws of the universe do not deny the natural longings of the human heart. That the progress of society might be — and, if it is to continue, must be — toward equality, not toward inequality. And that the harmonies of economics confirm the truth perceived by the Stoic Emperor Marcus Aurelius:

"We are made for cooperation — like feet, like hands, like eyelids, like the rows of the upper and lower teeth."

Book VII: Justice of the Remedy

Injustice of Private Property in Land

When someone proposes to abolish private property in land, the first question that arises is one of justice. Though often warped by habit, superstition, and selfishness into the most distorted forms, the sense of justice is fundamental to the human mind. Whatever dispute arouses people's passions, the conflict is sure to rage not so much over the question "Is it wise?" as over the question "Is it right?"

This tendency for popular discussions to take an ethical form has a cause. It springs from a law of the human mind — from a deep and instinctive recognition of what is probably the most profound truth we can grasp. Only what is just is truly wise; only what is right truly endures. In the narrow scope of individual actions and individual lives, this truth may often be obscured. But in the wider field of national life, it stands out everywhere.

I accept this standard and embrace this test. If our investigation into the cause that makes low wages and poverty the companions of material progress has led us to a correct conclusion, it will hold up when translated from the language of economics into the language of ethics — and at the source of social evils it will reveal a wrong. If it fails this translation, it is disproved. If it passes, it is confirmed by the highest court of appeal. If private property in land is just, then the remedy I propose is a false one. If, on the other hand, private property in land is unjust, then this remedy is the true one.

What Makes Property Rightful?

What constitutes the rightful basis of property? What is it that allows a person to justly say of a thing, "It is mine"? Where does the feeling come from that acknowledges their exclusive right against all the world? Isn't it, at its core, the right of individuals to themselves — to the use of their own powers, to the enjoyment of the fruits of their own labor? Isn't it this individual right, which springs from and is confirmed by the natural facts of individual existence — the fact that each pair of hands obeys a particular brain and is connected to a particular stomach, the fact that each person is a distinct, coherent, independent whole — which alone justifies individual ownership? Just as you belong to yourself, your labor, when given concrete form, belongs to you.

And for this reason, what a person makes or produces is their own, as against all the world — to enjoy or to destroy, to use, to exchange, or to give. No one else can rightfully claim it, and the maker's exclusive right to it involves no wrong to anyone else. Thus, everything produced by human effort carries a clear and indisputable title to exclusive possession and enjoyment — a title perfectly consistent with justice, which descends from the original producer, in whom it was vested by natural law. The pen with which I am writing is justly mine. No other human being can rightfully lay claim to it, for in me rests the title of the producers who made it. It has become mine because it was transferred to me by the stationer, to whom it was transferred by the importer, who obtained the exclusive right to it from the manufacturer, in whom, by the same process of purchase, were vested the rights of those who dug the material from the ground and shaped it into a pen. Thus, my exclusive right of ownership in the pen springs from the natural right of individuals to the use of their own abilities.

The Only Possible Source of Property Rights

Now, this is not only the original source from which all ideas of exclusive ownership arise — as is clear from the natural tendency of the mind to fall back on it when the idea of exclusive ownership is questioned, and from the way social relationships develop — but it is necessarily the only source. There can be no rightful title to ownership of anything that is not derived from the title of the producer and does not rest upon the natural right of individuals to themselves. There can be no other rightful title, because: first, there is no other natural right from which any other title can be derived, and second, the recognition of any other title is inconsistent with and destructive of this one.

First: what other right exists from which the right to exclusive possession of anything can be derived, except the right of individuals to themselves? What other power does nature give us, except the power of using our own abilities? How else can we act upon material things or other people? Paralyze the motor nerves, and a person has no more external influence or power than a log or a stone. From what else, then, can the right of possessing and controlling things be derived? If it doesn't spring from the person themselves, from what can it spring?

Nature acknowledges no ownership or control by human beings except as the result of effort. In no other way can her treasures be drawn forth, her powers directed, or her forces used or controlled. She makes no distinctions among people but is absolutely impartial to all. She knows no difference between master and slave, king and subject, saint and sinner. All people stand before her on equal footing with equal rights. She recognizes no claim but that of labor, and she recognizes that without regard to the claimant. If a pirate spreads their sails, the wind fills them just as readily as it fills those of a peaceful merchant ship or a missionary vessel. If a king and an ordinary person are thrown overboard, neither can keep their head above water except by swimming. Birds will not come to be shot by the owner of the land any sooner than they will come to be shot by the poacher. Fish will bite or refuse to bite at a hook in utter disregard of whether it is offered them by a good child who goes to Sunday school or a bad one who plays hooky. Grain will grow only as the ground is prepared and the seed is sown. Only at the call of labor can ore be raised from the mine. The sun shines and the rain falls alike on the just and the unjust.

The laws of nature are the decrees of the Creator. Written into them is no recognition of any right except that of labor. And written into them broadly and clearly is the equal right of all people to the use and enjoyment of nature — to apply their efforts to her and to receive and possess her reward. Therefore, since nature gives only to labor, the exertion of labor in production is the only title to exclusive possession.

Property in Labor Rules Out Property in Land

Second: this right of ownership that springs from labor rules out the possibility of any other right of ownership. If people are rightfully entitled to the products of their labor, then no one can be rightfully entitled to own anything that is not the product of their labor or the labor of someone else from whom the right has been transferred. If producing something gives the producer the right to exclusive possession and enjoyment, there can rightfully be no exclusive possession and enjoyment of anything not produced by labor — and the recognition of private property in land is a wrong.

Here's why: the right to the products of labor cannot be enjoyed without the right to free use of the opportunities that nature offers. To admit a right of property in those opportunities is to deny the right of property in the products of labor. When non-producers can claim as rent a portion of the wealth created by producers, the right of producers to the fruits of their labor is denied to that extent.

There is no escape from this position. To affirm that people can rightfully claim exclusive ownership of their own labor when embodied in material things is to deny that anyone can rightfully claim exclusive ownership of land. To affirm the rightfulness of property in land is to affirm a claim that has no warrant in nature, against a claim founded in human nature and the laws of the material universe.

The Critical Distinction: Things We Make vs. Things Nature Provides

What most prevents people from recognizing the injustice of private property in land is the habit of lumping all the things that are owned into one category — "property" — or, if any distinction is made, drawing the line according to the lawyers' unphilosophical distinction between personal property and real estate, or between movable and immovable things. The real and natural distinction is between things that are the products of labor and things that are the free gifts of nature — or, to use the terms of economics, between wealth and land.

These two classes of things are widely different in their nature and relationships, and to group them together as "property" is to confuse all thought when we come to consider whether property is just or unjust, right or wrong.

A house and the lot on which it stands are both property, in that both can be owned, and both are classified by lawyers as real estate. Yet in their nature and relationships, they are vastly different. The house is produced by human labor and belongs to the category that economics calls wealth. The lot is a part of nature and belongs to the category that economics calls land.

The defining character of the first class of things is that they embody labor — they are brought into being by human effort, and their existence or nonexistence, their increase or decrease, depends on people. The defining character of the second class is that they do not embody labor and exist regardless of human effort and regardless of people. They are the field or environment in which we find ourselves, the storehouse from which our needs must be supplied, the raw material upon which and the forces with which our labor alone can act.

The moment this distinction is grasped, it becomes clear that the moral authority natural justice gives to one type of property is denied to the other. The rightfulness of individual property in the products of labor implies the wrongfulness of individual property in land. While recognizing the first places all people on equal terms and secures to each the due reward of their labor, recognizing the second denies the equal rights of all people — permitting those who do not labor to take the natural reward of those who do.

Whatever may be said for the institution of private property in land, it is therefore plain that it cannot be defended on the grounds of justice.

An Equal and Inalienable Right

The equal right of all people to the use of land is as clear as their equal right to breathe the air — it is a right proclaimed by the fact of their existence. For we cannot suppose that some people have a right to be in this world and others do not.

If we are all here by the equal permission of the Creator, we are all here with an equal title to the enjoyment of nature's bounty — with an equal right to the use of all that nature so impartially offers.46 This is a right that is natural and inalienable. It is a right that vests in every human being as they enter the world, and which during their lifetime can be limited only by the equal rights of others. There is in nature no such thing as absolute ownership of land. There is on earth no power that can rightfully grant exclusive ownership of land. If every person alive were to unite to give away their equal rights, they could not give away the rights of those who come after them. For what are we but tenants for a day? Did we make the earth, that we should determine the rights of those who will occupy it after us? The Almighty, who created the earth for humanity and humanity for the earth, has entailed it upon all generations by a decree written into the constitution of all things — a decree that no human action can overturn and no passage of time can erase.

Let the legal documents be ever so many, or possession ever so long, natural justice can recognize no right in one person to the possession and enjoyment of land that is not equally the right of all. Though titles have been accepted generation after generation, the poorest child born in London today has as much right to the landed estates of the Duke of Westminster as the duke's eldest son does.47 Though the sovereign people of the State of New York consent to the celebrated possessions of the Astors, the tiniest infant that comes wailing into the world in the most wretched room of the most miserable tenement house is, at that moment, possessed of an equal right with the millionaires. And that child is robbed if the right is denied.

The Test Is Passed

Our previous conclusions, irresistible in themselves, thus stand approved by the highest and final test. Translated from the language of economics into the language of ethics, they show a wrong at the source of the evils that increase as material progress goes on.

The masses of people who, in the midst of abundance, suffer want — who, clothed with political freedom, are condemned to the wages of slavery — for whose toil labor-saving inventions bring no relief, but instead seem to rob them of a privilege — instinctively feel that "there is something wrong." And they are right.

The widespread social evils that everywhere oppress people amid advancing civilization spring from a great primary wrong — the seizure, as the exclusive property of some, of the land on which and from which all must live. From this fundamental injustice flow all the injustices that distort and endanger modern development — that condemn the producer of wealth to poverty and pamper the non-producer in luxury, that build the tenement house next to the palace, plant the brothel behind the church, and compel us to build prisons as we open new schools.

There is nothing strange or inexplicable about the problems that are now perplexing the world. It is not that material progress is not in itself a good. It is not that nature has called children into being for whom she has failed to provide. It is not that the Creator has left some taint of injustice in natural laws at which even the human mind revolts. The reason material progress brings such bitter fruits — that amid our highest civilization people faint and die from want — is not due to the stinginess of nature, but to the injustice of humanity. Vice and misery, poverty and destitution, are not the natural results of population growth and industrial development. They only follow population growth and industrial development because land is treated as private property — they are the direct and necessary results of violating the supreme law of justice by giving to some the exclusive possession of what nature provides for all.

How the Wrong Works

Recognizing individual ownership of land means denying the natural rights of other individuals — a wrong that must show itself in the unequal distribution of wealth. Since labor cannot produce without the use of land, denying the equal right to use land necessarily denies the right of labor to its own products. If one person can command the land upon which others must work, that person can take the products of their labor as the price of permission to work. The fundamental law of nature — that our enjoyment of nature's gifts shall follow from our own effort — is thus violated. One person receives without producing; the others produce without receiving. The one is unjustly enriched; the others are robbed.

To this fundamental wrong we have traced the unjust distribution of wealth that is splitting modern society into the very rich and the very poor. It is the continuous increase of rent — the price that labor is forced to pay for the use of land — that strips the many of the wealth they justly earn, only to pile it up in the hands of the few, who do nothing to earn it.

Why should those who suffer from this injustice hesitate for one moment to sweep it away? Who are the landholders that they should be allowed to reap where they have not sown?

The Absurdity of Land Titles

Consider for a moment the utter absurdity of the titles by which we solemnly transfer from John Doe to Richard Roe the right to exclusively possess the earth, giving absolute dominion against all others. In California, our land titles trace back to the Supreme Government of Mexico, which took the land from the Spanish King, who took it from the Pope — who, with a stroke of the pen, divided lands yet to be discovered between Spain and Portugal. Or, if you prefer, these titles rest on conquest. In the Eastern states, they trace back to treaties with Indigenous peoples and grants from English kings. In Louisiana, to the Government of France. In Florida, to the Government of Spain. In England, they trace back to the Norman conquerors. Everywhere, not to a right that obligates, but to a force that compels. And when a title rests on nothing but force, no complaint can be made when force annuls it. Whenever the people, having the power, choose to annul those titles, no objection can be raised in the name of justice. There have been people who had the power to hold or to grant exclusive possession of portions of the earth's surface — but when and where has there ever been a human being who had the right?

The right to exclusive ownership of anything produced by human effort is clear. No matter how many hands it has passed through, there was, at the beginning of the chain, human labor — someone who, having produced or procured it by their exertions, had a clear title against all the rest of the world, which could justly pass from one to another by sale or gift. But at the end of what chain of transactions or grants can a similar title be shown or even imagined to any part of the material universe?

To improvements, such an original title can be shown — but it is a title only to the improvements, not to the land itself. If I clear a forest, drain a swamp, or fill a marsh, all I can justly claim is the value created by those exertions. They give me no right to the land itself — no claim other than my equal share with every other member of the community in the value that the growth of the community adds to it.

But someone will say: there are improvements that over time become indistinguishable from the land itself! Very well — then the title to the improvements becomes blended with the title to the land. The individual right is absorbed into the common right. It is the greater that swallows the lesser, not the lesser that swallows the greater. Nature does not proceed from humanity, but humanity from nature, and it is into the bosom of nature that we and all our works must return.

Land Value as the Measure of Community Rights

Yet someone will say: since every person has a right to the use and enjoyment of nature, the person who is using land must be given exclusive right to its use in order to get the full benefit of their labor. But there is no difficulty in determining where the individual right ends and the common right begins. A precise and exact test is supplied by value. With its help, no matter how dense the population may become, the exact rights of each person and the equal rights of all can be determined and secured.

The value of land, as we have seen, is the price of monopoly. It is not the absolute but the relative capability of land that determines its value. No matter what its intrinsic qualities, land that is no better than other land available for the taking can have no value. And the value of land always measures the difference between it and the best land that can be had for free. Thus, the value of land expresses in exact and tangible form the right of the community in land held by an individual. And rent expresses the exact amount that the individual should pay to the community to satisfy the equal rights of all other members.

So if we grant to first occupants the undisturbed use of land, while collecting rent for the benefit of the community, we reconcile the security of possession needed for improvement with a full and complete recognition of everyone's equal right to the use of land.

First Come, First Served?

As for the argument that priority of occupation gives a complete and exclusive individual right to land — that is, if possible, the most absurd ground on which land ownership can be defended. Priority of occupation to give exclusive and perpetual title to the surface of a globe on which, in the order of nature, countless generations succeed each other! Did the people of the last generation have any better right to the use of this world than we do? Or those of a hundred years ago? Or a thousand? Did the mound-builders, or the cave-dwellers, the contemporaries of the mastodon and the three-toed horse, or the generations still further back who, in dim ages we can think of only as geological periods, followed each other on the earth we now occupy for our little day?

Does the first guest at a banquet have the right to turn back all the chairs and claim that none of the other guests may eat except on terms they dictate? Does the first person to present a ticket at a theater and walk in acquire by their priority the right to shut the doors and have the performance go on for them alone? Does the first passenger who enters a railroad car get the right to spread their luggage over all the seats and compel later passengers to stand?

The cases are perfectly analogous. We arrive and we depart, guests at a banquet continually spread, spectators and participants in an entertainment where there is room for all who come, passengers from station to station on a world that whirls through space. Our rights to take and possess cannot be exclusive; they must be bounded everywhere by the equal rights of others.

Just as a passenger in a railroad car may spread out over as many seats as they like until other passengers arrive, so may a settler take and use as much land as they choose until it is needed by others — a fact shown by the land acquiring a value — when their right must give way to the equal rights of others. No priority of claim can override those equal rights. If this were not the case, then by priority of occupation one person could acquire, and pass on to anyone they pleased, not merely 160 acres, or 640 acres, but a whole township, a whole state, a whole continent.

And to this obvious absurdity does the recognition of individual right to land lead when carried to its logical conclusion: that any one human being, if they could concentrate in themselves the individual rights to the land of any country, could expel all the rest of its inhabitants. And if they could concentrate the individual rights to the whole surface of the globe, they alone, of all the teeming population of the earth, would have the right to live.

This Absurdity Is Already Reality

And what would happen in this hypothetical case is, on a smaller scale, already happening in fact. The territorial lords of Great Britain, to whom grants of land have given "the white parasols and elephants mad with pride," have over and over again expelled the native population from large districts — people whose ancestors had lived on the land from time immemorial — driving them out to emigrate, to become paupers, or to starve. And on uncultivated tracts of land in the new state of California, you can see the blackened chimneys of homes from which settlers have been driven by laws that ignore natural right. Great stretches of land that might be filled with people lie desolate, because the recognition of exclusive ownership has put it in the power of one human being to forbid others from using them.

The small number of landowners who own the surface of the British Islands would be doing only what English law gives them full power to do — and what many of them have already done on a smaller scale — were they to exclude millions of British people from their native islands. And such an exclusion, in which a few hundred thousand would banish thirty million people from their native country, while it would be more dramatic, would be not one bit more offensive to natural right than what we see now: the vast body of the British people being compelled to pay enormous sums to a few of their number for the privilege of being permitted to live upon and use the land they so fondly call their own — land that is dear to them through memories so tender and so glorious, and for which they are held duty-bound, if need be, to spill their blood and lay down their lives.

I mention only the British Islands because, since land ownership is more concentrated there, they provide a more striking illustration of what private property in land necessarily involves. "To whomever the soil at any time belongs, to them belong the fruits of it" is a truth that becomes more and more apparent as population grows denser and invention and improvement add to productive power. But it is a truth everywhere — as much in our new states as in the British Islands or on the banks of the Indus.

Enslavement of Laborers the Ultimate Result of Private Property in Land

If slavery is unjust, then private property in land is unjust.

For let the circumstances be what they may — the ownership of land will always give the ownership of people, to a degree measured by the necessity (real or artificial) for the use of land. This is simply a restatement, in different form, of the law of rent.

And when that necessity is absolute — when starvation is the alternative to using land — then the ownership of people that comes with the ownership of land becomes absolute.

The Island Thought Experiment

Place one hundred people on an island from which there is no escape. Whether you make one of them the absolute owner of the other ninety-nine, or the absolute owner of the island's soil, it will make no difference either to that person or to the rest.

In either case, the one will be the absolute master of the ninety-nine — with power extending even to life and death, for simply refusing them permission to live on the island would be to force them into the sea.

On a larger scale, and through more complex relationships, the same cause must operate in the same way and to the same end. The ultimate result — the enslavement of laborers — becomes apparent just as the pressure increases that compels them to live on and from land that is treated as the exclusive property of others.

Take a country in which the soil is divided among a number of owners instead of being in the hands of one, and in which, as in modern production, the capitalist has been separated from the laborer, and manufacturing and trade in all their many branches have been separated from farming. Though less direct and obvious, the relationship between the owners of the soil and the workers will, with increasing population and improving technology, tend toward the same absolute mastery on one hand and the same abject helplessness on the other as in our island example. Rent will advance while wages fall. Of the total output, the landowner will get a constantly increasing share, the worker a constantly shrinking one. As moving to cheaper land becomes difficult or impossible, workers — no matter what they produce — will be reduced to a bare living. Free competition among them, where land is monopolized, will force them into a condition that, though they may be mocked with the titles and symbols of freedom, will be slavery in all but name.

Slavery Under the Forms of Freedom

There is nothing strange about the fact that, despite the enormous increase in productive power that this century has witnessed and which is still going on, wages in the lower and wider layers of industry everywhere tend toward the wages of slavery — just enough to keep the worker in working condition. For the ownership of the land on which and from which a person must live is, in effect, the ownership of the person themselves. In acknowledging the right of some individuals to the exclusive use and enjoyment of the earth, we condemn other individuals to slavery as fully and completely as if we had formally made them property.

In simpler forms of society, where production mainly consists of the direct application of labor to the soil, the slavery that necessarily results from granting some people exclusive right to the soil is plainly visible — in helotism, in serfdom, in the feudal system of villeinage.

Slavery Through Land, Not Through Capture

Chattel slavery originated in the capture of prisoners in war. Though it has existed to some extent in every part of the globe, its reach has been small and its effects minor compared to the forms of slavery that have originated in the monopolization of land. No entire people has ever been reduced to chattel slavery by others of their own race, nor has any people on a large scale been reduced to such slavery by conquest. The general subjugation of the many to the few, which we find wherever society has reached a certain level of development, has resulted from the appropriation of land as individual property. It is the ownership of the soil that everywhere gives the ownership of the people who live upon it.

It is this kind of slavery to which the enduring pyramids and colossal monuments of Egypt still bear witness — and of which we have, perhaps, a dim tradition in the biblical story of the famine during which the Pharaoh bought up the lands of the people. It was this kind of slavery into which the conquerors of Greece reduced the original inhabitants of the peninsula, transforming them into helots by making them pay rent for their lands. It was the growth of the latifundia — the great landed estates — that transformed the population of ancient Italy from a race of hardy farmers, whose tough virtues conquered the world, into a race of cringing slaves. It was the seizure of land as the absolute property of chieftains that gradually turned the descendants of free and equal Gallic, Germanic, and Hunnic warriors into serfs and peasants, and that changed the independent villagers of Slavic communities into the serfs of Russia and Poland. This process established feudalism in China and Japan as well as in Europe, and made the High Chiefs of Polynesia the near-absolute masters of their people.

How the Aryan shepherds and warriors who, as the study of languages tells us, descended from the common birthplace of the Indo-European peoples into the lowlands of India were turned into the submissive and cringing Hindu, the Sanskrit verse I have quoted before gives us a hint. The white parasols and the elephants mad with pride of the Indian Rajah are the flowers of grants of land. And could we find the key to the records of the long-buried civilizations entombed in the gigantic ruins of Yucatan and Guatemala — ruins that speak at once of a ruling class's pride and the unrewarded toil to which the masses were condemned — we would read, in all probability, of a slavery imposed upon the great body of the people through the appropriation of land as the property of a few. Another illustration of the universal truth: those who possess the land are masters of the people who dwell upon it.

Why This Injustice Persists

The necessary relationship between labor and land — the absolute power that land ownership gives over people who cannot live without using it — explains what is otherwise inexplicable: the growth and persistence of institutions, customs, and ideas so utterly offensive to the natural sense of liberty and equality.

When the idea of individual ownership, which so justly and naturally attaches to things of human production, is extended to land, all the rest is merely a matter of development. The strongest and most cunning easily acquire a greater share in this type of property — which is obtained not by production but by appropriation — and in becoming lords of the land, they necessarily become lords of their fellow human beings. The ownership of land is the basis of aristocracy. It was not noble birth that gave land, but the possession of land that gave noble status. All the enormous privileges of medieval European nobility flowed from their position as owners of the soil.

The simple principle of land ownership produced, on one side, the lord and, on the other, the vassal — the one having all rights, the other none. With the lord's right to the soil acknowledged and maintained, those who lived upon it could do so only on his terms. The customs and conditions of the times made those terms include services and obligations as well as rents in produce or money, but the essential thing that compelled obedience was ownership of land.

This power exists wherever land ownership exists, and can be brought to bear wherever the competition for the use of land is great enough to enable the landlord to dictate terms. The English landowner of today has, in the law that recognizes exclusive right to the land, essentially all the power that the feudal baron had. The landowner could demand rent in services or obligations. They could compel tenants to dress in a particular way, to profess a particular religion, to send their children to a particular school, to submit their disputes for the landlord's judgment, to fall on their knees when spoken to, to follow the landlord around dressed in livery, or to sacrifice their dignity — if tenants would prefer these things to being driven off the land. The landlord could demand, in short, any terms on which people would still consent to live on the land, and the law could not prevent it so long as it did not qualify the ownership, since compliance would take the form of a "free contract" or "voluntary act."

And English landlords do exercise such of these powers as suit the customs of the times. Having shaken off the obligation of providing for the country's defense, they no longer need their tenants' military service. And since wealth and power are now displayed in other ways than by long trains of attendants, they no longer care for personal service. But they habitually control the votes of their tenants and dictate to them in many small ways. "Right Reverend Father in God" Bishop Lord Plunkett evicted a number of his poor Irish tenants because they would not send their children to Protestant Sunday schools. To the Earl of Leitrim, for whom justice tarried so long before it sent the bullet of an assassin, even darker crimes are attributed. And at the cold promptings of greed, cottage after cottage has been pulled down and family after family forced onto the roads.

The principle that permits all this is the same principle that in cruder times and a simpler social order enslaved the great masses of the common people and placed such a wide gulf between noble and peasant. Where the peasant was made a serf, it was done simply by forbidding them to leave the estate on which they were born — thus artificially producing the condition we imagined on our island. In sparsely settled countries, this is necessary to produce absolute slavery. But where land is fully occupied, competition can produce substantially the same conditions. Between the rack-rented Irish peasant and the Russian serf, the advantage was in many respects on the side of the serf. The serf did not starve.

The Same Cause at Work Today

Now, as I believe I have conclusively proved, it is the same cause that has in every age degraded and enslaved the laboring masses that is at work in the civilized world today. Personal liberty — that is, the liberty to move around — is everywhere granted. Of political and legal inequality there are in the United States no traces, and in the most backward civilized countries only a few. But the great cause of inequality remains, and it is showing itself in the unequal distribution of wealth. The essence of slavery is that it takes from workers everything they produce except enough to support a bare animal existence — and to this minimum, the wages of free labor under existing conditions are unmistakably trending. Whatever the increase in productive power, rent steadily tends to swallow the gain, and more than the gain.

Thus the condition of the masses in every civilized country is, or is tending to become, virtual slavery under the forms of freedom. And it is likely that of all kinds of slavery, this is the most cruel and relentless. The workers are robbed of the product of their labor and compelled to toil for mere survival — but their taskmasters, instead of being human beings, take the form of impersonal necessities. Those to whom their labor is rendered and from whom their wages are received are often driven in their turn. The contact between laborers and the ultimate beneficiaries of their labor is severed, and individuality is lost.

The direct responsibility of master to slave — a responsibility that exercises a softening influence on the great majority of people — does not arise. It is not one human being who seems to drive another to unrelenting and poorly rewarded toil, but "the inevitable laws of supply and demand," for which no one in particular is responsible. The maxims of Cato the Elder — maxims that were regarded with horror even in an age of cruelty and universal slaveholding — that after as much work as possible is gotten from a slave, the slave should be turned out to die, become the common rule. Even the selfish interest that motivates a master to look after the comfort and well-being of a slave is lost. Labor has become a commodity and the laborer a machine. There are no masters and slaves, no owners and owned — only buyers and sellers. The haggling of the market takes the place of every other sentiment.

The Slaveholders Had a Point

When slaveholders in the American South looked at the condition of free laborers in the most advanced civilized countries, it is no wonder they easily persuaded themselves that slavery was divinely ordained. That the field workers of the South were, as a class, better fed, better housed, and better clothed — that they had less anxiety and more amusements and enjoyments in life than the agricultural laborers of England — there can be no doubt. And even in Northern cities, visiting slaveholders could see and hear of things impossible under what they called their "organization of labor."

In the Southern states, during the days of slavery, a slaveholder who compelled enslaved people to work and live as large classes of free workers are compelled to work and live in free countries would have been considered infamous. And if public opinion had not restrained such a slaveholder, their own selfish interest in maintaining the health and strength of their human property would have. But in London, New York, and Boston, among people who had given — and would give again — money and blood to free the enslaved, where no one could abuse an animal in public without arrest and punishment, barefoot and ragged children could be seen running around the streets even in winter. In squalid attics and foul cellars, women worked away their lives for wages that failed to keep them properly warm and nourished. Is it any wonder that to the slaveholders of the South, the demand for the abolition of slavery seemed like the height of hypocrisy?

And now that slavery has been abolished, the planters of the South find they have sustained no loss. Their ownership of the land upon which the freed people must live gives them practically as much command of labor as before, while they are relieved of responsibility that was sometimes very expensive. The formerly enslaved people still have the option of emigrating, and a great movement of that kind seems about to begin. But as population increases and land becomes expensive, the planters will get a greater proportionate share of their laborers' earnings than they did under chattel slavery, and the laborers a smaller share — for under chattel slavery, the enslaved always got at least enough to keep them in good physical health. In countries like England, there are large classes of laborers who do not get even that.48

How Competition Worsens the Oppression

The personal influences that, wherever there is a direct relationship between master and slave, soften chattel slavery and prevent the master from exerting power to its fullest extent also showed themselves in the cruder forms of serfdom that characterized earlier periods of European development. Aided by religion, and perhaps by the more enlightened (though still selfish) interests of the lord, and hardening into custom, these influences universally fixed a limit on what the landowner could extract from the serf or peasant. The competition of people without means of existence bidding against each other for access to those means was nowhere allowed to go to its full length and exert its full power of deprivation and degradation.

The helots of Greece, the sharecroppers of Italy, the serfs of Russia and Poland, the peasants of feudal Europe rendered their landlords a fixed proportion of either their produce or their labor, and were not generally squeezed past that point. But the influences that stepped in to moderate the extractive power of land ownership — and which may still be seen on English estates where the landlord and family consider it their duty to send medicines and comforts to the sick and elderly, and to look after the well-being of their tenants, just as the Southern planter looked after enslaved workers — are lost in the more refined and less obvious form that serfdom assumes in the more complicated processes of modern production. Modern production separates so widely and through so many intermediate steps the individual whose labor is taken from the one who takes it, and makes the relations between the two classes not direct and particular, but indirect and general.

In modern society, competition has free play to force from the worker the very utmost they can give. And with what terrible force it is acting can be seen in the condition of the lowest class in the centers of wealth and industry. That the condition of this lowest class is not yet more widespread is due to the vast extent of fertile land that has until now been open on this continent — land that has not merely provided an escape for the growing population of older regions of the country, but has greatly relieved the pressure in Europe. In Ireland, emigration has been so great as to actually reduce the population. This avenue of relief cannot last forever. It is already closing fast, and as it closes, the pressure must become harder and harder.

The Cruelest Poverty

It is not without reason that the wise crow in the Ramayana — the crow Bushanda, "who has lived in every part of the universe and knows all events from the beginning of time" — declares that, though contempt for worldly advantages is necessary for supreme happiness, the keenest pain possible is inflicted by extreme poverty. The poverty to which, in advancing civilization, great masses of people are condemned is not the freedom from distraction and temptation that sages have sought and philosophers have praised. It is a degrading and brutalizing slavery that cramps the higher nature, dulls the finer feelings, and drives people by its pain to acts that animals would refuse. It is a helpless, hopeless poverty that crushes human dignity, that robs even childhood of its innocence and joy, and into it the working classes are being driven by a force that acts upon them like a resistless and pitiless machine.

The Boston collar manufacturer who pays workers two cents an hour may feel sorry for their condition, but that manufacturer, like the workers, is governed by the law of competition and cannot pay more and stay in business — for the market is not governed by sentiment. And so, through all the intermediate steps, up to those who receive the earnings of labor without giving anything in return, in the form of land rent, it is the inexorable laws of supply and demand — a power with which individuals can no more argue than they can with the winds and tides — that seem to press the lower classes down into the slavery of want.

But in reality, the cause is what always has and always must result in slavery — the monopolization by some of what nature has designed for all.

Freedom Requires Equal Rights to Land

Our boasted freedom necessarily involves slavery, so long as we recognize private property in land. Until that is abolished, Declarations of Independence and Acts of Emancipation are in vain. So long as one person can claim the exclusive ownership of the land from which other people must live, slavery will exist, and as material progress goes on, it must grow and deepen!

This — and in previous chapters of this book we have traced the process, step by step — is what is happening in the civilized world today. Private ownership of land is the lower millstone. Material progress is the upper millstone. Between them, with increasing pressure, the working classes are being ground.

Claim of Landowners to Compensation

The truth is — and from this truth there can be no escape — that there is and can be no just title to exclusive possession of the soil, and that private property in land is a bold, bare, enormous wrong, like that of chattel slavery.

The majority of people in civilized societies do not recognize this, simply because the majority of people do not think. To them, whatever exists seems right — until its wrongfulness has been pointed out again and again. And in general, they are ready to crucify whoever first tries to point it out.

But it is impossible for anyone to study economics, even as it is currently taught, or to think at all about the production and distribution of wealth, without seeing that property in land differs essentially from property in things of human production, and that it has no basis in abstract justice.

The Economists Know It

This is admitted, either openly or tacitly, in every standard economics textbook — but generally only through vague concessions or conspicuous silences. Attention is usually drawn away from the truth, as a lecturer on moral philosophy in a slaveholding community might steer attention away from too close a look at the natural rights of human beings. And private property in land is accepted without comment, as an existing fact, or is assumed to be necessary for the proper use of land and the existence of civilized society.

The investigation we have carried out has conclusively proved that private property in land cannot be justified on grounds of usefulness — that, on the contrary, it is the great cause to which we can trace the poverty, misery, and degradation, the social disease and political weakness that are showing themselves so threateningly amid advancing civilization. Practical benefit, therefore, joins justice in demanding that we abolish it.

When practical benefit joins justice in demanding that we abolish an institution that rests on no broader base or stronger ground than a mere legal regulation, what reason can there be for hesitation?

The Compensation Argument

The concern that seems to cause hesitation, even among those who see clearly that land is by right common property, is this idea: that having permitted land to be treated as private property for so long, we would be doing a wrong to those who have based their plans on its permanence. Having allowed land to be held as rightful property, we would — by reclaiming common rights — be doing an injustice to those who purchased it with what was unquestionably their own rightful property.

Thus, it is argued that if we abolish private property in land, justice requires us to fully compensate those who now possess it — just as the British government, in abolishing the purchase and sale of military commissions, felt obligated to compensate those who held commissions they had purchased expecting to resell them, or just as in abolishing slavery in the British West Indies, $100,000,000 was paid to the slaveholders.

Even the philosopher Herbert Spencer, who in his Social Statics so clearly demonstrated the invalidity of every title by which exclusive possession of land is claimed, gives support to this idea (inconsistently, it seems to me) by declaring that justly estimating and settling the claims of present landholders — "who have either by their own acts or by the acts of their ancestors given for their estates equivalents of honestly-earned wealth" — is "one of the most intricate problems society will one day have to solve."

Buying Out the Landlords Would Not Work

It is this idea that inspires the proposal, which has advocates in Great Britain, that the government should purchase at market price the individual ownership of all the land in the country. And it was this idea that led the economist John Stuart Mill, although he clearly perceived the essential injustice of private property in land, to advocate not a full recovery of the land but only a recovery of future increases in value. His plan was that a fair and even generous estimate should be made of the market value of all land in the kingdom, and that future additions to that value not due to the owner's own improvements should be taken by the state.

To say nothing of the practical difficulties that such cumbersome plans involve — the expansion of government functions they would require and the corruption they would breed — their inherent and essential flaw lies in the impossibility of bridging the radical difference between wrong and right through any compromise. To the exact extent that the interests of landholders are protected, to that same extent must general interests and general rights be disregarded. If landholders are to lose nothing of their special privileges, the people at large can gain nothing.

To buy out individual property rights would merely be to give landholders, in another form, a claim of the same kind and amount that their possession of land now gives them. It would be to raise for them, through taxation, the same proportion of the earnings of labor and capital that they now take as rent. Their unjust advantage would be preserved and the unjust disadvantage of the non-landholders would be continued.

True, there would eventually be a gain for the people when the advance of rents made the amount landholders would take under the current system greater than the interest on the purchase price at current rates. But this would be only a future gain. In the meantime, not only would there be no relief, but the burden imposed on labor and capital for the benefit of current landholders would actually be increased. For one of the factors in the current market value of land is the expectation of future increases in value. So buying up the land at market rates and paying interest on the purchase money would saddle producers not only with the payment of actual rent, but with the full payment of speculative rent.

To put it another way: the land would be purchased at prices calculated on a lower-than-normal rate of return (because the prospect of rising land values always makes the market price of land much higher than the price of anything else yielding the same current income), and interest on the purchase money would be paid at the normal rate. Thus, not only would all that the land currently yields to its owners have to be paid to them, but considerably more. It would be, in effect, the state taking a permanent lease from the current landholders at a considerably higher rent than what they now receive. For the present, the state would simply become the landholders' rent-collection agent, and would have to pay over to them not only what it received, but considerably more.

Mill's plan for nationalizing the future "unearned increase in the value of land" — by fixing the present market value of all lands and directing future increases to the state — would not add to the injustice of the current distribution of wealth, but neither would it remedy it. Further speculative increases in rent would cease, and in the future the people at large would gain the difference between the actual increase of rent and the amount at which that increase was estimated in fixing the present value of land (in which, of course, prospective as well as present value is a factor). But it would leave, for all the future, one class in possession of the enormous advantage over others that they now have. All that can be said of this plan is that it might be better than nothing.

The Thin End of the Wedge

Such inefficient and impractical schemes may serve for discussion where any more effective proposal would not currently be entertained, and their discussion is a hopeful sign, as it shows the thin end of the wedge of truth being driven in. Justice speaks humbly when she first begins a protest against a time-honored wrong. We of the English-speaking nations still wear the collar of the Saxon serf and have been trained to look upon the "vested rights" of landowners with all the superstitious reverence that ancient Egyptians looked upon the crocodile.

But when the times are ripe for them, ideas grow, even when they seem insignificant at first. One day, the members of the Third Estate covered their heads when the king put on his hat. A little while later, and the head of a son of Saint Louis rolled from the scaffold. The anti-slavery movement in the United States began with talk of compensating owners. But when four million enslaved people were emancipated, the owners got no compensation, nor did they clamor for any. And by the time the people of any country like England or the United States are sufficiently aroused to the injustice and disadvantages of individual land ownership to attempt its nationalization, they will be sufficiently aroused to nationalize it in a much more direct and easy way than by purchase. They will not trouble themselves about compensating the landowners.

Why Compensation Is Not Owed

Nor is it right that there should be any concern about the landowners. That a thinker as great as John Stuart Mill should have attached so much importance to compensating landowners as to urge confiscating merely the future increase in rent is only explainable by his acceptance of the prevailing doctrines that wages are drawn from capital and that population constantly tends to press upon the means of survival. These blinded him to the full effects of the private monopolization of land. He saw that "the claim of the land holder is altogether subordinate to the general policy of the state" and that "when private property in land is not expedient, it is unjust."49 But entangled in the Malthusian doctrine, he attributed, as he expressly states in a paragraph I have previously quoted, the want and suffering he saw around him to "the stinginess of nature, not the injustice of man." And so the nationalization of land seemed to him a comparatively small matter, one that could accomplish nothing toward eradicating poverty and abolishing want — ends that could be reached only as people learned to suppress a natural instinct.

Great as he was and pure as he was — warm heart and noble mind — he never saw the true harmony of economic laws, nor realized how from this one great fundamental wrong flow want and misery, vice and shame. Otherwise he could never have written this sentence: "The land of Ireland, the land of every country, belongs to the people of that country. The individuals called land owners have no right in morality and justice to anything but the rent, or compensation for its salable value."

In the name of the Prophet — figs! If the land of any country belongs to the people of that country, what right, in morality and justice, do the individuals called landowners have to the rent? If the land belongs to the people, why in the name of morality and justice should the people pay its market value for what is already their own?

An Ongoing Robbery, Not a Past One

Herbert Spencer says:50 "Had we to deal with the parties who originally robbed the human race of its heritage, we might make short work of the matter." Why not make short work of the matter anyway? For this robbery is not like the theft of a horse or a sum of money, which ends with the act. It is a fresh and continuous robbery that goes on every day and every hour. It is not from the products of the past that rent is drawn — it is from the products of the present. It is a toll levied on labor constantly and continuously.

Every blow of the hammer, every stroke of the pick, every thrust of the shuttle, every throb of the steam engine pays it tribute. It takes from the earnings of those who, deep underground, risk their lives, and from those who cling to reeling masts above white waves. It claims the just reward of the investor and the fruits of the inventor's patient effort. It takes little children from play and from school and compels them to work before their bones are hard or their muscles are firm. It robs the shivering of warmth, the hungry of food, the sick of medicine, the anxious of peace. It degrades, brutalizes, and embitters. It crowds families of eight and ten into a single squalid room. It herds agricultural gangs of boys and girls together like animals. It fills the saloon and the bar with those who have no comfort in their homes. It makes young people who might be useful citizens into candidates for prisons and penitentiaries. It fills brothels with young women who might have known the pure joy of motherhood. It sends greed and every evil passion prowling through society as a hard winter drives wolves to the homes of the living. It darkens faith in the human soul, and across the reflection of a just and merciful Creator draws the veil of a hard, blind, and cruel fate!

It is not merely a robbery in the past — it is a robbery in the present, a robbery that deprives the infants now coming into the world of their birthright! Why should we hesitate about making short work of such a system? Because I was robbed yesterday, and the day before, and the day before that, is it any reason that I should allow myself to be robbed today and tomorrow? Any reason that I should conclude the robber has acquired a vested right to rob me?

Rent Belongs to the Community

If the land belongs to the people, why continue to permit landowners to take the rent, or compensate them in any way for the loss of rent? Consider what rent is. It does not arise spontaneously from land. It is due to nothing that the landowners have done. It represents a value created by the whole community. Let the landholders have, if you please, all that possession of the land would give them in the absence of the rest of the community. But rent, the creation of the whole community, necessarily belongs to the whole community.

What the Law Itself Says

Try the case of the landholders by the principles of the common law — the very law by which the rights of one person against another are determined. The common law, we are told, is the perfection of reason, and certainly the landowners cannot complain of its judgment, for it has been built up by and for landowners. Now what does the law give to the innocent purchaser when the land for which they paid their money is ruled to rightfully belong to someone else? Nothing at all. That the purchaser bought in good faith gives them no right or claim whatsoever. The law does not concern itself with the "intricate question of compensation" to the innocent buyer. The law does not say, as John Stuart Mill says, "The land belongs to A, therefore B, who thought himself the owner, has no right to anything but the rent, or compensation for its salable value." For that would be like a famous fugitive slave case decision in which the court was said to have "given the law to the North and the slave to the South." The law simply says: "The land belongs to A — let the Sheriff put them in possession!" It gives the innocent purchaser of a wrongful title no claim and allows no compensation.

And not only this — it takes from the innocent purchaser all the improvements they have made on the land in good faith. You may have paid a high price for land, making every effort to verify that the title is good. You may have held it in undisturbed possession for years without a thought or hint of any rival claimant. You may have made it fruitful by your toil, or erected upon it a costly building worth more than the land itself, or a modest home where you hoped, surrounded by the fruit trees you planted and the vines you tended, to pass your later years. Yet if some sharp lawyers can dig up a technical flaw in your documents or hunt up some forgotten heir who never dreamed of their rights, not merely the land but all your improvements may be taken from you. And not only that — according to the common law, after you have surrendered the land and given up your improvements, you may be called upon to account for the profits you earned from the land during the time you had it.

Now, if we apply to the case of The People v. The Landowners the same principles of justice that landowners themselves have formulated into law, and that are applied every day in English and American courts to disputes between individuals, we would not only not think of giving landholders any compensation for the land, but would take all their improvements and whatever else they may have as well.

A Generous Remedy

But I do not propose — and I do not suppose anyone else will propose — to go that far. It is enough if the people resume ownership of the land. Let the landowners keep their improvements and personal property in secure possession.

And in this measure of justice, there would be no oppression, no injury to any class. The great cause of the present unequal distribution of wealth, with the suffering, degradation, and waste that it brings, would be swept away. Even landholders would share in the general gain. The gain of even the large landholders would be a real one. The gain of small landholders would be enormous. For in welcoming Justice, we welcome the handmaid of Love. Peace and Plenty follow in her train, bringing their good gifts not to some, but to all.

How true this is, we shall see hereafter.

If in this chapter I have spoken of justice and practical benefit as if justice were one thing and practical benefit another, it has been merely to meet the objections of those who speak that way. In justice is the highest and truest practical benefit.

Property in Land Historically Considered

What more than anything else prevents people from recognizing the essential injustice of private property in land, and stands in the way of any candid consideration of proposals to abolish it, is the mental habit that makes anything that has long existed seem natural and necessary.

We are so used to treating land as individual property — it is so thoroughly embedded in our laws, customs, and habits — that the vast majority of people never think of questioning it. They look upon it as essential to the use of land. They are unable to imagine, or at least it does not occur to them to imagine, society existing without the reduction of land to private possession. The first step toward cultivating or improving land seems to them to be finding a particular owner for it. And a person's land is regarded as fully and fairly their own — to sell, to lease, to give, or to leave to their heirs — as their house, their cattle, their goods, or their furniture.

The "sacredness of property" has been preached so constantly and effectively, especially by those "conservators of ancient barbarism" (as Voltaire called the lawyers), that most people look upon private ownership of land as the very foundation of civilization. If the restoration of land as common property is suggested, they think of it at first blush either as an impractical fantasy that has never been and never can be realized, or as a proposal to overturn society from its foundations and bring about a return to barbarism.

Precedent Does Not Equal Justice

If it were true that land had always been treated as private property, that would not prove the justice or necessity of continuing to treat it that way — any more than the once-universal existence of slavery (which could safely have been asserted at one time) would prove the justice or necessity of owning human beings.

Not long ago, monarchy seemed all but universal, and not only kings but the majority of their subjects genuinely believed that no country could get along without a king. Yet, to say nothing of America, France now gets along without a king. The Queen of England and Empress of India has about as much to do with governing her realms as the wooden figurehead of a ship has in determining its course, and the other crowned heads of Europe sit, metaphorically speaking, on barrels of nitroglycerin.

A little over a hundred years ago, Bishop Butler, author of the famous Analogy, declared that "a constitution of civil government without any religious establishment is a chimerical project of which there is no example." As for there being no example, he was right. No government at that time existed, nor would it have been easy to name one that ever had existed, without some sort of established religion. Yet in the United States, we have since proved through a century of practice that a civil government can exist without a state church.

The Historical Record: Land Was Originally Common Property

But while it is true that the universal existence of private property in land — even if it were a fact — would not prove that it should always be so, the point is that it is not a fact. On the contrary, the common right to land has everywhere been the primary recognition, and private ownership has nowhere grown up except as the result of usurpation. The fundamental and persistent perception of humanity is that all people have an equal right to land. The opinion that private property in land is necessary to society is merely the offspring of an ignorance that cannot see beyond its immediate surroundings — an idea of comparatively modern growth, as artificial and baseless as the divine right of kings.

The observations of travelers, the research of critical historians who have done so much in recent decades to reconstruct forgotten records of peoples, the investigations of scholars like Sir Henry Maine, Emile de Laveleye, Professor Nasse of Bonn, and others into the growth of institutions — all prove that wherever human society has formed, the common right to use the earth has been recognized, and that nowhere has unrestricted individual ownership been freely adopted. Historically, as ethically, private property in land is robbery. It nowhere springs from contract. It can nowhere be traced to perceptions of justice or practical benefit. It has everywhere had its birth in war and conquest, and in the selfish use that the cunning have made of superstition and law.

The Universal Pattern

Wherever we can trace the early history of society — whether in Asia, Europe, Africa, the Americas, or Polynesia — land has been regarded, as the necessary relationship between human life and land would lead it to be regarded, as common property in which the rights of all recognized members were equal. That is, all members of the community — all citizens, as we would say — had equal rights to the use and enjoyment of the community's land.

This recognition of the common right to land did not prevent the full recognition of particular and exclusive rights in things that are the products of labor. Nor was it abandoned when the development of agriculture required recognizing exclusive possession of land in order to secure exclusive enjoyment of the labor invested in cultivating it. The division of land among working units — whether families, extended families, or individuals — went only as far as was necessary for that purpose. Pasture and forest lands were kept as common, and equality in agricultural land was secured either by periodic redistribution (as among the Germanic peoples) or by prohibiting the sale of land (as in the law of Moses).

This primary arrangement still exists, in more or less intact form, in the village communities of India, Russia, and the Slavic countries that were, or until recently had been, under Turkish rule; in the mountain districts of Switzerland; among the Kabyles in North Africa and the peoples of South Africa; among the native population of Java and the indigenous people of New Zealand — that is, wherever outside influences have left the form of primitive social organization intact. That it once existed everywhere has been abundantly proved in recent years by the research of many independent scholars and observers, which are best summarized (to my knowledge) in Systems of Land Tenures in Various Countries, published under authority of the Cobden Club, and in Emile de Laveleye's Primitive Property, to which I would refer readers who wish to see this truth displayed in detail.

"In all primitive societies," says de Laveleye, after an investigation that leaves no part of the world unexplored, "the soil was the joint property of the tribes and was subject to periodical distribution among all the families, so that all might live by their labor as nature has ordained. The comfort of each was thus proportioned to his energy and intelligence; no one, at any rate, was destitute of the means of subsistence, and inequality increasing from generation to generation was provided against."

How Did Private Ownership Take Over?

If de Laveleye is right in this conclusion — and that he is right there can be no doubt — how, it will be asked, did the reduction of land to private ownership become so widespread?

The causes that have worked to replace this original idea of equal right to the use of land with the idea of exclusive and unequal rights can, I think, be vaguely but certainly traced everywhere. They are everywhere the same causes that have led to the denial of equal personal rights and the establishment of privileged classes.

These causes can be summarized as: the concentration of power in the hands of chieftains and the military class, resulting from a state of warfare, which enabled them to monopolize common lands; the effect of conquest in reducing the conquered to a form of land-based slavery, and dividing their lands among the conquerors in disproportionate shares favoring the chiefs; the growing influence of a priestly class; and the growing influence of a class of professional lawyers whose interests were served by replacing common ownership with exclusive ownership of land.51 And once inequality is produced, it always tends toward greater inequality, by a kind of gravitational pull.

Greece and Rome: The Pattern Writ Large

It was the struggle between this idea of equal rights to the soil and the tendency to monopolize it in individual possession that caused the internal conflicts of Greece and Rome. It was the check given to this monopolizing tendency — in Greece by such institutions as those of Lycurgus and Solon, and in Rome by the Licinian Law and subsequent divisions of land — that gave each their days of strength and glory. And it was the final triumph of this tendency that destroyed both.

Great estates ruined Greece, as afterward "great estates ruined Italy."52 As the soil, in spite of the warnings of great lawmakers and statesmen, passed finally into the possession of a few, population declined, art sank, the intellect grew weak, and the people in whom humanity had achieved its most splendid development became a byword and a reproach.

Rome's Rise and Fall

The idea of absolute individual property in land, which modern civilization inherited from Rome, reached its full development there within historical times. When the future mistress of the world first emerges into view, each citizen had a small homestead plot that could not be sold, and the general domain — "the corn-land which was of public right" — was subject to common use, doubtless under rules or customs that secured equality, as in the Germanic mark and the Swiss common fields. It was from this public domain, constantly expanded by conquest, that the patrician families succeeded in carving their great estates.

These great estates, by the power with which the great attracts the small, and in spite of temporary checks through legal limits and recurring divisions, finally crushed out all the small farmers. Their modest holdings were absorbed into the enormous latifundia of the fabulously rich, while the farmers themselves were forced into slave gangs, became rent-paying tenants, or were driven into newly conquered foreign provinces where land was given to the veterans of the legions — or else to the capital city, to swell the ranks of the landless masses who had nothing to sell but their votes.

Dictatorship, soon passing into the unbridled despotism of an Eastern type, was the inevitable political result. The empire, even while it embraced the world, was in reality a shell, kept from collapse only by the healthier life of the frontiers, where land had been divided among military settlers or older customs of common use survived longer. But the great estates that had devoured the strength of Italy crept steadily outward, carving the surface of Sicily, Africa, Spain, and Gaul into vast holdings cultivated by slaves or tenants. The hardy virtues born of personal independence died out. Exhaustive farming impoverished the soil, and wild beasts replaced people, until at length, with a strength nurtured in equality, the barbarians broke through, Rome perished, and of a civilization once so proud nothing was left but ruins.

Thus came to pass that astonishing event which, at the height of Rome's grandeur, would have seemed as impossible as it would seem now to us that the Comanches should conquer the United States or the Sami should lay waste to Europe. The fundamental cause is to be found in the ownership of land. On one side, the denial of the common right to land had resulted in decay. On the other, equality gave strength.

"Freedom," says de Laveleye, "and, as a consequence, the ownership of an undivided share of the common property, to which the head of every family in the clan was equally entitled, were in the German village essential rights. This system of absolute equality impressed a remarkable character on the individual, which explains how small bands of barbarians made themselves masters of the Roman Empire, in spite of its skillful administration, its perfect centralization and its civil law, which has preserved the name of written reason."

It was, on the other hand, that the heart was eaten out of that great empire. "Rome perished," says Professor Seeley, "from the failure of the crop of men."

The Feudal System: A Partial Recognition of Common Rights

In his lectures on the History of Civilization in Europe, and more elaborately in his lectures on the History of Civilization in France, the historian Guizot vividly described the chaos that in Europe followed the fall of the Roman Empire — a chaos which, as he said, "carried all things in its bosom," and from which the structure of modern society was slowly evolved. It is a picture that cannot be compressed into a few lines, but suffice it to say that the result of this infusion of rough but vigorous life into Romanized society was a disorganization of the Germanic as well as the Roman structure — both a blending and a mixing of the idea of common rights in the soil with the idea of exclusive property. This was substantially what occurred in those provinces of the Eastern Empire later overrun by the Turks.

The feudal system, which was so readily adopted and so widely spread, was the result of such a blending. But underneath and side by side with the feudal system, a more primitive organization based on the common rights of cultivators took root or revived, and has left its traces all over Europe. This primitive organization, which allotted equal shares of cultivated ground and common use of uncultivated ground — and which existed in ancient Italy as in Saxon England — maintained itself beneath absolutism and serfdom in Russia, beneath Muslim rule in Serbia, and in India was swept, but not entirely destroyed, by wave after wave of conquest and century after century of oppression.

The feudal system — which is not unique to Europe but seems to be the natural result of the conquest of a settled country by a people among whom equality and individuality are still strong — clearly recognized, in theory at least, that the land belongs to society at large, not to the individual. A rough product of an age in which might stood for right as nearly as it ever can (for the idea of right is so deeply rooted in the human mind that it must show itself even in the association of pirates and robbers), the feudal system nonetheless admitted in no one the uncontrolled and exclusive right to land. A fief was essentially a trust, and with enjoyment came obligation. The sovereign, theoretically the representative of the collective power and rights of the whole people, was in the feudal view the only absolute owner of land. And though land was granted to individual possession, its possession involved duties by which the one who enjoyed its revenues was supposed to give back to the commonwealth an equivalent for the benefits received from the delegation of the common right.

In the feudal scheme, the crown lands supported public expenditures now included in the civil budget. The church lands paid for public worship and education, for the care of the sick and the poor, and maintained a class of people who were supposed to be — and no doubt to a great extent were — devoting their lives to purposes of public good. The military holdings provided for the public defense. In the obligation of the military tenant to bring into the field a specified force when needed, as well as in the payments required when the sovereign's eldest son was knighted, a daughter married, or the sovereign taken prisoner of war, was a crude and inefficient recognition — but still unquestionably a recognition — of the fact, obvious to the natural perceptions of all people, that land is not individual but common property.

Nor was the landholder's control allowed to extend beyond their own lifetime. Although the principle of inheritance soon displaced the principle of selection (as where power is concentrated it always must), feudal law required that there always be some representative of a fief capable of performing the duties as well as receiving the benefits attached to a landed estate — and who this should be was not left to individual whim but was rigorously determined in advance. Hence wardship and other feudal obligations. The system of primogeniture and its outgrowth, the entail, were in their beginnings not the absurdities they later became.

The basis of the feudal system was absolute ownership of the land — an idea the barbarians readily acquired amid a conquered population to whom it was familiar. But over this, feudalism threw a higher right. The process of creating feudal tenures consisted of bringing individual control into subordination to a superior authority representing the larger community or nation. The units of the system were the landowners, who by virtue of their ownership were absolute lords on their own domains and who there performed the role of protection that the historian Taine so graphically described (though perhaps with too vivid a coloring) in the opening chapter of his Ancient Regime. The work of the feudal system was to bind together these units into nations and to subordinate the powers and rights of individual lords of land to the powers and rights of the collective society, represented by the sovereign or king.

Thus the feudal system, in its rise and development, was a triumph of the idea of common right to land — changing an absolute ownership into a conditional one, and imposing special obligations in return for the privilege of receiving rent. And during the same period, the power of land ownership was encroached upon from below as well. The at-will tenancy of the cultivators very generally hardened into tenancy by custom, and the rent that the lord could demand from the peasant became fixed and certain.

The Commons

Amid the feudal system there remained, or there grew up, communities of cultivators — more or less subject to feudal dues — who tilled the soil as common property. Although the lords, where and when they had the power, claimed pretty much everything they thought worth claiming, the idea of common right was strong enough to attach itself by custom to a considerable portion of the land. The commons, in feudal times, must have comprised a very large share of the area of most European countries.

In France (although the aristocracy had been appropriating these lands for centuries before the Revolution, occasionally checked and reversed by royal decree, and during the Revolution and First Empire large distributions and sales were made), the common or communal lands still amount, according to de Laveleye, to 4,000,000 hectares, or about 9,900,000 acres. The extent of England's common land during the feudal period may be inferred from the fact that though enclosures by the landed aristocracy began during the reign of Henry VII, no less than 7,660,413 acres of common land were enclosed under acts passed between 1710 and 1843, of which 600,000 acres have been enclosed since 1845. An estimated 2,000,000 acres of common land still remain in England, though of course the most worthless parts of the soil.

In addition to these common lands, there existed in France until the Revolution, and in parts of Spain until our own day, a custom with all the force of law by which cultivated land, after the harvest had been gathered, became common for purposes of grazing or travel until it was time to use the ground again. In some places, a custom existed by which anyone had the right to go onto ground its owner was neglecting to cultivate, and there to sow and reap a crop in security. And if they chose to fertilize the ground for the first crop, they acquired the right to sow and gather a second crop without interference from the owner.

The Evidence Is Everywhere

It is not merely the Swiss common fields, the German village commons, the Serbian and Russian village communities. Not merely the long ridges that on English ground — now the exclusive property of individuals — still enable historians to trace out the great fields in ancient times devoted to the three-year rotation of crops, in which each villager was annually allotted an equal plot. Not merely the documentary evidence that careful scholars have in recent years drawn from old records. It is the very institutions under which modern civilization has developed that prove the universality and long persistence of the recognition of the common right to use the soil.

There still remain in our legal systems survivals that have lost their meaning — which, like the still-existing remnants of England's ancient commons, point to this truth. The doctrine of eminent domain, which exists in Islamic law as well, making the sovereign theoretically the only absolute owner of land, springs from nothing but the recognition of the sovereign as the representative of the collective rights of the people. Primogeniture and entail, which still exist in England and which existed in some American states a hundred years ago, are merely distorted forms of what was once a natural outgrowth of the understanding of land as common property. The very distinction made in legal terminology between real and personal property is but the survival of a primitive distinction between what was originally considered common property and what, by its nature, was always considered the individual's own. And the greater formality and ceremony still required for the transfer of land is but a survival — now meaningless and useless — of the more general and ceremonious consent once required for transferring rights that were understood to belong not to any one member but to every member of a family or tribe.

The Paradox of "Freedom"

The general course of modern civilization since the feudal period has been to subvert these natural and primary ideas of collective ownership of the soil. Paradoxical as it may seem, the emergence of liberty from feudal bonds has been accompanied by a trend in the treatment of land toward the form of ownership that involves the enslavement of the working classes — a trend now beginning to be strongly felt across the civilized world, in the pressure of an iron yoke that cannot be relieved by any extension of mere political power or personal liberty, and which economists mistake for the pressure of natural laws, and workers mistake for the oppression of capital.

This is clear: in Great Britain today, the right of the people as a whole to the soil of their native country is much less fully acknowledged than it was in feudal times. A much smaller proportion of the people own the soil, and their ownership is much more absolute. The commons, once so extensive and contributing so much to the independence and support of the lower classes, have been almost entirely appropriated to individual ownership and enclosed — all but a small remnant of the most worthless land. The great estates of the church, which were essentially common property devoted to a public purpose, have been diverted from that trust to enrich individuals. The obligations of military tenants have been shaken off, and the cost of maintaining the military and paying interest on an immense debt accumulated by wars has been loaded onto the whole people through taxes on the necessities and comforts of life. The crown lands have mostly passed into private possession, and for the support of the royal family and all the minor royals who marry into it, the British worker must pay in the price of a mug of beer and a pipe of tobacco.

The English yeoman — the sturdy breed who won Crecy, Poitiers, and Agincourt — is as extinct as the mastodon. The Scottish clansman, whose right to the soil of their native hills was then as undisputed as that of the chieftain, has been driven out to make room for the sheep ranges or deer parks of that chieftain's descendant. The tribal right of the Irish has been turned into a tenancy-at-will. Thirty thousand people have the legal power to expel the whole population from five-sixths of the British Islands, and the vast majority of the British people have no right whatever to their native land except to walk the streets or trudge the roads.

To them may fittingly be applied the words of a tribune of the Roman people. "Citizens of Rome," said Tiberius Gracchus, "you are called the lords of the world, yet have no right to a square foot of its soil! The wild beasts have their dens, but the soldiers of Italy have only water and air!"

How This Happened

The result has perhaps been more marked in England than anywhere else, but the tendency is visible everywhere, having gone further in England because circumstances have accelerated it there.

The reason, I believe, that the extension of the idea of personal freedom has gone hand in hand with an extension of the idea of private property in land, is that as the cruder forms of domination connected with land ownership were dropped, abolished, or became less obvious, attention was diverted from the more insidious but really more powerful forms, and the landowners were easily able to put property in land on the same footing as other property.

The growth of national power, whether in the form of monarchy or parliamentary government, stripped the great lords of their individual power and importance, their jurisdiction, and their control over persons — and so suppressed the most glaring abuses, just as the growth of Roman imperial power suppressed the more striking cruelties of slavery. The breakup of the large feudal estates (which, until the modern tendency toward large-scale production brought a new concentration, had operated to increase the number of landowners) and the abolition of the laws by which landowners in more sparsely settled times had tried to compel laborers to remain on their estates — all this also helped draw attention away from the essential injustice involved in private property in land. Meanwhile, the steady influence of legal ideas drawn from Roman law, which has been the great mine and storehouse of modern legal thought, tended to level the natural distinction between property in land and property in other things. Thus, alongside the extension of personal liberty, went an extension of individual ownership of land.

Moreover, the political power of the feudal lords was not broken by the revolt of the classes who could most clearly feel the injustice of land ownership. Such revolts took place again and again, but again and again they were crushed with terrible cruelties. What broke the power of the lords was the growth of the merchant and artisan classes, for whom the relationship between their wages and rent was not so obvious. These classes, too, developed under a system of exclusive guilds and trade organizations which, as I have previously explained in discussing trade combinations and monopolies, enabled them to somewhat protect themselves from the general law of wages — protections that were much more easily maintained than they are now, when improved transportation, basic education, and the spread of news are steadily making the population more mobile. These classes did not see, and do not yet see, that the ownership of land is the fundamental fact that must ultimately determine the conditions of industrial, social, and political life.

And so the tendency has been to merge the idea of property in land with that of property in things of human production. Steps backward have even been taken and hailed as steps forward. The French Constituent Assembly in 1789 thought it was sweeping away a relic of tyranny when it abolished tithes and imposed the support of the clergy on general taxation. The Abbe Sieyes stood alone when he told them that they were simply giving back to the landowners a tax that was one of the conditions under which they held their lands, and reimposing it on the labor of the nation. But in vain. The Abbe Sieyes, being a priest, was assumed to be defending the interests of his order, when in truth he was defending the rights of the people. In those tithes, the French people might have retained a large public revenue that would not have taken one cent from the wages of labor or the earnings of capital.

And so the abolition of the military tenures in England by the Long Parliament, ratified after the accession of Charles II — though in reality an appropriation of public revenues by the feudal landholders, who thus rid themselves of the obligations under which they held the common property of the nation and shifted the burden to the people at large through taxes on consumers — has long been characterized, and is still held up in the law books, as a triumph of the spirit of freedom. Yet here is the source of England's immense debt and heavy taxation. Had the form of these feudal dues simply been updated to suit the changed times, English wars need never have required the borrowing of a single pound, and the labor and capital of England need not have been taxed a single penny for maintaining a military establishment. All this would have come from rent, which the landholders have since appropriated to themselves — from the tax that land ownership levies on the earnings of labor and capital.

The landholders of England got their land on terms that required them, even in the sparse population of Norman days, to put in the field upon call sixty thousand fully equipped cavalry,53 plus various fines and payments that amounted to a considerable part of the rent. It would probably be a low estimate to put the monetary value of these services and dues at one-half the rental value of the land. Had the landholders been held to this contract, and no land been allowed to be enclosed except on similar terms, the income from English land today would be greater by many millions than the entire public revenues of the United Kingdom. England might today enjoy absolute free trade. There need not have been a customs duty, an excise tax, a license fee, or an income tax, yet all present expenditures could be met, with a large surplus remaining for anything that would benefit the whole people.

The Original Title

Turning back, wherever there is light to guide us, we may see everywhere that in their first perceptions, all peoples have recognized the common ownership of land — and that private property is a usurpation, a creation of force and fraud.

As Madame de Stael said, "Liberty is ancient." Justice, if we turn to the most ancient records, will always be found to have the title of precedent on its side.

Of Property in Land in the United States

In the earlier stages of civilization, we see that land is everywhere regarded as common property. And turning from the dim past to our own times, we may see that natural perceptions are still the same. When placed in circumstances where the influence of education and habit is weakened, people instinctively recognize the equality of right to the bounty of nature.

The California Gold Rush: A Natural Experiment

The discovery of gold in California brought together in a new country people who had been used to looking on land as the rightful subject of individual property, and of whom probably not one in a thousand had ever dreamed of drawing any distinction between property in land and property in anything else. But for the first time in the history of the English-speaking peoples, these people were brought into contact with land from which gold could be obtained by the simple operation of washing it out.

Had the land they were dealing with been agricultural, or grazing, or forest land of unusual richness — had it been land that derived special value from its location for commercial purposes or from the water power it provided — or even had it contained rich deposits of coal, iron, or lead — the land system they were used to would have been applied, and it would have been reduced to private ownership in large tracts. Even the pueblo lands of San Francisco, really the most valuable in the state (which by Spanish law had been set aside to provide homes for the city's future residents), were privatized without any protest worth speaking of.

But the novelty of the situation broke through habitual ideas and threw people back on first principles. By common consent, it was declared that this gold-bearing land should remain common property, of which no one might take more than they could reasonably use, or hold for longer than they continued to use it. This perception of natural justice was accepted by the federal government and the courts. While placer mining remained important, no attempt was made to overrule this return to primitive ideas.

The title to the land remained with the government, and no individual could acquire more than a possessory claim. The miners in each district set the amount of ground an individual could take and the amount of work that had to be done to count as use. If this work was not done, anyone could reclaim the ground. Thus, no one was allowed to hoard or lock up natural resources. Labor was acknowledged as the creator of wealth, was given a free field, and was secured in its reward.

The system would not have assured complete equality of rights under the conditions that prevail in most countries. But under the conditions that existed there and then — a sparse population, an unexplored country, and an occupation that was essentially a lottery — it secured substantial justice. One person might strike an enormously rich deposit while others prospected in vain for months and years, but all had an equal chance. No one was allowed to play dog in the manger with the bounty of the Creator. The essential idea of the mining regulations was to prevent hoarding and monopoly. The same principle underlies the mining laws of Mexico, and the same principle was adopted in Australia, in British Columbia, and in the diamond fields of South Africa — because it accords with natural perceptions of justice.

With the decline of placer mining in California, the familiar idea of private property finally prevailed in the passage of a law permitting the patenting of mineral lands. The only effect has been to lock up opportunities — to give the owner of mining ground the power to say that no one else may use what they do not choose to use themselves. There are many cases in which mining ground is held out of use for speculative purposes, just as valuable building lots and agricultural land are withheld from use. But while preventing use, the extension of private ownership to mineral land has done nothing for the security of improvements. The greatest expenditures of capital in opening and developing mines — expenditures that in some cases amounted to millions of dollars — were made on possessory titles alone.

Why Americans Missed the Injustice

Had the circumstances facing the first English settlers in North America been such as to force them to reconsider the question of land ownership from scratch, there can be no doubt they would have reverted to first principles, just as they reverted to first principles in matters of government. Individual land ownership would have been rejected, just as aristocracy and monarchy were rejected. But in the country they came from, the system had not yet fully developed its effects, and in the new country, an immense continent invited settlement. This prevented any question of the justice and policy of private property in land from arising. In a new country, equality seems sufficiently assured if no one is allowed to take land to the exclusion of everyone else. At first, no harm seems to come from treating land as absolute property. There is plenty of land left for those who choose to take it, and the slavery that in a later stage of development necessarily springs from individual ownership of land is not yet felt.

In Virginia and to the South, where settlement had an aristocratic character, the natural complement of the large estates was introduced in the form of enslaved labor. But the first settlers of New England divided the land as, twelve centuries before, their ancestors had divided the land of Britain — giving each head of a family a town lot and a planting lot, with the free common beyond. As for the great proprietors whom the English kings tried to create through letters patent, the settlers saw clearly enough the injustice of the attempted monopoly, and none of these proprietors got much from their grants. But the abundance of land prevented attention from being called to the monopoly that individual land ownership — even in small tracts — must involve when land becomes scarce.

And so it has come to pass that the great republic of the modern world has adopted at the beginning of its career an institution that ruined the republics of antiquity. A people who proclaim the inalienable rights of all to life, liberty, and the pursuit of happiness have accepted without question a principle which, by denying the equal and inalienable right to the soil, ultimately denies the equal right to life and liberty. A people who at the cost of a bloody war abolished chattel slavery have permitted slavery in a more widespread and dangerous form to take root.

The Continent as Safety Valve

The continent has seemed so vast, the area over which population might pour so enormous, that — accustomed by habit to the idea of private property in land — we have not realized its essential injustice. Not only has this background of unsettled land prevented the full effects of private ownership from being felt even in the older regions, but allowing people to take more land than they could use — so they could charge those who later needed it for the privilege of using it — has not seemed so unjust when others could do the same thing by moving further on.

More than this, the very fortunes that have resulted from the appropriation of land — fortunes that have really been drawn from taxes levied on the wages of labor — have appeared to be, and have been celebrated as, prizes held out to workers. In all the newer states, and even considerably in the older ones, our landed aristocracy is still in its first generation. Those who have profited from rising land values have largely been people who began life without a cent. Their great fortunes, many running high into the millions, seem to them and to many others like the best proof of the justice of existing social conditions in rewarding prudence, foresight, industry, and thrift. But the truth is that these fortunes are merely the gains of monopoly and are necessarily made at the expense of labor. The fact that those enriched in this way started as laborers hides this — and the same feeling that leads every lottery ticket holder to delight in imagining the size of the prizes has prevented even the poor from quarreling with a system that has made many poor people rich.

In short, the American people have failed to see the essential injustice of private property in land because they have not yet felt its full effects. This public domain — the vast extent of land yet to be reduced to private possession, the enormous common toward which the energetic were always heading — has been the great fact that, since the days when the first settlements began to fringe the Atlantic coast, has shaped our national character and colored our national thought.

It is not that we have avoided a titled aristocracy and abolished primogeniture, that we elect all our officers from school board member up to president, that our laws run in the name of the people instead of in the name of a prince, that the state recognizes no official religion, and our judges wear no wigs — that we have been exempted from the ills that Fourth of July orators used to point to as characteristic of the worn-out tyrannies of the Old World. The general intelligence, the general comfort, the active invention, the power of adaptation and assimilation, the free and independent spirit, the energy and hopefulness that have marked our people — these are not causes but results. They have sprung from unfenced land.

This public domain has been the transforming force that turned the downtrodden, unambitious European peasant into the self-reliant Western farmer. It gave a consciousness of freedom even to people in crowded cities and was a wellspring of hope even to those who never thought of actually going out to claim land. The child of the common people, as they grow to adulthood in Europe, finds all the best seats at the banquet of life marked "taken" and must struggle with their fellows for the crumbs that fall, without one chance in a thousand of forcing or sneaking their way to a seat. In America, whatever their condition, there has always been the consciousness that the public domain lay behind them. And the knowledge of this fact, acting and reacting, has pervaded our whole national life, giving it generosity and independence, elasticity and ambition. All that we are proud of in the American character — all that makes our conditions and institutions better than those of older countries — we may trace to the fact that land has been cheap in the United States, because new soil was open to the settler.

The Frontier Is Closing

But our advance has reached the Pacific. Further west we cannot go, and an increasing population can only expand north and south and fill up what has been passed over. North, it is already filling up the valley of the Red River, pressing into that of the Saskatchewan, and settling Washington Territory. South, it is covering western Texas and taking up the farmable valleys of New Mexico and Arizona.

The republic has entered a new era — an era in which the monopoly of land will tell with accelerating effect. The great fact that has been so powerful is ceasing to exist. The public domain is almost gone — a very few years will end its influence, already rapidly fading.

I do not mean there will be no public domain. For a long time to come, there will be millions of acres of public land carried on the books of the Land Department. But it must be remembered that the best part of the continent for farming is already taken, and that it is the poorest land that is left. It must be remembered that what remains consists of the great mountain ranges, the barren deserts, and the high plains fit only for grazing. And it must be remembered that much of the land that appears in official reports as open to settlement is unsurveyed land that has been claimed through possessory rights or speculative filings that do not show up until the land is formally surveyed.

California figures on the books of the Land Department as the greatest land state in the Union, containing nearly 100,000,000 acres of public land — something like one-twelfth of the whole public domain. Yet so much of this is covered by railroad grants or held in the manner I have described, so much consists of untillable mountains or plains that require irrigation, and so much is monopolized by claims that control the water, that as a practical matter it is difficult to point any immigrant to any part of the state where they can take up a farm on which they can settle and support a family. People, weary of the search, end by buying land or renting it on shares. It is not that there is any real scarcity of land in California — an empire in herself, California will someday support a population as large as France's — but appropriation has gotten ahead of the settler and manages to stay just ahead.

The Coming Crisis

Some twelve or fifteen years ago, the late Ben Wade of Ohio said in a speech in the United States Senate that by the close of this century, every acre of ordinary agricultural land in the United States would be worth $50 in gold. It is already clear that if he erred at all, it was in overstating the time. In the twenty-one years remaining of the present century, if our population keeps increasing at the rate it has maintained since the founding of the government (with the exception of the decade that included the Civil War), there will be an addition to our present population of something like forty-five million — an addition of some seven million more than the total population of the United States as shown by the census of 1870, and nearly half again as much as the present population of Great Britain.

There is no question about the ability of the United States to support such a population, and many hundreds of millions more, and — under proper social arrangements — to support them in increased comfort. But in view of such population growth, what becomes of the unappropriated public domain? In practical terms, it will soon cease to exist. It will be a very long time before it is all in use, but it will be a very short time, at the rate we are going, before all that people can turn to use will have an owner.

The Effects Are Already Visible

But the harmful effects of making the land of a whole people the exclusive property of some do not wait for the final appropriation of the public domain to show themselves. It is not necessary to look to the future to see them; we can see them in the present. They have grown with our growth and are still increasing.

We plow new fields, we open new mines, we found new cities. We push back the frontier and lay railroad tracks across the land. We lace the air with telegraph wires. We add knowledge to knowledge and put invention after invention to use. We build schools and fund colleges. Yet it becomes no easier for the masses of our people to make a living. On the contrary, it is becoming harder. The wealthy class is becoming wealthier, but the poorer class is becoming more dependent. The gulf between the employed and the employer is growing wider. Social contrasts are becoming sharper. As fancy carriages appear, so do barefooted children. We are getting used to talking about "the working classes" and "the propertied classes." Beggars are becoming so common that where it was once thought almost criminal to refuse food to someone who asked for it, the gate is now barred and the guard dog released, while laws are passed against vagrants that recall those of Henry VIII.

We call ourselves the most progressive people on earth. But what is the goal of our progress, if these are its fruits along the way?

The One Cause

These are the results of private property in land — the effects of a principle that must act with increasing and increasing force. It is not that workers have multiplied faster than capital. It is not that population is pressing against the means of survival. It is not that machinery has made "work scarce." It is not that there is any real conflict between labor and capital. It is simply that land is becoming more valuable — that the terms on which labor can obtain access to the natural opportunities that alone enable it to produce are becoming harder and harder. The public domain is shrinking and narrowing. Property in land is concentrating. The proportion of our people who have no legal right to the land on which they live is steadily growing.

The New York World reports: "A nonresident ownership class, like that of Ireland, is getting to be the characteristic of large farming districts in New England, adding yearly to the nominal value of leasehold farms, advancing yearly the rent demanded, and steadily degrading the character of the tenants." And The Nation, referring to the same region, says: "Increased nominal value of land, higher rents, fewer farms occupied by owners, diminished production, lower wages, a more ignorant population, increasing numbers of women employed at hard outdoor labor (the surest sign of a declining civilization), and a steady deterioration in the style of farming — these are the conditions described by a cumulative mass of evidence that is perfectly irresistible."

The same tendency is visible in the newer states, where the large scale of farming recalls the latifundia that ruined ancient Italy. In California, a very large proportion of farmland is rented from year to year, at rates varying from a fourth to even half the crop.

A Call to First Principles

The harder times, the lower wages, the increasing poverty visible in the United States are but the results of the natural laws we have traced — laws as universal and irresistible as that of gravity. We did not establish the republic when, in the face of the world's powers, we declared the inalienable rights of all. We shall never establish the republic until we practically carry out that declaration by securing to the poorest child born among us an equal right to their native soil! We did not abolish slavery when we ratified the Fourteenth Amendment. To abolish slavery, we must abolish private property in land! Unless we come back to first principles — unless we recognize natural perceptions of fairness, unless we acknowledge the equal right of all to land — our free institutions will be in vain. Our public schools will be in vain. Our discoveries and inventions will but add to the force that presses the masses down!

Book VIII: Application of the Remedy

Private Ownership of Land Inconsistent with the Best Use of Land

There's a deeply ingrained delusion — born from confusing what's accidental with what's essential — that legal writers have done their best to spread, and that economists have generally gone along with rather than tried to expose. It's the idea that private property in land is necessary for land to be used well, and that making land common property would destroy civilization and send us back to barbarism.

This delusion is a lot like the idea that, according to the essayist Charles Lamb, persisted for so long among the Chinese after the delicious flavor of roast pork was accidentally discovered when Ho-ti's hut burned down — the idea that to cook a pig, you had to set fire to a house. But while in Lamb's charming essay it took a sage to teach people they could roast pigs without burning down houses, you don't need a sage to see that what's required for improving land is not absolute ownership of the land, but security for the improvements. This should be obvious to anyone who looks around.

There's no more reason to make someone the absolute and exclusive owner of land to encourage them to improve it than there is to burn down a house to cook a pig. Making land private property is just as crude, wasteful, and unreliable a way of securing improvement as burning down a house is a crude, wasteful, and unreliable way of roasting a pig. And we don't even have the excuse that Lamb's Chinese had for sticking with their method. Until the sage invented the crude grill that, according to Lamb, preceded the spit and oven, no one had ever seen a pig roasted except by a house burning down. But among us, nothing is more common than land being improved by people who don't own it.

The greater part of the land in Great Britain is farmed by tenants. The greater part of the buildings in London are built on leased ground. And even in the United States, the same system exists everywhere to a greater or lesser extent. Separating use from ownership is a perfectly ordinary arrangement.

Would Anything Change If Rent Went to the Public?

Wouldn't all this land be cultivated and improved just as well if the rent went to the state or municipality instead of to private individuals? If no private ownership of land were recognized, but all land were held this way — the occupier or user paying rent to the state — wouldn't land be used and improved just as well and just as securely as it is now? There can only be one answer: of course it would. So reclaiming land as common property would in no way interfere with the proper use and improvement of land.

What's necessary for the use of land is not private ownership of it, but security for improvements. You don't need to tell someone, "this land is yours," to get them to cultivate or improve it. You only need to tell them, "whatever your labor or capital produces on this land will be yours." Give people security that they can reap what they sow, and they will sow. Assure them they'll get to keep the house they want to build, and they'll build it. These are the natural rewards of labor. People sow for the sake of reaping. People build houses for the sake of living in them. Land ownership has nothing to do with it.

Historical Proof: Security, Not Ownership, Drives Investment

It was precisely to obtain this kind of security that, at the beginning of the feudal period, so many smaller landholders surrendered ownership of their lands to a military chieftain. They received back the use of their lands as a fief or trust and, kneeling bareheaded before the lord with their hands between his hands, swore to serve him with life, limb, and worldly honor. Similar examples of people giving up land ownership in exchange for security of use can be seen in Turkey, where a special exemption from taxation and extortion attaches to vakouf, or church lands. There it's common for a landowner to sell their land to a mosque for a token price, with the understanding that they can remain as tenant on it at a fixed rent.

It isn't "the magic of property," as the agricultural writer Arthur Young said, that turned the sandy fields of Flanders into fruitful farms. It's the magic of security for labor. And this can be secured in ways other than making land private property, just as the heat needed to roast a pig can be secured in ways other than burning down houses. The mere promise of an Irish landlord that for twenty years he wouldn't claim in rent any share of his tenants' improvements was enough to make Irish peasants turn a barren mountain into gardens. On the mere security of a fixed ground rent for a term of years, the most expensive buildings in cities like London and New York are erected on leased ground. If we give those who improve land that kind of security, we can safely abolish private property in land.

Common Ownership Works in Practice

Fully recognizing common rights to land need not in any way interfere with fully recognizing individual rights to improvements or produce. Two people can own a ship without sawing it in half. Ownership of a railroad can be divided into a hundred thousand shares, and yet trains run with as much order and precision as if there were a single owner. In London, joint-stock companies have been formed to hold and manage real estate. Everything could go on as it does now, and yet the common right to land could be fully recognized by directing rent to the common benefit.

There's a lot in the center of San Francisco to which the common rights of the people of that city are still legally recognized. This lot isn't cut up into tiny pieces, nor is it an unused wasteland. It's covered with fine buildings, the private property of individuals, standing there in perfect security. The only difference between this lot and those around it is that the rent from this one goes into the common school fund, while the rent from the others goes into private pockets. What's to prevent the land of an entire country from being held by its people in this way?

The Alaska Fur Seal Example

It would be hard to find any piece of territory in the United States where the conditions commonly said to require private land ownership exist to a higher degree than on the tiny islands of St. Peter and St. Paul in the Aleutian Islands, acquired from Russia in the Alaska purchase. These islands are the breeding grounds of the fur seal — an animal so timid and wary that the slightest fright will cause it to abandon its usual grounds, never to return. To prevent the complete destruction of this fishery, without which the islands are useless, it's not only necessary to avoid killing the females and young pups, but even to prevent such noises as the discharge of a pistol or the barking of a dog. The workers who do the killing must take their time, quietly walking among the seals that line the rocky beaches, until the timid animals — so clumsy on land but so graceful in water — show no more sign of fear than lazily waddling out of the way. Then those that can be killed without reducing the future population are carefully separated and gently driven inland, out of sight and hearing of the herds, where they're dispatched with clubs.

To throw such a fishery open to anyone who wanted to go and kill — which would make it in every party's interest to kill as many as possible right away, without any thought for the future — would be to utterly destroy it in a few seasons, just as similar fisheries in other oceans have been destroyed. But that doesn't mean these islands need to be made private property. Although for far less compelling reasons the great public domain of the American people has been handed over to private ownership as fast as anyone could be found to take it, these islands have been leased at a rent of $317,500 per year,54 probably not much less than they could have been sold for at the time of the Alaska purchase. They've already yielded two and a half million dollars to the national treasury, and they remain — in undiminished value, since under the careful management of the Alaska Fur Company the seal population is actually growing — the common property of the people of the United States.

Private Ownership Actually Hinders Good Land Use

So far from private property in land being necessary for the proper use of land, the opposite is true. Treating land as private property actually stands in the way of its proper use. If land were treated as public property, it would be used and improved as soon as there was need for its use or improvement. But because it's treated as private property, individual owners are allowed to prevent others from using or improving what they themselves can't or won't use or improve.

When title to land is in dispute, the most valuable land lies unimproved for years. In many parts of England, improvement is blocked because estates are entailed, so no security can be given to those who would improve them. Large tracts of ground that, if treated as public property, would be covered with buildings and crops are kept idle to satisfy the whims of the owner. In the thickly settled parts of the United States, there's enough unused land to support three or four times our present population — lying idle because its owners are holding it for higher prices — while immigrants are forced past this unused land to seek homes where their labor will be far less productive. In every city, valuable lots sit vacant for the same reason.

If the best use of land is the test, then private property in land stands condemned — as it is condemned by every other consideration. It's as wasteful and unreliable a way of ensuring the proper use of land as burning down houses is of roasting pigs.

How Equal Rights to the Land May Be Asserted and Secured

We've traced the want and suffering that prevail everywhere among working people, the recurring spasms of economic depression, the scarcity of jobs, the stagnation of capital, and the tendency of wages toward the starvation point — all of which grow worse as material progress advances — to a single fact: the land on which and from which everyone must live has been made the exclusive property of some.

We've seen that there is no possible cure for these evils except abolishing their cause. We've seen that private property in land has no basis in justice, but stands condemned as a denial of natural right — a perversion of the law of nature that, as society develops, must condemn the masses to a slavery that is the harshest and most degrading of all.

We've weighed every objection and seen that neither on grounds of fairness nor practicality is there anything to stop us from making land common property by reclaiming rent.

But a question of method remains. How do we do it?

The Straightforward Approach

We could satisfy the demands of justice and meet all economic requirements in a single stroke: abolish all private titles, declare all land public property, and lease it to the highest bidders in whatever lot sizes make sense, under conditions that would carefully protect the private right to improvements.

This way, we'd secure in our complex modern society the same equality of rights that in simpler times was achieved by dividing the land into equal portions. And by giving the use of land to whoever could get the most from it, we'd ensure the greatest production.

Such a plan, far from being a wild and impractical fantasy, has been endorsed (with the exception that he suggests compensating current landholders — undoubtedly a careless concession he would reconsider on reflection) by no less eminent a thinker than the philosopher Herbert Spencer, who says of it in Social Statics (Chapter IX, Section 8):

"Such a doctrine is consistent with the highest state of civilization; may be carried out without involving a community of goods, and need cause no very serious revolution in existing arrangements. The change required would simply be a change of landlords. Separate ownership would merge into the joint-stock ownership of the public. Instead of being in the possession of individuals, the country would be held by the great corporate body — society. Instead of leasing his acres from an isolated proprietor, the farmer would lease them from the nation. Instead of paying his rent to the agent of Sir John or his Grace, he would pay it to an agent or deputy agent of the community. Stewards would be public officials instead of private ones, and tenancy the only land tenure. A state of things so ordered would be in perfect harmony with the moral law. Under it all men would be equally landlords, all men would be alike free to become tenants. ... Clearly, therefore, on such a system, the earth might be enclosed, occupied and cultivated, in entire subordination to the law of equal freedom."

A Simpler Way

But while such a plan is perfectly workable, it doesn't seem to me the best approach. Or rather, I propose to accomplish the same thing in a simpler, easier, and quieter way than formally confiscating all the land and formally leasing it to the highest bidders.

Doing that would involve an unnecessary shock to existing customs and habits of thought — which should be avoided.

Doing that would involve an unnecessary expansion of government machinery — which should be avoided.

It's a principle of statecraft — one that the successful founders of tyrannies have understood and acted on — that great changes are best brought about under old forms. Those of us who would free people should take the same lesson to heart. It's the natural method. When nature creates a higher type of life, she takes a lower one and develops it. This is also the law of social progress. Let's work with it. With the current, we can glide fast and far. Against it, it's hard pulling and slow progress.

The Proposal: Don't Confiscate Land -- Confiscate Rent

I'm not proposing to either purchase or confiscate private property in land. The first would be unjust; the second, unnecessary. Let the individuals who now hold it keep possession, if they want, of what they're pleased to call their land. Let them continue to call it their land. Let them buy and sell, bequeath and transfer it. We can safely leave them the shell, if we take the kernel. It's not necessary to confiscate land; it is only necessary to confiscate rent.

And to take rent for public uses, it's not necessary for the state to bother with leasing out lands and risk the favoritism, collusion, and corruption that might involve. No new government machinery needs to be created. The machinery already exists. Instead of expanding it, all we have to do is simplify and streamline it. By leaving landowners a small percentage of rent — which would probably be much less than the cost and waste involved in trying to lease lands through a government agency — and by using this existing machinery, we can, without disruption or upheaval, assert the common right to land by taking rent for public uses.

We already take some rent through taxation. We only need to make some changes in how we tax to take it all.

The Single Tax

What I therefore propose, as the simple yet powerful remedy — which will raise wages, increase the returns to capital, wipe out extreme poverty, give paying work to whoever wants it, unleash human potential, reduce crime, elevate morals, taste, and intelligence, purify government, and carry civilization to yet nobler heights — is to claim rent through taxation.

In this way, the state can become the universal landlord without calling itself that, and without taking on a single new function. In form, land ownership would remain just as it is now. No landowner need be forced out, and no limit need be placed on how much land anyone could hold. Because with rent being taken by the state in taxes, land — no matter whose name it was in, or how it was divided up — would effectively be common property, and every member of the community would share in the benefits of its ownership.

Now, since the taxation of rent, or land values, must necessarily increase as we abolish other taxes, we can put the proposition into practical form:

Abolish all taxation except that on land values.

As we've seen, the value of land starts at nothing in the beginning of a society, but as the society grows through population increase and technological advance, it becomes greater and greater. In every civilized country, even the newest, the total value of land is enough to cover the entire cost of government. In more developed countries, it's far more than enough. So it won't be enough simply to shift all taxes onto land values. Where rent exceeds current government revenues, it will be necessary to increase the amount collected in taxes accordingly, and to keep increasing it as society progresses and rent rises. But this is such a natural and easy step that it can be considered built into the proposition to put all taxes on land values. That's the first step — the one the practical fight must focus on. Once the hare is caught and killed, cooking it will follow as a matter of course. Once the common right to land is understood well enough that all other taxes are abolished in favor of those that fall on rent, there's no danger of much more being left to individual landowners than is needed to motivate them to collect the public revenues.

Overcoming Misconceptions

Experience has taught me — for I've been working for some years to popularize this proposition — that wherever the idea of concentrating all taxation on land values takes hold enough to be seriously considered, it invariably gains ground. But few among the people who would benefit most from it see its full significance and power at first, or even for a long time afterward. It's hard for working people to get past the idea that there's a fundamental conflict between capital and labor. It's hard for small farmers and homeowners to get past the idea that putting all taxes on land values would unfairly burden them. It's hard for both groups to get past the idea that exempting capital from taxation would make the rich richer and the poor poorer. These ideas come from confused thinking. But behind the ignorance and prejudice stands a powerful interest that has long dominated literature, education, and public opinion. A great wrong always dies hard, and the great wrong that in every civilized country condemns the masses to poverty and want will not die without a bitter struggle.

I don't think these misconceptions can survive in the mind of a reader who has followed me this far. But since any discussion aimed at the public must deal with concrete specifics rather than abstractions, let me ask you to follow me a bit further, so we can test the remedy I've proposed against the accepted standards of good taxation. In doing so, many additional implications may come to light that might otherwise escape notice.

The Proposition Tried by the Canons of Taxation

The best tax a government can levy is obviously the one that most closely meets these conditions:

1. It should weigh as lightly as possible on production — so as to least hold back the growth of the general fund from which taxes must be paid and the community sustained.

2. It should be easy and cheap to collect, and fall as directly as possible on the people who actually bear it — so as to take from the people as little as possible beyond what it yields the government.

3. It should be certain — so as to give the least opportunity for tyranny or corruption by officials, and the least temptation to lawbreaking and evasion by taxpayers.

4. It should fall equally — so as to give no citizen an advantage or put any at a disadvantage compared with others.

Let's consider what form of taxation best meets these conditions. Whatever it is, that will clearly be the best way to raise public revenue.

I

The Effect of Taxes on Production

All taxes must obviously come from what land and labor produce, since there is no other source of wealth than the combination of human effort with the materials and forces of nature. But the way equal amounts of taxation are imposed can affect wealth production very differently. Taxation that reduces the reward of the producer necessarily reduces the incentive to produce. Taxation that's tied to the act of production, or to the use of any of the three factors of production, necessarily discourages production.

So taxation that cuts into the earnings of workers or the returns of investors tends to make workers less industrious and skilled, and investors less inclined to save and invest. Taxation that falls on the processes of production puts an artificial obstacle in the way of creating wealth. And a tax on labor as it's being performed, on wealth as it's being used as capital, and on land as it's being cultivated will obviously discourage production much more powerfully than the same amount of taxation levied on workers whether they work or not, on wealth whether it's used productively or unproductively, or on land whether it's cultivated or left idle.

How taxes are levied is, in fact, just as important as how much is levied. Just as a small load placed badly can exhaust a horse that could easily carry a much heavier one properly balanced, a people can be impoverished and their ability to produce wealth destroyed by taxation that, if levied differently, could be borne with ease. A tax on date trees, imposed by Mohammed Ali, caused the Egyptian peasants to cut down their trees — but a tax of twice the amount on the land itself produced no such result. The tax of ten percent on all sales imposed by the Duke of Alva in the Netherlands would, if maintained, have nearly stopped all trade while yielding very little revenue.

But we don't need foreign examples. Wealth production in the United States is significantly reduced by taxes that fall on productive processes. Shipbuilding, in which we once excelled, has been all but destroyed — at least for foreign trade — and many branches of production and commerce seriously crippled, by taxes that divert industry from more productive activities to less productive ones.

This drag on production is characteristic, to a greater or lesser degree, of most taxes that modern governments rely on. All taxes on manufacturing, all taxes on commerce, all taxes on capital, all taxes on improvements work this way. Their tendency is the same as Mohammed Ali's tax on date trees, even if their effects aren't as immediately obvious.

All such taxes tend to reduce the production of wealth and should therefore never be used when it's possible to raise money through taxes that don't hold back production. This becomes possible as society develops and wealth grows.

Taxes That Don't Hurt Production

Taxes on conspicuous display would simply redirect into the public treasury what would otherwise be wasted on showing off for its own sake. Taxes on inheritances and bequests from the rich would probably have little effect on the desire to accumulate, which, once it really takes hold of a person, becomes a blind passion. But the great category of taxes that can raise revenue without interfering with production is taxes on monopolies — because the profit of monopoly is itself a tax levied on production, and to tax it is simply to redirect into public coffers what production must pay anyway.

There are various kinds of monopolies among us. For instance, there are the temporary monopolies created by patent and copyright laws. These would be extremely unjust and unwise to tax, since they're simply recognitions of the right of labor to its intangible creations, and serve as a reward held out to invention and authorship.55 There are also the burdensome monopolies discussed in Chapter IV of Book III — those that result from the concentration of capital in businesses that are monopolistic by nature. But while it would be extremely difficult, if not altogether impossible, to levy taxes by general law that would fall exclusively on monopoly returns without becoming taxes on production or trade, it's much better that these monopolies be eliminated altogether.

They largely spring from legislative action or inaction. For example, the ultimate reason San Francisco merchants are forced to pay more for goods shipped directly from New York to San Francisco by the Isthmus route than it costs to ship them from New York to Liverpool or Southampton and then to San Francisco is the "protective" laws that make building American steamships so expensive and that forbid foreign ships from carrying goods between American ports. The reason residents of Nevada are forced to pay as much freight from the East as if their goods were carried to San Francisco and back again is that the authority which prevents a cab driver from overcharging isn't exercised over a railroad company. And it can be said generally that businesses which are monopolies by nature properly belong to the state and should be run by the state. There's the same reason for the government to carry telegraphic messages as there is for it to carry letters, and the same reason for railroads to be publicly owned as for public roads to be.

Land: The Greatest Monopoly

But all other monopolies are trivial compared with the monopoly of land. And since the value of land represents a monopoly pure and simple, it's perfectly suited for taxation in every respect. That is, while the value of a railroad or telegraph line, the price of gas or a patent medicine, may partly reflect monopoly pricing, it also reflects the effort of labor and capital. But the value of land — or economic rent, as we've seen — is made up of none of these factors. It reflects nothing but the advantage of appropriation.

Taxes levied on land values cannot hold back production in the slightest degree until they exceed rent — the annual value of the land — because unlike taxes on goods, trade, capital, or any of the tools or processes of production, they don't fall on production at all. The value of land doesn't represent the reward of production the way the value of crops, cattle, buildings, or any of the things called personal property and improvements does. It represents the exchange value of monopoly. It's never the creation of the individual who owns the land; it's created by the growth of the community. So the community can take it all without in any way reducing the incentive to improvement or lessening the production of wealth in the slightest degree. Taxes can be levied on land values until the state takes all the rent, without reducing the wages of labor or the returns to capital by one cent, without raising the price of a single product, or making production in any way more difficult.

Even Better: Land Value Taxes Boost Production

But there's more. Taxes on land values not only don't hold back production like most other taxes — they actually tend to increase production by destroying speculative rent. How speculative rent suppresses production can be seen not only in the valuable land sitting idle, but in the devastating cycles of economic depression which, originating in the speculative run-up of land values, spread across the entire civilized world, paralyzing industry everywhere and causing more waste — and probably more suffering — than a general war. Taxation that took rent for public uses would prevent all this. And if land were taxed at anything close to its rental value, no one could afford to hold land they weren't using. Consequently, unused land would be thrown open to those who would use it. Settlement would be denser, and as a result, labor and capital could produce much more with the same effort. The dog in the manger who, in this country especially, wastes so much productive power, would be choked off.

There's an even more important way in which taking rent for public uses through taxation would stimulate wealth production — through its effect on distribution. But I'll save that for later. It's clear enough already that when it comes to production, a tax on land values is the best tax that can be levied. Tax manufacturing, and you check manufacturing. Tax improvements, and you discourage improvement. Tax commerce, and you hinder trade. Tax capital, and you drive it away. But take the entire value of land in taxation, and the only effect will be to stimulate industry, open new opportunities to capital, and increase the production of wealth.

II

Ease and Cheapness of Collection

With the possible exception of certain licenses and stamp duties — which practically collect themselves but can only bring in a trivial amount of revenue — a tax on land values can be more easily and cheaply collected than any other tax. Land can't be hidden or carried off. Its value can be readily determined. And once the assessment is made, all you need is a collector.

Since every tax system already collects some revenue from taxes on land, and the machinery for that purpose already exists and could just as easily collect all revenue as part of it, the entire cost of collecting the revenue now raised by other taxes could be eliminated by replacing all other taxes with the tax on land values. The enormous savings this would produce can be guessed at from the army of officials now engaged in collecting those other taxes.

These savings would substantially narrow the gap between what taxation costs the people and what it actually yields, but replacing all other taxes with a tax on land values would narrow that gap in an even more important way.

Land Value Taxes Don't Raise Prices

A tax on land values doesn't add to prices and is therefore paid directly by the person it falls on. By contrast, all taxes on things whose quantity can vary increase prices and, in the course of trade, get passed from seller to buyer, growing as they go.

If we impose a tax on money that's lent out, as has often been tried, the lender will charge the tax to the borrower, and the borrower must pay it or go without the loan. If the borrower uses it in business, they in turn must recover the tax from their customers, or the business becomes unprofitable. If we impose a tax on buildings, the users of buildings must ultimately pay it, because construction will stop until building rents rise high enough to cover the regular profit plus the tax. If we impose a tax on manufactured or imported goods, the manufacturer or importer charges a higher price to the wholesaler, the wholesaler to the retailer, and the retailer to the consumer.

Now, the consumer — on whom the tax ultimately falls — must pay not only the amount of the tax, but also a profit on that amount to everyone who advanced it along the way. A profit on the capital advanced in paying taxes is just as necessary to each dealer as a profit on the capital advanced in paying for goods. Manila cigars cost, when bought from the importer in San Francisco, $70 per thousand, of which $14 is the actual cost of the cigars delivered to port and $56 is the customs duty. But the dealer who buys these cigars to resell must charge a profit not on $14 — the real cost of the cigars — but on $70, the cost of the cigars plus the duty. In this way, all taxes that add to prices get passed from hand to hand, growing as they go, until they finally rest on consumers, who end up paying much more than the government receives.

The way taxes raise prices is by increasing the cost of production and reducing supply. But land is not something produced by human effort, and taxes on rent can't reduce supply. So while a tax on rent forces landowners to pay more, it gives them no power to charge more for the use of their land, since it in no way tends to reduce the supply of land. On the contrary, by forcing those who hold land for speculation to sell or lease for whatever they can get, a tax on land values tends to increase competition among owners and thus lower the price of land.

In every respect, then, a tax on land values is the cheapest tax by which large revenues can be raised — giving the government the largest net revenue relative to the amount taken from the people.

III

Certainty

Certainty is an important quality in taxation, because the more tax collection depends on the diligence and honesty of the collectors and the public spirit and honesty of those who pay, the more opportunities there are for tyranny and corruption on one side, and evasion and fraud on the other.

The methods by which most of our revenues are now collected stand condemned on this ground alone, if on no other. The massive corruption and fraud caused by the United States' whiskey and tobacco taxes are well known. The constant undervaluations at the customs house, the laughable dishonesty of income tax returns, and the absolute impossibility of getting anything like a fair valuation of personal property are all matters of common knowledge. The material loss these taxes inflict — the added cost that this uncertainty piles on top of what the people pay but the government never receives — is enormous.

When, during England's protectionist era, her coasts were lined with an army of people trying to prevent smuggling and another army of people trying to evade them, it's clear that both armies had to be supported from the output of labor and capital. The expenses and profits of the smugglers, like the pay and bribes of the customs officers, were a tax on the nation's industry on top of what the government received. And so it is with all the payoffs to assessors, all the bribes to customs officials, all the money spent electing pliable officers or obtaining rulings and decisions that dodge taxes, all the costly schemes for bringing in goods to evade duties or manufacturing to evade taxes, all the expenses of informants, detectives, and spies, all the costs of legal proceedings and punishments — not only to the government but to those being prosecuted. All of this is taken from the general fund of wealth without adding a penny to revenue.

The Moral Cost

Yet this is the least of the cost. Taxes that lack certainty have the most devastating effect on public morals. Our revenue laws as a whole might well be titled "Acts to Promote the Corruption of Public Officials, to Suppress Honesty and Encourage Fraud, to Put a Premium on Perjury and the Bribing of Witnesses, and to Divorce the Idea of Law from the Idea of Justice." That is their true character, and they accomplish it admirably. A customs house oath is a joke. Our assessors regularly swear to assess all property at its full, true cash value and routinely do nothing of the kind. People who pride themselves on their personal and business honor bribe officials and file false returns. And the demoralizing spectacle is constantly presented of the same court trying a murderer one day and a vendor of untaxed matches the next.

So uncertain and so corrupting are these methods of taxation that the New York Commission — composed of David A. Wells, Edwin Dodge, and George W. Cuyler — which investigated taxation in that state, proposed to replace most taxes other than the real estate tax with an arbitrary tax on each person, estimated based on the rental value of their home.

But there's no need to resort to any arbitrary assessment. The tax on land values, which is the least arbitrary of taxes, possesses the quality of certainty to the highest degree. It can be assessed and collected with a precision that reflects the immovable and unhideable nature of land itself. Taxes levied on land can be collected to the last cent. And while the assessment of land is sometimes unequal, the assessment of personal property is far more unequal, and these inequalities in land assessment largely arise from taxing improvements together with land, and from the general demoralization that, spreading from the causes I've described, infects the entire tax system.

If all taxes were placed on land values alone, regardless of improvements, the system would be so simple and transparent, and public attention would be so focused on it, that valuations could be made with the same certainty that a real estate agent can determine the price a seller can get for a lot.

IV

Equality

The economist Adam Smith's rule is that "The subjects of every state ought to contribute toward the support of the government as nearly as possible in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state." Every tax, he goes on to say, that falls only on rent, or only on wages, or only on interest, is necessarily unequal. In line with this is the common idea — which our systems of taxing everything vainly attempt to carry out — that everyone should pay taxes in proportion to their wealth or their income.

But setting aside all the insurmountable practical difficulties of taxing everyone according to their means, it's clear that justice can't be achieved this way.

The Family Burden

Consider two people with equal means or equal incomes. One has a large family; the other has no one to support but themselves. On these two, indirect taxes fall very unequally, since the one can't avoid paying taxes on the food, clothing, and other goods consumed by their family, while the other only pays on what they consume alone. But even supposing taxes are levied directly, so each pays the same amount — there's still injustice. One person's income is stretched to support six, eight, or ten people; the other's supports only one. And unless you take the Malthusian doctrine to the extreme of regarding the raising of a new citizen as a harm to the state, this is a gross injustice.

But you might say that this difficulty can't be avoided — that it's nature herself who brings human beings helpless into the world and places their support on the parents, providing her own sweet and great rewards in return. Very well, then. Let's turn to nature and read what justice demands from her law.

Nature Rewards Only Labor

Nature gives to labor, and to labor alone. Even in a Garden of Eden, a person would starve without human effort. Now consider two people with equal incomes — one earned by their own labor, the other from the rent of land. Is it just that they should contribute equally to the expenses of the state? Obviously not. The income of one represents wealth they create and add to the general wealth of the state. The income of the other represents merely wealth taken from the common stock, returning nothing. The right of one to enjoy their income rests on the law of nature, which gives wealth to labor. The right of the other rests on a purely fictitious right, a creation of law, unknown and unrecognized by nature.

The parent who is told that from their labor they must support their children must accept it, for such is nature's decree. But they can justly demand that from the income earned by their labor, not one penny shall be taken, as long as there remains any income that comes from monopolizing the natural opportunities that nature offers equally to all — opportunities in which their children have an equal birthright share.

What "Protection of the State" Really Means

Adam Smith speaks of incomes "enjoyed under the protection of the state," and this is the ground on which equal taxation of all kinds of property is usually defended — that all property is equally protected by the state. The underlying idea is that the enjoyment of property is made possible by the state — that there is a value created and maintained by the community, which can justly be called upon to pay community expenses.

Now, of what values is this actually true? Only of the value of land. Land value doesn't arise until a community is formed, and unlike other values, it grows as the community grows. It exists only as the community exists. Scatter the largest community, and land that was once enormously valuable would have no value at all. With every increase in population, land values rise. With every decrease, they fall. This is true of nothing else, except things that, like land ownership, are monopolies by nature.

The Most Just Tax

The tax on land values is, therefore, the most just and equal of all taxes. It falls only on those who receive a special and valuable benefit from society, and on them in proportion to the benefit they receive. It is the taking by the community, for the use of the community, of the value that the community creates. It is the application of common property to common uses.

When all rent is taken by taxation for the needs of the community, then the equality ordained by nature will be achieved. No citizen will have an advantage over any other except what comes from their own industry, skill, and intelligence, and each will get what they fairly earn. Then, but not until then, will labor get its full reward and capital its natural return.

Endorsements and Objections

The grounds on which we've concluded that a tax on land values or rent is the best way to raise public revenue have been acknowledged — explicitly or implicitly — by every economist of standing since the nature and law of rent were first established.

What the Economists Have Said

The economist David Ricardo says (Chapter X): "A tax on rent would fall wholly on landlords, and could not be shifted to any class of consumers," because it "would leave unaltered the difference between the produce obtained from the least productive land in cultivation and that obtained from land of every other quality. ... A tax on rent would not discourage the cultivation of fresh land, for such land pays no rent and would be untaxed."

The economist John Ramsay McCulloch (Note XXIV to Wealth of Nations) declares that "in a practical point of view taxes on the rent of land are among the most unjust and impolitic that can be imagined," but he makes this claim solely because he assumes it's practically impossible to distinguish in taxation between the sum paid for the use of the soil itself and the sum paid on account of capital invested in it. But if this separation could be made, he admits that the sum paid to landlords for the use of the natural powers of the soil could be entirely swept away by a tax — without their being able to shift any part of the burden onto anyone else, and without affecting the price of produce.

The economist John Stuart Mill not only admits all this but expressly declares the fairness and wisdom of a special tax on rent, asking what right landlords have to the increase in wealth that comes to them from the general progress of society without any work, risk, or saving on their part. And although he specifically disapproves of interfering with their claim to the present value of land, he proposes to take the entire future increase as belonging to society by natural right.

Mrs. Fawcett, in the concise summary of her husband's writings entitled Political Economy for Beginners, says: "The land tax, whether small or great in amount, partakes of the nature of a rent paid by the owner of land to the state. In a great part of India the land is owned by the government and therefore the land tax is rent paid direct to the state. The economic perfection of this system of tenure may be readily perceived."

In fact, the idea that rent should — on grounds of both practicality and justice — be the natural target for taxation is built into the accepted theory of rent, and can be found in embryonic form in the works of every economist who has accepted Ricardo's law of rent. The reason these principles haven't been pushed to their logical conclusions, as I've pushed them, clearly comes from the reluctance to endanger or offend the enormous financial interest bound up in private land ownership, and from the false theories about wages and the causes of poverty that have dominated economic thought.

The French Economists Got There First

But there has been a school of economists who clearly perceived what is obvious to the natural instincts of people uninfluenced by habit — that the revenues from the common property, land, ought to be used for the common good. The French Economists of the last century, led by Quesnay and Turgot, proposed exactly what I have proposed: that all taxation should be abolished except a tax on the value of land.

Since I'm acquainted with the doctrines of Quesnay and his followers only secondhand through English writers, I can't say how far his particular ideas — such as agriculture being the only productive occupation — are misunderstandings or merely peculiarities of terminology. But of this I'm certain from the proposition his theory led to: he saw the fundamental relationship between land and labor that has since been lost sight of, and he arrived at practical truth, even if through a chain of imperfectly expressed reasoning. The forces that leave a "net product" in the hands of the landlord were no better explained by the Physiocrats than the suction of a pump was explained by the old assumption that "nature abhors a vacuum." But the fact, in its practical implications for the economy, was recognized. And the benefit that would come from the perfect freedom given to industry and trade by replacing all the taxes that hamper and distort the use of labor with a single tax on rent was doubtless as clearly seen by them as it is by me. One of the most regrettable things about the French Revolution is that it overwhelmed the ideas of these Economists just as they were gaining strength among the educated classes and were apparently about to influence tax policy.

Without knowing anything of Quesnay or his doctrines, I've reached the same practical conclusion by a route that cannot be disputed, and have based it on grounds that cannot be questioned by accepted economics.

The Only Standard Objection

The only objection to the tax on rent or land values that you'll find in standard economics textbooks is one that actually concedes the tax's advantages — because the objection is simply that, due to the difficulty of separating them, we might accidentally tax something other than rent when we tax land. McCulloch, for instance, declares taxes on the rent of land to be unwise and unjust because the return received for the natural powers of the soil can't be clearly distinguished from the return received for improvements and upgrades, which might thus be discouraged.

The historian Thomas Macaulay somewhere says that if accepting the law of gravity were harmful to any substantial financial interest, there would be no shortage of arguments against gravity — a truth that this objection perfectly illustrates. For even if we grant that it's impossible to always perfectly separate the value of land from the value of improvements, is the need to continue taxing some improvements a reason to keep taxing all improvements? If it discourages production to tax values that labor and capital have intimately combined with land value, how much greater is the discouragement involved in taxing not only those, but all the clearly distinguishable values that labor and capital create?

Separating Land Value from Improvement Value

And as a matter of fact, the value of land can always be readily distinguished from the value of improvements. In countries like the United States, there's plenty of valuable land that has never been improved. In many states, the value of the land and the value of improvements are routinely estimated separately by assessors, even though they're afterward combined under the term "real estate." And even where land has been occupied since ancient times, there's no difficulty in determining the value of the bare land, because frequently the land is owned by one person and the buildings by another. When a fire occurs and improvements are destroyed, a clear and definite value remains in the land.

In the oldest country in the world, there would be no difficulty at all in making this separation, if all that's attempted is to separate the value of clearly identifiable improvements made within a reasonable time period from the value of the land, should those improvements be destroyed. This is plainly all that justice or policy requires. Absolute accuracy is impossible in any system. And trying to separate everything the human race has ever done from what nature originally provided would be as absurd as it would be impractical. A swamp drained or a hill terraced by the Romans is now as much a part of the natural advantages of the British Isles as if the work had been done by an earthquake or a glacier. The fact that after a certain period of time the value of such permanent improvements would be considered as having merged into the value of the land, and would be taxed accordingly, could have no deterrent effect on such improvements — because such projects are frequently undertaken on leases for a set number of years. The fact is that each generation builds and improves for itself, not for the distant future. And the further fact is that each generation inherits not only the natural powers of the earth, but everything that remains of the work of past generations.

The Objection from Democracy

A different kind of objection may be raised, however. It may be argued that where political power is widely shared, it's highly desirable that taxation should fall not on one class, such as landowners, but on everyone — so that all who exercise political power feel a proper interest in economical government. Taxation and representation, it will be said, can't safely be divorced.

But however desirable it may be to combine political power with an awareness of public costs, the present system certainly doesn't achieve it. Indirect taxes are largely collected from people who pay little or nothing consciously. In the United States, the class is rapidly growing that not only feels no interest in taxation, but has no stake in good government at all. In our large cities, elections are largely determined not by considerations of public interest, but by the kind of influences that determined elections in Rome when the masses had ceased to care about anything except bread and circuses.

The effect of replacing the many taxes now imposed with a single tax on land values would hardly reduce the number of conscious taxpayers, since the breakup of land currently held for speculation would greatly increase the number of landowners. But it would equalize the distribution of wealth enough to lift even the poorest above the condition of abject poverty in which public concerns carry no weight, while at the same time cutting down the swollen fortunes that lift their possessors above any concern for government.

The politically dangerous classes are the very rich and the very poor. It isn't the taxes a person consciously pays that gives them a stake in the country and an interest in its government — it's the feeling that they are an integral part of the community, that its prosperity is their prosperity and its disgrace their shame. Let citizens feel this. Let them be surrounded by all the influences that spring from and cluster around a comfortable home. And the community can rely on them, even to limb or to life. People don't vote patriotically, any more than they fight patriotically, because of the taxes they pay. Whatever promotes the comfortable and independent material condition of the masses will best foster public spirit and make the ultimate governing power more intelligent and more virtuous.

Why Governments Don't Already Do This

But it may be asked: if a tax on land values is such an advantageous way of raising revenue, why do all governments resort to so many other taxes instead?

The answer is obvious. The tax on land values is the only significant tax that can't be passed on. It falls on landowners, and there's no way they can shift the burden to anyone else. So a large and powerful class has a direct interest in keeping the tax on land values low and substituting other taxes to raise the needed revenue — just as the landowners of England two hundred years ago managed to establish an excise tax, which fell on all consumers, to replace the feudal dues that fell only on them.

There is, then, a definite and powerful interest opposed to taxing land values. But against the other taxes that modern governments so heavily rely on, there is no organized opposition. The ingenuity of politicians has been devoted to devising tax schemes that drain the wages of labor and the earnings of capital the way a vampire bat is said to suck the blood of its victim. Nearly all these taxes are ultimately paid by that indefinable figure, the consumer — and they're paid in a way that doesn't call attention to the fact that a tax is being paid. The amounts are so small and the methods so sneaky that the consumer doesn't notice and isn't likely to bother protesting effectively. Meanwhile, those who pay the money directly to the tax collector are not only not interested in opposing a tax they so easily pass on to others, but are very often actively in favor of it — as are other powerful interests that profit, or expect to profit, from the price increases such taxes create.

The Real Obstacle: Special Interests

Nearly all the many taxes burdening the people of the United States have been imposed more to benefit private interests than to raise revenue. The great obstacle to simplifying taxation is these private interests, whose lobbyists swarm the halls of government whenever a tax cut is proposed, to make sure the taxes they profit from aren't touched. The saddling of the United States with a protective tariff has been due to these influences, not to any acceptance of the absurd theories of protectionism on their own merits. The massive revenue needs of the Civil War were the golden opportunity for these special interests, and taxes were piled onto everything possible — not so much to raise revenue as to allow particular groups to share in the advantages of tax-collecting and tax-profiting. And since the war, these interested parties have been the great obstacle to reducing taxation. The taxes that cost the people least have, for this very reason, been easier to abolish than the taxes that cost the people the most.

And so, even popular governments — whose stated principle is securing the greatest good for the greatest number — are, in one of their most important functions, used to secure a questionable benefit for a small number at the cost of a great harm to the many.

How Special Interests Defend Their Taxes

License taxes are generally favored by those they're imposed on, since they tend to keep others out of the business. Taxes on manufactured goods are often welcomed by large manufacturers for similar reasons, as was seen in the distillers' opposition to reducing the whiskey tax. Import duties not only tend to give certain producers special advantages, but also benefit importers or dealers who have large stocks on hand. And so, with all such taxes, there are particular interests — capable of quick organization and coordinated action — that favor the tax. Meanwhile, in the case of a tax on land values, there is a solid and sensitive interest steadily and bitterly opposed to it.

But if the truth I'm trying to make clear is once understood by the masses, it's easy to see how a coalition of political forces strong enough to put it into practice becomes possible.

Book IX: Effects of the Remedy

Of the Effect upon the Production of Wealth

The elder Mirabeau, we're told, considered Quesnay's proposal to replace all taxes with a single tax on rent as a discovery equal in usefulness to the invention of writing or the shift from barter to money.

To anyone who thinks it through, this sounds more like sharp insight than exaggeration. The advantages of replacing the dozens of taxes we currently use to raise public revenue with a single tax on land values become more and more impressive the more you consider them. This is the secret that would transform the small village into the great city. With all the burdens that now weigh down industry and obstruct trade lifted off, wealth production would take off at a speed we can barely imagine. This, in turn, would increase land values — creating a new surplus that society could use for public purposes. And freed from the corruption and special-interest manipulation that come with collecting revenue the way we do now, society could take on functions that the growing complexity of modern life makes desirable, but that thoughtful people currently shy away from because they fear political corruption under the present system.

Consider the effect on the production of wealth.

To abolish the taxation that now hampers every part of commerce and burdens every form of industry would be like lifting an immense weight off a powerful spring. Energized and released, production would leap to life, and trade would receive a boost felt in every corner of the economy. Our current method of taxation acts on trade like artificial deserts and mountains. It costs more to get goods through a customs house than to ship them around the world. It punishes energy, industry, skill, and thrift as if those qualities were crimes. If I've worked harder and built myself a good house while you've been content to live in a shack, the tax collector shows up every year to fine me for my effort by taxing me more than you. If I've saved while you've wasted, I get penalized while you go free. If someone builds a ship, we make them pay for their boldness, as though they'd harmed the public. If a railroad is opened, down comes the tax collector, as if it were a public nuisance. If a factory is built, we charge an annual sum that could practically fund a healthy profit margin on its own. We say we want investment, but if anyone accumulates capital or brings it to our community, we charge them as if we're granting them a special privilege. We punish with a tax the person who turns barren fields into ripening grain. We fine the one who installs machinery and the one who drains a swamp. How heavily these taxes burden production is something only those realize who have tried to trace our tax system through all its twists and turns — because, as I've said before, the heaviest part of taxation is what falls on us through higher prices. But clearly, these taxes are like the Egyptian Pasha's tax on date trees. Even if they don't cause the trees to be cut down, they at least discourage the planting of new ones.

To abolish these taxes would be to lift the entire enormous weight of taxation from productive work. The seamstress's needle and the great factory, the cart horse and the locomotive, the fishing boat and the steamship, the farmer's plow and the merchant's inventory — all would be untaxed alike. Everyone would be free to make or save, to buy or sell, without being fined by taxes or harassed by tax collectors. Instead of telling producers, as it does now, "The more you add to the general wealth, the more we'll tax you!" the government would say, "Be as industrious, as thrifty, as enterprising as you want — you'll keep your full reward! You won't be fined for making two blades of grass grow where one grew before. You won't be taxed for adding to the total wealth."

And won't the community gain by refusing to kill the goose that lays the golden eggs? By not muzzling the ox that treads out the corn? By leaving industry, thrift, and skill their natural reward, full and untouched? Because there is a natural reward for the community too. The law of society is "each for all" as well as "all for each." No one can keep to themselves all the good they do, any more than they can contain all the bad. Every productive enterprise, besides its return to those who undertake it, produces side benefits for others. If someone plants a fruit tree, their gain is gathering the fruit in season. But beyond that personal gain, the whole community benefits. Others enjoy the increased supply of fruit. The birds the tree shelters fly far and wide. The rain it helps attract doesn't fall only on that one field. And even the eye that sees it from a distance gets a sense of beauty. The same is true of everything else. Building a house, a factory, a ship, or a railroad benefits others besides those who pocket the direct profits. Nature laughs at the miser. They're like the squirrel who buries nuts and never digs them up again — the nuts sprout and grow into trees. Wrapped in fine linen and steeped in costly spices, a mummy is laid to rest. Thousands upon thousands of years later, a Bedouin uses its wrappings to cook food, those wrappings generate the steam that propels a traveler on their journey, or they pass to distant lands to satisfy the curiosity of another civilization. The bee fills the hollow tree with honey, and along comes the bear or the human.

The community can safely leave to individual producers everything that motivates their effort. It can let workers keep the full reward of their labor, and investors the full return on their capital. Because the more that labor and capital produce, the greater grows the common wealth in which everyone shares. And it's in the value — or rent — of land that this general gain takes a definite, concrete form. Here is a fund the government can collect while leaving labor and capital their full reward. As production increases, this fund would grow right along with it.

And shifting the burden of taxation from production and trade to land values wouldn't just give a new boost to wealth production — it would open up new opportunities. Under this system, no one would bother holding land unless they intended to use it, and land now kept idle would be thrown open for development everywhere.

The selling price of land would drop. Land speculation would receive its death blow. Land monopolization would no longer pay off. Millions upon millions of acres that settlers are currently shut out from by high prices would be abandoned by their present owners or sold to settlers for next to nothing. And not just on the frontiers — this would happen within what we now consider well-settled areas. Within a hundred miles of San Francisco, enough land would open up to support, even with current farming methods, an agricultural population equal to what's now scattered across the 800-mile stretch from the Oregon border to the Mexican line. This would be true to the same degree across most of the Western states, and to a large degree in the older Eastern states too — because even in New York and Pennsylvania, the population is still sparse compared to what the land could support. And even in densely populated England, such a policy would open up many hundreds of thousands of acres now held as private parks, deer preserves, and hunting grounds.

This simple approach of putting all taxes on land values would, in effect, auction off the land to whoever would pay the highest rent to the government. Demand for land sets its value, so if taxes nearly consumed that value, anyone who wanted to hold land without using it would have to pay almost as much as it would be worth to someone who actually wanted to put it to use.

And remember, this wouldn't apply only to farmland. It would apply to all land. Mineral-rich land would be opened to use, just like agricultural land. In the heart of a city, no one could afford to keep land from its most profitable use. On the outskirts, no one could demand more for it than its current best use would justify. Everywhere that land had value, taxation, instead of acting as a fine on improvement the way it does now, would push people toward improvement. Whoever planted an orchard, plowed a field, built a house, or erected a factory, no matter how expensive, would pay no more in taxes than if they'd left that same amount of land sitting idle. The person monopolizing farmland would be taxed just as much as if their land were covered with buildings, crops, and livestock. The owner of a vacant city lot would have to pay as much for the privilege of keeping everyone else off it as their neighbor who has a fine house on their lot. It would cost as much to keep a row of run-down shacks on valuable land as if it were covered with a grand hotel or massive warehouses filled with valuable goods.

And so the entry fee that must currently be paid before anyone can work where labor is most productive would disappear. Farmers wouldn't have to spend half their savings, or mortgage years of future labor, just to get land to cultivate. Homebuilders in cities wouldn't have to spend as much on a small lot as on the house they put on it. A company planning to build a factory wouldn't have to spend a large share of their capital just on the site. And what they paid year by year to the government would replace all the taxes now levied on improvements, machinery, and inventory.

Consider what this change would do to the labor market. Competition would no longer be one-sided, as it is now. Instead of workers competing against each other for jobs — driving wages down to bare survival in the process — employers would be competing everywhere for workers, and wages would rise to the fair value of labor. Because entering the labor market would be the greatest competitor of all for the employment of labor — one whose demand can't be satisfied until want itself is satisfied: the demand of labor itself. Employers wouldn't just be bidding against other employers, all feeling the boost of greater trade and higher profits. They'd be bidding against the ability of workers to become their own bosses, thanks to the natural opportunities freely opened to them by a tax that prevented monopolization.

With natural opportunities open to labor, with capital and improvements free from taxation, and with trade freed from restrictions, the sight of willing workers unable to turn their labor into the things they desperately need would become impossible. The recurring crises that paralyze the economy would end. Every engine of production would be set in motion. Demand would keep pace with supply, and supply with demand. Trade would expand in every direction, and wealth would grow on every hand.

Of the Effect upon Distribution and Thence upon Production

As great as the advantages of shifting all public taxes to a tax on land values already appear, they can't be fully appreciated until we consider how it would affect the distribution of wealth.

We've traced the cause of the unequal distribution of wealth that shows up in every developed society — with a constant tendency toward greater and greater inequality as material progress continues — and we've found it in this fact: as civilization advances, private ownership of land gives landowners a greater and greater power to grab the wealth produced by labor and capital.

So relieving labor and capital from all taxation, direct and indirect, and placing the burden on rent instead would counteract this tendency toward inequality. And if it went far enough to capture the whole of rent in taxation, the cause of inequality would be completely destroyed. Rent, instead of driving inequality as it does now, would then promote equality. Labor and capital would receive everything that was produced, minus the portion taken by the government through the tax on land values — which, applied to public purposes, would be equally distributed as public benefits.

In other words, the wealth produced in every community would be split into two parts. One part would be distributed as wages and interest among individual producers, based on each person's contribution to the work of production. The other part would go to the community as a whole, distributed as public benefits shared by all its members. In this, everyone would share equally — the weak along with the strong, young children and frail elderly people, the injured, the disabled, and the blind, alongside the healthy and vigorous. And rightly so — because while one part represents the result of individual effort in production, the other part represents the increased productive power that the community as a whole contributes to each individual.

So as material progress tends to increase rent, if rent were collected by the community for shared purposes, the very force that now drives inequality as progress continues would instead drive greater and greater equality. To fully grasp this effect, let's go back to principles we've already established.

We've seen that wages and interest must everywhere be set by the rent line, or margin of cultivation — that is, by the reward that labor and capital can earn on land where no rent is paid. The total amount of wealth that the combined force of labor and capital receives will be the total amount of wealth produced (or rather, after accounting for taxes, the net amount) minus what is claimed as rent.

We've seen that with material progress as it's currently happening, rent tends to rise in two distinct ways. Both push up the share of wealth going to rent and push down the share going to wages and interest. But the first tendency — the natural one, arising from the laws of social development — increases rent as a total amount without actually reducing wages and interest as total amounts, and may even increase them. The second tendency — the unnatural one, arising from the private monopolization of land — increases rent by actively reducing wages and interest.

Now, it's clear that collecting rent through taxation for public purposes — which effectively abolishes private ownership of land — would destroy the tendency toward an absolute decline in wages and interest, by ending the speculative monopolization of land and the speculative inflation of rent. It would dramatically increase wages and interest by opening up natural opportunities that are currently monopolized and by reducing the price of land. Labor and capital would gain not just what's currently taken from them in taxation, but would gain further from the actual decline in rent caused by falling speculative land values. A new equilibrium would be established, with the prevailing rate of wages and interest much higher than it is now.

But once this new equilibrium was established, further advances in productive power — and the tendency toward such advances would be greatly accelerated — would result in still-increasing rent. Not at the expense of wages and interest, but through new gains in production which, since rent would be collected by the community for public use, would benefit every member of the community. As material progress continued, the condition of ordinary people would constantly improve. Not just one class would grow richer, but all would grow richer. Not just one class would have more of life's necessities, comforts, and luxuries, but all would have more. Because the increasing productive power that comes with growing population, with every new scientific discovery, with every labor-saving invention, with every expansion and improvement of trade, could be monopolized by no one. Whatever portion of the benefit didn't go directly to increase the rewards of labor and capital would go to the government — that is, to the whole community. All the enormous advantages, material and mental, of a dense population would be combined with the freedom and equality that can now be found only in new and thinly settled regions.

And then consider how a more equal distribution of wealth would supercharge production, preventing waste everywhere and increasing productive power everywhere.

If it were possible to put a dollar figure on the direct financial losses that society suffers from the social dysfunction that condemns large classes of people to poverty and crime, the number would be staggering. England supports over a million people on official charity. New York City alone spends over seven million dollars a year the same way. But public welfare spending, charitable organizations, and individual charity, added together, would be only the first and smallest item in the full accounting. The potential earnings of the labor going to waste; the cost of the reckless, irresponsible, and idle habits poverty generates; the financial loss — to consider nothing else — implied by the horrifying mortality statistics, especially infant mortality, among the poorer classes; the waste shown by the cheap bars and liquor shops that multiply as poverty deepens; the damage done by the social parasites bred by poverty and desperation — the thieves, sex workers, beggars, and drifters; the cost of protecting society from them — all of these are items in the sum that our present unjust and unequal distribution of wealth drains from the total that society could enjoy with its current means of production. And even then the accounting wouldn't be complete. The ignorance and vice, the recklessness and immorality bred by inequality show themselves in incompetent and corrupt government. The waste of public funds, and the even greater waste caused by the ignorant and corrupt abuse of public powers and functions, are the natural consequences.

But the increase in wages and the opening of new avenues of employment that would result from directing rent to public purposes wouldn't merely stop these wastes and relieve society of these enormous losses. New productive power would be added to labor. It's a basic truth that labor is most productive where wages are highest. Poorly paid labor is inefficient labor, the world over.

What's observed between the efficiency of farm labor in different English agricultural districts where different wage rates prevail; what the contractor Thomas Brassey noticed comparing the work of his better-paid English laborers with that of lower-paid Continental workers; what was evident in the United States comparing slave labor to free labor; what's shown by the astonishing number of workers or servants needed in India or China to get anything done — all of this is universally true. The efficiency of labor always increases with the customary wages of labor, because higher wages mean greater self-respect, intelligence, hope, and energy. A person is not a machine that will do a fixed amount and no more. A person is not an animal whose powers reach only so far and no further. It's the mind, not muscle, that is the great engine of production. The physical power generated by the human body is one of the weakest forces in nature. But for the human intellect, the unstoppable currents of nature flow and matter becomes clay in our hands. To increase the comfort, leisure, and independence of ordinary people is to increase their intelligence. It means bringing the brain to the aid of the hand. It means enlisting in the common work of life the same faculty that measures the microscopic organism and traces the orbits of stars!

Who can say to what infinite heights the wealth-producing power of labor might be raised by social arrangements that give the producers of wealth their fair share of its rewards and pleasures! Even with current methods the gain would be simply incalculable. But just as wages are high, invention and the adoption of improved methods and machinery proceed with greater speed and ease. The reason wheat crops in southern Russia are still harvested with the scythe and threshed with the flail is simply that wages there are so low. American inventiveness, America's talent for labor-saving processes and machinery, are the result of the comparatively high wages that have prevailed in the United States. Had our workers been condemned to the meager rewards of the Egyptian peasant or Chinese laborer, we'd still be drawing water by hand and carrying goods on our backs. Higher rewards for labor and capital would further accelerate invention and speed the adoption of improved methods, and these would truly appear as what they really are — an unmixed blessing. The harmful effects of labor-saving machinery on working people, effects that are now so often visible and that, despite all argument, make so many people view machinery as a curse rather than a blessing, would disappear. Every new power harnessed to human service would improve conditions for everyone. And from the widespread intelligence and mental vitality springing from this general improvement in living standards would come new breakthroughs in productive power that we can't even dream of yet.

But I won't deny, and don't want to lose sight of, the fact that while preventing waste and boosting the efficiency of labor, the more equal distribution of wealth resulting from the simple tax plan I propose would also lessen the intensity with which people chase wealth. It seems to me that in a society where no one needed to fear poverty, no one would crave great wealth — or at least, no one would go to the trouble of straining and struggling for it the way people do now. The sight of people 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 society where the abolition of the fear of want had dissolved the envious admiration with which most people now regard great riches, anyone who toiled to accumulate more than they could use would be seen the way we'd now look at someone wearing half a dozen hats stacked on their head, or walking around in the blazing sun in an overcoat. When everyone is confident of getting enough, no one will want to make a pack mule of themselves.

And though this incentive to production would be weakened, can't we spare it? Whatever role it may have played at an earlier stage of development, it's not needed now. The dangers threatening our civilization don't come from weak springs of production. What it suffers from, and what, if no remedy is applied, it must die from, is unequal distribution!

Nor would removing this incentive, even viewed purely from the standpoint of production, be an unmixed loss. The reality is that total production is greatly reduced by the greed with which riches are pursued — this is one of the most obvious facts of modern society. And if this obsessive desire to get rich at any cost were diminished, the mental energies now devoted to scraping together fortunes would be redirected into far more useful pursuits.

Of the Effect upon Individuals and Classes

When it's first proposed to put all taxes on land values and thereby collect the rent for public use, every landowner is likely to take alarm. There will be no shortage of appeals to the fears of small farm and homestead owners, who'll be told this is a plan to rob them of their hard-earned property. But a moment's thought will show that this proposal should appeal to everyone whose interests as a landowner don't greatly outweigh their interests as a worker or investor, or both. And further reflection will show that even the large landowners, who may lose in relative terms, would see an absolute gain. The increase in production would be so great that labor and capital would gain far more than private land ownership would lose. And in these gains — along with the even greater gains that come from a healthier society — the whole community, including the landowners themselves, would share.

In an earlier chapter I addressed the question of what is owed to current landowners and showed that they have no claim to compensation. But there's another reason we can set aside the whole idea of compensation: they won't actually be harmed.

It's obvious, of course, that this change would greatly benefit everyone who lives by wages, whether of hand or mind — laborers, factory workers, skilled tradespeople, clerks, and professionals of all kinds. It's also obvious that it would benefit everyone who lives partly by wages and partly by their capital's earnings — shopkeepers, merchants, manufacturers, and business owners and operators of every sort, from the street vendor or truck driver to the railroad or shipping company owner. And it would likewise increase the incomes of those who live off returns on their investments in anything other than land — except perhaps holders of government bonds or other fixed-rate securities, which might drop in resale value as the general rate of interest rises, though the income from them would remain the same.

Now take the case of the homeowner — the tradesperson, shopkeeper, or professional who has bought a house and lot where they live, and who looks at it with satisfaction as a place their family can't be kicked out of if they die. This person won't be harmed. On the contrary, they'll come out ahead. The market value of their lot will go down — in theory, it would disappear entirely. But its usefulness to them won't disappear. It will serve their purposes as well as ever. And since the value of all other lots will decline in the same proportion, they keep the same security of always having a lot that they had before. In other words, they're a "loser" only in the way that someone who bought a pair of boots might be called a loser if boot prices later fell. Their boots are still just as useful, and their next pair will be cheaper. Likewise for the homeowner: their lot will be just as useful, and if they're looking forward to getting a bigger lot someday, or watching their children get homes of their own as they grow up, they'll actually come out ahead even on the lot question. And in their day-to-day life, everything else considered, they'll come out well ahead. Yes, they'll have higher taxes to pay on their land. But they'll be freed from taxes on their house and improvements, on their furniture and personal property, and on everything they and their family eat, drink, and wear — while their earnings will be substantially boosted by rising wages, steady employment, and livelier trade. Their only loss would come if they wanted to sell their lot without buying another, and that would be a small loss compared to the great gain.

The same is true for the farmer. I'm not talking now about the gentleman farmers who never touch a plow handle, who cultivate thousands of acres and enjoy incomes like those of the wealthy Southern planters before the Civil War. I'm talking about the working farmers who make up such a large class in the United States — people who own small farms that they work themselves with the help of their children and maybe some hired hands, and who in Europe would be called peasant farmers. As paradoxical as it may seem to them until they understand the full picture, of all classes above the ordinary wage worker, they have the most to gain from putting all taxes on land values. That they don't currently get as good a living as their hard work ought to give them is something they generally feel, even if they can't trace the cause. The fact is that taxation, as currently structured, hits them with particular harshness. They're taxed on all their improvements — houses, barns, fences, crops, livestock. The personal property they own can't be as easily hidden or undervalued as the more concentrated forms of wealth in the cities. They're not only taxed on personal property and improvements that owners of unused land escape, but their land is generally taxed at a higher rate than land held for speculation, simply because it's improved. But beyond all this, every tax imposed on goods, and especially taxes like our protective tariffs that are designed to raise prices, fall on farmers without any relief. In a country like the United States that exports agricultural products, farmers can't be protected by tariffs. Whoever else benefits, farmers must lose. Some years ago, the Free Trade League of New York published a broadside with illustrations of various necessities labeled with the tariff duties imposed on them. It read something like this: "The farmer rises in the morning and puts on pants taxed 40 percent and boots taxed 30 percent, strikes a light with a match taxed 200 percent," and so on, following the farmer through the day and through life until, killed by taxation, the farmer is lowered into the grave with a rope taxed 45 percent. This is just a vivid illustration of how such taxes ultimately land. Farmers would gain enormously from replacing all these taxes with a single tax on land values, because the land value tax would fall most heavily not on agricultural areas, where land values are comparatively low, but on towns and cities where land values are high — whereas taxes on personal property and improvements hit the countryside just as hard as the city. And in thinly settled areas, there would be barely any taxes at all for farmers to pay. Since taxes would be based on the value of the bare land, they'd fall equally on unimproved and improved land alike. Acre for acre, an improved and cultivated farm with its buildings, fences, orchard, crops, and livestock would be taxed no more than unused land of equal quality. The result would be that speculative values would be kept down, and cultivated, improved farms would have no taxes to pay until the surrounding area was well settled. In fact, as paradoxical as it may seem at first, the effect of putting all taxes on land values would be to relieve the hardest-working farmers of all taxation.

But the great benefit to working farmers can only be fully seen when you consider how it would affect where people live. The destruction of speculative land values would tend to spread out population where it's too dense and concentrate it where it's too sparse. It would replace the tenement with homes surrounded by gardens, and would fully settle agricultural areas before people were driven far from neighbors to find land. City people would get more of the pure air and sunshine of the country; country people would get more of the conveniences and social life of the city. If, as seems likely, the use of machinery favors large fields, the rural population would cluster in villages, as it once did in earlier times. The life of the average farmer is now unnecessarily bleak. Farmers are not only forced to work from dawn to dark, but the thin spread of population cuts them off from the conveniences, the entertainment, the schools, and the social and intellectual opportunities that come with closer human contact. They'd be far better off in all these ways, and their labor would be far more productive, if they and their neighbors held no more land than they actually wanted to use.56 And their children, as they grew up, wouldn't be so driven to seek the excitement of the city, nor would they have to move so far away to find farms of their own. Their means of making a living would be in their own hands, right at home.

In short, working farmers are laborers and investors as well as landowners, and it's by their labor and capital that they make their living. Their loss would be in name only; their gain would be real and substantial.

In varying degrees, this is true of all landowners. Many landowners are working people of one sort or another. And it would be hard to find a landowner who isn't also an investor — while as a general rule, the bigger the landowner, the bigger the investor. This is so universally true that in popular thinking the two roles are confused. So putting all taxes on land values, while it would significantly reduce all great fortunes, would in no case leave a wealthy person penniless. The Duke of Westminster, who owns a considerable portion of the land beneath London, is probably the richest landowner in the world. Collecting all his ground rents through taxation would sharply reduce his enormous income, but would still leave him his buildings and all the income from them, plus no doubt substantial personal wealth in various other forms. He'd still have everything he could possibly enjoy, and a much better society in which to enjoy it.

The Astor family of New York would likewise remain very rich. And so, I believe, it would be across the board — this reform would make no one poorer except those who could afford to be a great deal poorer without being genuinely hurt. It would trim great fortunes, but it would impoverish no one.

Wealth would not only be enormously increased — it would be fairly distributed. I don't mean that every individual would receive the same amount of wealth. That wouldn't be equal distribution, since different people have different abilities and different desires. What I mean is that wealth would be distributed according to the degree to which each person's industry, skill, knowledge, or good judgment contributed to the common stock. The great force that concentrates wealth in the hands of those who don't produce and takes it from the hands of those who do would be gone. The inequalities that remained would be natural ones, not the artificial inequalities produced by the violation of natural law. Those who produce nothing would no longer wallow in luxury while the producers scraped by on the barest necessities of survival.

With the monopoly of land gone, there would be no reason to fear large fortunes. Because then anyone's wealth would have to consist of real, produced wealth — the product of labor, which constantly tends to be used up and dispersed. (I imagine national debts wouldn't long survive the abolition of the system that creates them.) All fear of great fortunes could be dismissed, because when everyone gets what they fairly earn, no one can get more than they fairly earn. How many people are there who fairly earn a million dollars?

Of Changes in Social Life and Development

We're dealing only with general principles here. There are some questions of detail — like how to divide revenue between local and national governments — that would come up when these principles were applied, but we don't need to discuss them now. Once principles are settled, details can be readily worked out.

And without getting too elaborate, it's impossible to cover all the changes that would be brought about — or made possible — by a reform that would readjust the very foundation of society. But let me call attention to some of the main ones.

One of the most striking is the enormous simplification that would become possible in government. Collecting taxes, preventing and punishing tax evasion, checking and cross-checking revenues drawn from dozens of different sources — these activities probably make up three-quarters, maybe seven-eighths, of what government does, aside from keeping order, maintaining the military, and administering justice. An immense and complicated web of governmental machinery would simply be swept away.

In the justice system, the relief would be similar. Much of the civil business of our courts comes from disputes over land ownership. These would end when the government was effectively recognized as the sole owner of land, and all occupants became what they practically would be: rent-paying tenants. The growth of moral behavior that would follow the end of poverty would bring a similar reduction in other civil cases. This could be accelerated by adopting the commonsense proposal of the philosopher Jeremy Bentham to abolish all laws for the collection of debts and the enforcement of private contracts. Rising wages and the opening of opportunities for everyone to make a comfortable living would quickly reduce and eventually eliminate from society the thieves, con artists, and other criminals who spring from the unequal distribution of wealth. So the criminal justice system, with its whole apparatus of police officers, detectives, prisons, and penitentiaries, would — like the civil courts — stop draining so much of society's energy and attention. We'd be rid not only of many judges, bailiffs, clerks, and prison guards, but also of the vast army of lawyers now supported at the expense of productive workers. Talent currently wasted on legal technicalities would be turned to higher pursuits.

The legislative, judicial, and executive functions of government would be vastly simplified in this way. And I don't think public debts and standing armies — which historically grew out of the shift from feudal to private land ownership — would last long after the return to the old idea that a country's land is the common right of its people. Public debts could easily be paid off by a tax that would neither reduce wages nor hamper production. Standing armies would fade away as the masses grew more intelligent and independent, aided perhaps by advances in military technology that are revolutionizing the art of war.

Society would thus approach the ideal of Jeffersonian democracy, what the philosopher Herbert Spencer called the ultimate "abolition of government." But only government in its role as a directing and repressive power. At the same time and to the same degree, it would become possible to realize the dream of socialism. All this simplification and elimination of government's current functions would free it to take on certain other functions that are now urgently needed. Government could handle the transmission of messages by telegraph as well as by mail, and build and operate railroads as well as public roads. With its present functions so simplified and reduced, it could take on roles like these without danger or strain, and they'd be under the watchful eye of a public no longer distracted by the current system's complexity. There would be a large and growing surplus of revenue from taxing land values, because material progress — which would accelerate dramatically — would constantly push rent higher. This revenue, arising from common property, could be applied to the common good, the way revenues were once used in ancient Sparta. We might not set up public dining halls — they'd be unnecessary — but we could build public baths, museums, libraries, gardens, lecture halls, music and dance venues, theaters, universities, technical schools, shooting ranges, playgrounds, gyms, and more. Heat, light, and power, as well as water, could be piped through our streets at public expense. Our roads could be lined with fruit trees. Discoverers and inventors could be rewarded, scientific research supported, and in a thousand ways public revenue could be used to encourage efforts that benefit everyone. We'd reach the ideal of the socialist — but not through government coercion. Government would change its character and become the administration of a great cooperative society. It would become simply the agency through which common property was managed for the common benefit.

Does this sound impractical? Consider for a moment the vast changes that would transform social life through a reform that guaranteed labor its full reward, that banished want and the fear of want, and gave even the humblest person the freedom to develop their full potential.

When we think about what's possible in social organization, we tend to assume that greed is the strongest of human motives, and that any system of administration can only work if it's built on the idea that people must be threatened with punishment to stay honest — that selfish interests are always stronger than shared interests. Nothing could be further from the truth.

Where does this lust for gain come from — this force that drives people to trample everything pure and noble underfoot, to sacrifice all the higher possibilities of life, that turns civility into a hollow performance, patriotism into a fraud, and religion into hypocrisy, that makes so much of civilized life a war of all against all, fought with the weapons of cunning and deception?

Doesn't it spring from the existence of want? Thomas Carlyle somewhere says that poverty is the hell the modern person is most afraid of. And he's right. Poverty is the open-mouthed, relentless hell that yawns beneath civilized society. And it's hell enough. The ancient Hindu scriptures declare no truer thing than when the wise crow Bushanda tells the eagle-bearer of Vishnu that the sharpest pain is poverty. Because poverty is not just deprivation. It means shame, degradation — the searing of the most sensitive parts of our moral and mental nature as with hot irons. It means the denial of our strongest impulses and our deepest affections, the wrenching of our most vital nerves. You love your partner, you love your children — but wouldn't it be easier to watch them die than to watch them ground down by the kind of desperate want in which large classes of people in every highly developed society actually live? The strongest of animal instincts is the one by which we cling to life. But it's an everyday event in civilized societies for people to drink poison or put a gun to their head out of fear of poverty. And for every one who does, there are probably a hundred who feel the urge but are held back by instinctive recoil, religious conviction, or family bonds.

From this hell of poverty, it's only natural that people would make every effort to escape. The impulse of self-preservation and self-interest combines with nobler feelings, and love as much as fear drives the struggle. Many a person does a mean thing, a dishonest thing, a greedy and grasping and unjust thing, in the effort to protect a parent, a spouse, or children from want, or from the fear of want.

And out of this state of affairs grows a public opinion that enlists, as a driving force in the scramble to grab and hold, one of the strongest — perhaps for many people the very strongest — springs of human action. The desire for approval, the urge to win the respect, admiration, or sympathy of our fellow human beings, is instinctive and universal. Sometimes distorted into the most bizarre forms, it's present everywhere. It's powerful among the most isolated tribal people, as among the most polished members of the most refined society. It shows itself with the first gleam of intelligence and persists to the last breath. It triumphs over the love of ease, over the sense of pain, over the dread of death. It shapes both the most trivial and the most important actions.

The toddler just learning to walk or talk will try harder as its cute little tricks draw attention and laughter. The dying ruler of the world gathers his robes around him so he may pass away as befits a king. Chinese mothers used to deform their daughters' feet with cruel bindings; European women have sacrificed their own comfort and their families' comfort to similar dictates of fashion. The Polynesian, that he might be admired for his beautiful tattoo, held himself still while his flesh was torn by sharks' teeth. The North American Indian, tied to the stake, bore the most fiendish tortures without a moan, and, to be respected and admired as a great warrior, taunted his tormentors to new cruelties. It's this desire that leads the desperate charge. It's this that keeps the student's lamp burning. It's this that drives people to strive, to strain, to toil, and to die. It's this that raised the pyramids and set fire to the great temple at Ephesus.

Now, people admire what they desire. How sweet the safe harbor looks to those battered by the storm; food to the hungry, drink to the thirsty, warmth to the freezing, rest to the exhausted, power to the powerless, knowledge to those whose intellectual hunger has been awakened. And so the sting of want and the fear of want make people admire above all things the possession of riches, and to become wealthy is to become respected, admired, and influential. Get money — honestly if you can, but at any rate get money! That's the lesson society drums into its members' ears day and night. People instinctively admire virtue and truth, but the sting of want and the fear of want make them admire the rich and envy the fortunate even more. It's good to be honest and just, and people will praise it. But the person who amasses a million dollars through fraud and injustice will get more respect, admiration, and influence — more deference and flattery, if not genuine loyalty — than the one who refuses to do so. The honest person may have their reward in the future. They may know that their name is written in the Book of Life, that theirs is the white robe and the palm branch of the one who conquered temptation. But the other has their reward right now. Their name is on the list of "our substantial citizens." They enjoy the courtship of powerful people and the flattery of the fashionable; the best pew in the church and the personal attention of the eloquent clergyman who, in Christ's name, preaches the Gospel of the rich, and softens into a meaningless decoration the stern biblical metaphor of the camel and the eye of the needle. They may become a patron of the arts, a sponsor of writers and scholars. They may benefit from the conversation of the intelligent and be polished by the company of the refined. Their charity may feed the poor, help the struggling, and bring sunshine into desolate places. And noble public institutions may commemorate their name and fame after they are gone. Satan doesn't tempt people in the form of a hideous monster with horns and a tail, but as an angel of light. His promises aren't only of the kingdoms of the world, but of mental and moral authority and power. He appeals not just to animal appetites, but to the cravings that stir in us precisely because we are more than animals.

Take the case of those miserable people with muckrakes — to borrow the image from Bunyan's allegorical Pilgrim's Progress — who can be seen in every community as plainly as Bunyan saw their type in his vision. Long after they've accumulated enough wealth to satisfy every desire, they go on working, scheming, striving to pile riches upon riches. It was the desire "to be somebody" — indeed, in many cases the desire to do noble and generous things — that started them on their money-making careers. And what drives them long after every possible need is met, what pushes them on with unsatisfied and ravenous greed, is not simply the force of tyrannical habit, but the subtler rewards that possessing riches brings — the sense of power and influence, the sense of being looked up to and respected, the knowledge that their wealth doesn't just raise them above want, but makes them people of importance in the community where they live. This is what makes the rich so reluctant to part with their money, so driven to get more.

Against temptations that appeal to the deepest impulses of our nature, the sanctions of law and the teachings of religion can do very little. The wonder is not that people are so self-seeking, but that they aren't far more so. That under current conditions people aren't more grasping, more unfaithful, more selfish than they are proves the goodness and resilience of human nature — the ceaseless flow from the deep springs that feed our moral qualities. All of us have mothers. Most of us have children. And so faith, purity, and selflessness can never be entirely banished from the world, no matter how badly we arrange our social systems.

But whatever is powerful for evil can be made powerful for good. The change I've proposed would destroy the conditions that twist impulses that are in themselves healthy and beneficial, and would transform the forces that now tear society apart into forces that would unite and purify it.

Give labor a free field and its full earnings. Collect for the benefit of the whole community the fund that the community's growth creates. And want and the fear of want would vanish. The springs of production would be released, and the enormous increase in wealth would give even the poorest ample comfort. People would no more worry about finding work than they worry about finding air to breathe. They'd need have no more anxiety about physical necessities than do the lilies of the field. The progress of science, the march of invention, the spread of knowledge would bring their benefits to all.

With want and the fear of want abolished, the admiration of riches would fade, and people would seek the respect and approval of their peers in ways other than acquiring and displaying wealth. In this way, the skill, attention, integrity, and dedication that can now be enlisted only for private gain would be brought to bear on public affairs and the management of shared resources. A railroad or gas utility might be operated by the public not only more economically and efficiently than under the current system of corporate stockholder management, but as economically and efficiently as would be possible under a single owner. The prize at the ancient Olympic games, which called forth the most intense efforts of all Greece, was nothing more than a wreath of wild olive. For a bit of ribbon, people have over and over again performed services no amount of money could have purchased.

Shortsighted is the philosophy that counts on selfishness as the master motive of human action. It's blind to facts the world is full of. It doesn't see the present, and it misreads the past. If you want to move people to action, what should you appeal to? Not their wallets, but their patriotism. Not selfishness, but sympathy. Self-interest is, in a sense, a mechanical force — powerful, certainly, and capable of large and wide-ranging results. But there is in human nature what might be compared to a chemical force — something that melts and fuses and overwhelms, something to which nothing seems impossible. "All that a man hath will he give for his life" — that is self-interest. But in loyalty to higher impulses, people will give even life itself.

It's not selfishness that fills the history of every people with heroes and saints. It's not selfishness that blazes out on every page of world history in sudden splendor of noble deeds, or sheds the soft glow of compassionate lives. It wasn't selfishness that turned Gautama Buddha's back on his royal home, or called the Maid of Orleans to lift the sword from the altar. It wasn't selfishness that held the three hundred Spartans in the pass at Thermopylae, or gathered into Arnold Winkelried's chest the sheaf of enemy spears. It wasn't selfishness that chained Vincent de Paul to the bench of a galley to take a prisoner's place, or brought little starving children during the Indian famine, tottering on their own weak legs, to the relief stations with even weaker children in their arms. Call it religion, patriotism, sympathy, the enthusiasm for humanity, or the love of God — give it whatever name you want — there is a force that overcomes and drives out selfishness. A force that is the electricity of the moral universe, a force beside which all others are weak. Everywhere that human beings have lived, it has shown its power, and today, as ever, the world is full of it. To be pitied is the person who has never seen it and never felt it. Look around! Among ordinary people, in the care and struggle of daily life, in the noise of the busy street and the squalor where poverty hides — here and there the darkness is lit with the trembling play of its gentle flames. Those who haven't seen it have walked with shut eyes. Those who look may see, as the ancient writer Plutarch said, that "the soul has a principle of kindness in itself, and is born to love, as well as to perceive, think, or remember."

And this force of all forces — that now goes to waste or takes on twisted forms — we can harness for the strengthening, building up, and ennobling of society, if we choose, just as we now harness physical forces that once seemed nothing but powers of destruction. All we have to do is give it freedom and room to work. The injustice that produces inequality — the injustice that in the midst of abundance tortures people with want or haunts them with the fear of want, that stunts them physically, degrades them intellectually, and warps them morally — is what alone prevents harmonious social development. For, as the Stoic philosopher Marcus Aurelius wrote, "all that is from the gods is full of providence. We are made for cooperation — like feet, like hands, like eyelids, like the rows of the upper and lower teeth."

There are people who can't even conceive of any better society than the one that exists now — who think the idea that greed could be banished, prisons could stand empty, individual interests could be aligned with shared interests, and no one would try to rob or exploit their neighbor is nothing but the dream of impractical dreamers. These self-proclaimed practical, levelheaded types, who pride themselves on seeing things as they are, have a hearty contempt for such visions. But these people — though some of them write books, some occupy university chairs, and some stand in pulpits — don't actually think.

If they were accustomed to dining in the kind of cheap eating houses found in the rougher quarters of London and Paris, where the knives and forks are chained to the tables, they'd conclude it was the natural, ineradicable tendency of human beings to steal cutlery.

Take a group of well-mannered people dining together. There's no scrambling for food, no one trying to get more than their neighbor, no one grabbing or hoarding. On the contrary, each person is eager to serve their neighbor before themselves, to offer others the best rather than claim it for themselves. And should anyone show the slightest tendency to put the gratification of their own appetite ahead of the others', or in any way act piggish or grabby, the swift and heavy penalty of social contempt and exclusion would show how strongly common opinion condemns such behavior.

All this is so ordinary as to attract no attention — it seems like the natural state of things. Yet it's no more natural for people not to be greedy about food than for them not to be greedy about wealth. People get greedy about food when they're not confident there will be a fair distribution that gives everyone enough. But when those conditions are assured, they stop being greedy about food. And the same is true in society at large. Under current arrangements, people are greedy about wealth because distribution is so unjust that instead of everyone being assured of enough, many are guaranteed to end up in want. It's the "devil take the hindmost" quality of our current social system that creates the race and scramble for wealth — the competition in which all considerations of justice, mercy, religion, and fellow feeling are trampled underfoot, in which people forget their own souls and struggle to the very edge of the grave for what they can't take beyond it. But a fair distribution of wealth, one that freed everyone from the fear of want, would destroy the greed for wealth, just as in polite society the greed for food has been destroyed.

On the crowded steamships of the early California lines, there was often a striking difference between the manners of the steerage and the cabin, which illustrates this principle of human nature. Plenty of food was provided for the steerage as for the cabin, but in the steerage there were no rules ensuring orderly service, and meals became a free-for-all. In the cabin, by contrast, where everyone had an assigned place and there was no fear that anyone would go without, there was no such scrambling and waste as happened in the steerage. The difference wasn't in the character of the passengers, but simply in this one fact. Move a cabin passenger to the steerage and they'd join the greedy rush. Move a steerage passenger to the cabin and they'd immediately become polite and well-mannered. The same difference would show itself throughout society if our present unjust distribution of wealth were replaced by a just one.

Consider this real fact of a cultivated and refined social setting, in which all the coarser impulses are held in check — not by force, not by law, but by shared opinion and the mutual desire to please. If this is possible for part of a community, it's possible for a whole community. There are stages of society in which everyone has to go armed, in which everyone must be ready to defend their person and property with their own strength. If we've progressed beyond that, we can progress further still.

But someone may say: to banish want and the fear of want would destroy the incentive to work. People would become idlers, and such a happy state of general comfort and contentment would be the death of progress. This is the old slaveholder's argument — that people can only be driven to labor with the whip. Nothing is more untrue.

Want might be banished, but desire would remain. Humans are the unsatisfied animal. We've barely begun to explore, and the universe lies before us. Each step opens new vistas and kindles new desires. We are the constructive animal: we build, we improve, we invent and put things together, and the greater the thing we accomplish, the greater the thing we want to accomplish next. We are more than animals. Whatever intelligence breathes through nature, it is in that likeness that we are made. The steamship, driven by its throbbing engines through the sea, is in kind — though not in degree — as much a creation as the whale that swims beneath it. The telescope and the microscope, what are they but added eyes that we've made for ourselves? The fine fabrics and beautiful colors in which people dress themselves — don't they answer to the plumage that nature gives the bird? Human beings must be doing something, or imagining they're doing something, because in us throbs the creative impulse. The person who simply basks in the sunshine is not a natural human being, but an abnormal one.

As soon as children can control their muscles, they begin making mud pies or dressing a doll. Their play is just imitation of the work of their elders. Their very destructiveness comes from the desire to accomplish something, from the satisfaction of seeing themselves make something happen. There's no such thing as the pursuit of pleasure purely for pleasure's sake. Our very amusements entertain only insofar as they involve, or simulate, learning or doing something. The moment they stop engaging either our curiosity or our creative drive, they stop being fun. Telling novel readers how the story ends spoils their interest. It's only the element of chance and skill that lets the card player "kill time" by shuffling bits of pasteboard. The luxurious frivolities of Versailles were bearable to human beings only because the king believed he was governing a kingdom and the courtiers were chasing new honors and pensions. People who lead what are called lives of fashion and pleasure must have some purpose beyond amusement, or they'd die of boredom. They endure it only because they imagine they're gaining social position, making connections, or improving their children's prospects. Lock someone up and deny them any work to do, and they must either die or go insane.

It's not labor itself that people find repulsive. It's not the natural need for effort that is a curse. It's only labor that produces nothing — effort whose results we can never see. To toil day after day and get only the bare necessities of life, that is indeed hard. It's like the infernal punishment of forcing someone to keep pumping or drown, or to keep trudging on a treadmill or be crushed. But released from that necessity, people would work harder and better, because then they'd work as their inclinations led them — then they'd feel they were truly accomplishing something for themselves or others. Was Alexander von Humboldt's life an idle one? Did Benjamin Franklin find nothing to do when he retired from the printing business with enough to live on? Is Herbert Spencer a slacker? Did Michelangelo paint for room and board?

The fact is that the work which improves the human condition, the work that extends knowledge and increases power, that enriches literature and elevates thought, is not done to earn a living. It's not the work of slaves, driven to their task either by a master's whip or by animal necessity. It's the work of people who perform it for its own sake, not for more food or drink or clothing or show. In a society where want was abolished, work of this kind would increase enormously.

I'm inclined to think that collecting rent in the way I've proposed would cause the organization of labor, wherever large amounts of capital were used, to take on the cooperative form, since the more equal spread of wealth would unite investor and worker in the same person. But whether this happened or not is of little consequence. The grinding toil of routine labor would fade away. Wages would be too high and opportunities too abundant for anyone to be forced to suppress the higher qualities of their nature. In every line of work, the brain would aid the hand. Work, even of the rougher kinds, would become something lighter, and the modern tendency toward specialization wouldn't mean monotony or the narrowing of workers' abilities. It would be offset by shorter hours, by variety, and by the alternation of intellectual with manual work. The result would be not only the productive forces now going to waste being put to use, not only our present knowledge — so imperfectly applied today — being fully utilized, but from the mobility of labor and the mental energy that would be unleashed, there would come advances in methods of production that we can't now imagine.

For the greatest of all the enormous wastes our current social system involves is the waste of human potential. How tiny are the forces that actually drive civilization forward, compared to the forces that lie dormant! How few are the thinkers, the discoverers, the inventors, the organizers, compared to the great mass of people! Yet such individuals are born in abundance. It's the conditions of life that allow so few to develop. Among human beings there are infinite varieties of talent and inclination, just as there are such infinite varieties of physical form that among a million people you won't find two who can't be told apart. But, both from observation and reflection, I'm inclined to think that the differences in natural ability are no greater than the differences in height or physical strength.

Look at the lives of great people, and see how easily they might never have been heard of. Had Caesar been born into a common family; had Napoleon entered the world a few years earlier; had Columbus gone into the Church instead of to sea; had Shakespeare been apprenticed to a cobbler or chimney sweep; had Isaac Newton been consigned by fate to the education and toil of a farm laborer; had Adam Smith been born in the coal mines, or Herbert Spencer been forced to make his living as a factory worker — what would their talents have mattered? But there would have been, it will be said, other Caesars or Napoleons, other Columbuses or Shakespeares, other Newtons, Smiths, or Spencers. True. And that shows how abundant our human nature is. Just as the ordinary worker bee is transformed when needed into a queen bee, so, when circumstances favor development, what might otherwise pass for an ordinary person rises into a hero or leader, discoverer or teacher, sage or saint. So widely has the sower scattered the seed, so strong is the life force that bids it bud and blossom. But alas for the stony ground, and the birds, and the weeds! For every one who reaches their full height, how many are stunted and deformed.

The will within us is the ultimate fact of consciousness. Yet how little of what the best of us have — in learning, in position, even in character — can be credited entirely to ourselves, and how much to the influences that shaped us. Who is there, wise, learned, careful, or strong, who wouldn't, if they traced the inner history of their life, turn — like the Stoic Emperor Marcus Aurelius — to give thanks that by this person and that, here and there, good examples were set, noble thoughts reached them, and fortunate opportunities opened before them? Who is there who, with eyes open and having reached the middle of life, hasn't sometimes echoed the thought of the devout person who, watching a criminal led to the gallows, said, "But for the grace of God, there go I"? How little heredity counts compared to circumstances. We say this person is the product of a thousand years of European progress, and that one of a thousand years of Chinese stagnation. Yet place a European infant in the heart of China, and except for the shape of the eye or the shade of the hair, the child would grow up like those around them — using the same language, thinking the same thoughts, showing the same tastes. Switch a child of privilege in the cradle with an infant from the slums, and will noble blood produce a refined and cultured person?

To remove want and the fear of want, to give all classes leisure, comfort, and independence — the decencies and refinements of life, the opportunities for mental and moral growth — would be like turning water onto a desert. The barren waste would clothe itself in green, and the desolate places where life seemed forbidden would before long be shaded by trees and filled with birdsong. Talents now hidden, virtues unsuspected, would emerge to make human life richer, fuller, happier, nobler. Among those round pegs jammed into square holes, and square pegs crammed into round ones; among those wasting their energy in the scramble to get rich; among those who in factories have been turned into machines, or who are chained by necessity to workbench or plow; among children growing up in squalor, vice, and ignorance — there are powers of the highest order, talents of the most brilliant kind. They need only the opportunity to come forth.

Consider the possibilities of a society that gave that opportunity to everyone. Let your imagination fill in the picture — its colors grow too bright for words to paint. Consider the moral elevation, the intellectual vitality, the richness of social life. Consider how by a thousand actions and interactions the members of every community are linked together, and how under present conditions even the fortunate few who stand at the top of the social pyramid must suffer, though they may not know it, from the want, ignorance, and degradation beneath them. Consider these things and then say whether the change I propose would not benefit everyone — even the greatest landowner. Wouldn't they be more confident about their children's future leaving them penniless in such a society than leaving them the largest fortune in this one? If such a society existed anywhere, wouldn't they gladly give up everything they owned to gain entry?

I have now traced social weakness and disease to their source. I have shown the remedy. I have covered every point and met every objection. But the problems we've been considering, great as they are, lead into problems greater still — into the grandest questions the human mind can wrestle with. I'm about to ask the reader who has come with me this far to go with me further, into still higher territory. But I ask you to remember that in the limited space remaining within the bounds of this book, I can't fully address the questions that arise. I can only suggest some thoughts that may perhaps serve as starting points for further reflection.

Book X: The Law of Human Progress

The Current Theory of Human Progress — Its Insufficiency

If the conclusions we've reached are correct, they should fit within a larger pattern.

So let's restart our inquiry from a higher vantage point, where we can survey a wider field.

What is the law of human progress?

This is a question I would hesitate to take on in the brief space I can devote to it here — it touches, directly or indirectly, on some of the deepest problems the human mind can grapple with. But it's a question that naturally arises. Are the conclusions we've come to consistent with the larger law that governs human development?

What is that law? We need to find the answer, because the prevailing philosophy, while clearly recognizing that such a law exists, gives no more satisfactory account of it than mainstream economics gives of the persistence of poverty alongside growing wealth.

Let's stick as closely as possible to the firm ground of facts. Whether human beings were or were not gradually developed from animals isn't something we need to settle here. However closely connected questions about humanity as we know it may be to questions about our origins, light can only be thrown from the former onto the latter. You can't reason from the unknown to the known. We can only make inferences from facts we actually have.

However we may have originated, everything we know about ourselves is as human beings — just as we are now. There is no record or trace of humanity in any condition lower than that of the least technologically developed peoples still found today. Whatever bridge our species may have crossed over the wide chasm that now separates us from other animals, no remnants of it survive. Between the least developed human societies we know of and the most intelligent animals, there is an unbridgeable difference — not merely one of degree, but of kind. Many human characteristics, actions, and emotions can be found in other animals. But no human being, no matter how far down the scale of development, has ever been found lacking one thing that no animal shows even the slightest trace of: a clearly recognizable but almost undefinable something that gives us the power of improvement — that makes us the progressive species.

A beaver builds a dam, a bird builds a nest, and a bee builds a cell. But while beavers' dams, birds' nests, and bees' cells are always built on the same model, the human dwelling has evolved from the crude hut of leaves and branches to the magnificent home equipped with every modern convenience. A dog can connect cause and effect to some degree, and can be taught certain tricks. But its capacity in these respects hasn't increased one bit during all the ages it has been the companion of improving humanity. The dog of civilization is no more accomplished or intelligent than the dog of a nomadic hunter. We know of no animal that wears clothes, cooks its food, makes tools or weapons, breeds other animals for food, or has an articulate language. But human beings who don't do these things have never been found or even heard of, except in fables. In other words, wherever we find people, they show this power — of supplementing what nature has done for them with what they do for themselves. And in fact, human beings are so poorly equipped physically that there is no part of the world, except perhaps some of the small islands of the Pacific, where we could survive without this ability.

People everywhere and at all times display this ability — everywhere and at all times we have knowledge of, they have made some use of it. But the degree to which it has been used varies enormously. Between the crude canoe and the steamship, between the boomerang and the repeating rifle, between a roughly carved wooden idol and the breathtaking marble of Greek art, between the knowledge of early peoples and modern science, between a nomadic hunter and a modern city dweller, between the most isolated tribal woman and a woman of refined society — the differences are staggering.

These varying degrees of development can't be traced to differences in innate ability. The most advanced peoples of today were themselves living in what we'd call primitive conditions within historical memory, and we find the widest differences between peoples of the same ancestry. Nor can they be entirely explained by differences in physical environment — places that were once the cradles of learning and the arts are now in many cases home to far less developed societies, and within a few years great cities have risen on the hunting grounds of nomadic tribes. All these differences are clearly tied to social development. Beyond perhaps the most basic rudiments, improvement becomes possible only as people live together. All these advances in human powers and conditions can be summed up in the word civilization. People improve as they become civilized — as they learn to cooperate in society.

What is the law of this improvement? What common principle can explain the different stages of civilization that different communities have reached? What is the essential nature of civilizational progress, so that we can say of various social arrangements, "This one helps" and "That one doesn't" — or explain why an institution or condition that advances civilization at one time may hold it back at another?

The prevailing belief today is that the progress of civilization is a development or evolution, in the course of which human powers are increased and human qualities improved by causes similar to those used to explain the origin of species — namely, the survival of the fittest and the hereditary transmission of acquired qualities.

That civilization is an evolution — that it is, in the philosopher Herbert Spencer's language, a progress from an indefinite, incoherent sameness to a definite, coherent complexity — there is no doubt. But saying this doesn't explain or identify the causes that advance or retard it. How far Spencer's sweeping generalizations, which seek to explain all phenomena in terms of matter and force, may ultimately include all these causes, I can't say. But as it has been scientifically presented, the evolutionary philosophy has either not yet definitively addressed this question, or has given rise to an opinion that doesn't fit the facts.

The popular explanation of progress is, I think, very much like the view a self-made millionaire naturally takes of the causes of unequal wealth distribution. If that person has a theory at all, it's usually that there's plenty of money to be made by anyone with the will and ability, and that it's ignorance, laziness, or wastefulness that makes the difference between rich and poor. And so the common explanation of differences in civilization is differences in capability. The civilized peoples are the superior peoples, and their advance is due to this superiority — just as English victories were, in common English opinion, due to the natural superiority of the English over the French, and just as democratic government, active invention, and greater average comfort were, until recently at least, attributed in common American opinion to the greater cleverness of the American people.

Now, just as the economic doctrines we met and disproved at the beginning of this inquiry aligned with the common opinion of people who see capitalists paying wages and competition driving wages down — just as the Malthusian theory aligned with existing prejudices of both rich and poor — so the explanation of progress as gradual racial improvement aligns with the popular opinion that accounts for differences in civilization by differences in race. It has given coherence and a scientific formula to opinions that already existed. Its extraordinary spread since Darwin first startled the world with The Origin of Species has been less a conquest than an absorption.

The view that now dominates the world of thought is this: that the struggle for existence, as it becomes more intense, drives people to new efforts and inventions. That this improvement, and the capacity for improvement, is locked in through hereditary transmission and extended by the tendency of the best-adapted or most improved individual to survive and reproduce, and of the best-adapted or most improved tribe, nation, or people to survive in the struggle between social groups. On this theory, the differences between humans and animals, and the differences in relative progress among peoples, are now explained just as confidently — and almost as universally — as they were explained a short while ago by the theory of special creation and divine intervention.

The practical outcome of this theory is a kind of hopeful fatalism, which fills current literature.57 In this view, progress results from forces that work slowly, steadily, and relentlessly to elevate humanity. War, slavery, tyranny, superstition, famine, and plague — the suffering and misery that fester in modern civilization — are the driving forces that push humanity forward by eliminating weaker types and spreading stronger ones. Hereditary transmission is the mechanism by which advances are locked in and past advances become the foundation for new ones. The individual is the product of changes gradually impressed upon and passed down through a long line of ancestors, and the social order takes its form from the individuals who compose it. Thus, while this theory is, as Herbert Spencer says,58 "radical to a degree beyond anything which current radicalism conceives" — since it looks for changes in the very nature of human beings — it is at the same time "conservative to a degree beyond anything conceived by current conservatism," since it holds that no change can help except these slow changes in human nature. Philosophers may insist that this doesn't lessen the duty of trying to reform injustices, just as theologians who taught predestination insisted on the duty of everyone to struggle for salvation. But as most people understand it, the result is fatalism: "Do what we may, the mills of the gods grind on regardless of either our help or our hindrance." I mention this only to illustrate what I take to be the opinion now rapidly spreading through common thought — not because the search for truth should be influenced by concern about its effects. But this, I take it, is the current view of civilization: that it results from forces which, operating in the way described, slowly change human character and elevate human powers; that the difference between a civilized person and one in a less developed society reflects a long process of inherited improvement that has become permanently fixed in mental makeup; and that this improvement tends to continue, leading to ever higher civilization. We have reached a point where progress seems natural to us, and we look forward confidently to the greater achievements of coming generations — some even believing that scientific advances will eventually give people immortality and enable them to travel not just to the planets but to the distant stars, and at last to manufacture suns and solar systems for themselves.59

But without soaring to the stars, the moment this theory of progress — which seems so natural to us amid an advancing civilization — looks around the world, it runs into an enormous fact: the existence of frozen, petrified civilizations. The majority of the human race today has no concept of progress. The majority of the human race today looks back at the past — just as our own ancestors did until a few generations ago — as the time of human perfection. The difference between a nomadic hunter and a citizen of an advanced society might be explained by the theory that the former is simply so underdeveloped that progress is barely visible. But how, on the theory that human progress results from general and continuous causes, do we account for civilizations that advanced so far and then stopped? You can't say of the Hindu or the Chinese, as you might say of a hunter-gatherer, that our superiority is the result of a longer education — that we are, as it were, the adults of nature while they are the children. The peoples of India and China were civilized when Europeans were living as nomadic tribes. They had great cities, highly organized and powerful governments, literatures, philosophies, refined customs, considerable division of labor, extensive commerce, and elaborate arts — while our ancestors were wandering groups living in huts and skin tents, no further advanced than the Indigenous peoples of North America. While we have progressed from that state to nineteenth-century civilization, they have stood still. If progress is the result of fixed, inevitable, and eternal laws that drive humanity forward, how do we account for this?

One of the best popular writers on evolutionary philosophy, Walter Bagehot (in Physics and Politics), acknowledges the force of this objection and tries to explain it this way: that the first thing necessary to civilize people is to tame them — to get them to live in association with their fellows under the rule of law. And so a body, or "cake," of laws and customs grows up, strengthened and extended by natural selection, since the tribe or nation bound together this way has an advantage over those that aren't. But eventually this cake of custom and law becomes too thick and hard to allow further progress, which can go on only when circumstances arise that introduce discussion and debate, permitting the freedom and flexibility necessary for improvement.

This explanation, which Bagehot offers with some misgivings, is, I think, at the expense of the general theory. But that aside, it clearly doesn't explain the facts.

The hardening tendency Bagehot describes would show up at a very early stage of development, and his examples are nearly all drawn from very early or semi-developed societies. But these arrested civilizations had gone a long way before they stopped. There must have been a time when they were far advanced compared to a primitive state, yet still flexible, free, and progressing. These arrested civilizations stopped at a point that was in many respects equal to and in some respects superior to European civilization of, say, the sixteenth century or at least the fifteenth. Up to that point, there must have been discussion, openness to new ideas, and active mental life of all kinds. They had architects who carried the art of building, necessarily through a series of innovations and improvements, to a very high level. They had shipbuilders who, through one innovation after another, produced vessels as good as the warships of Henry VIII. They had inventors who stopped only on the verge of our most important improvements — and from some of whom we can still learn. They had engineers who built great irrigation systems and navigable canals. They had rival schools of philosophy and competing religious ideas. One great religion, in many respects resembling Christianity, arose in India, displaced the older religion, spread into China and swept over that country, and was eventually displaced in turn in its original homeland — just as Christianity was displaced in the places where it first took root. There was life, active life, and the kind of innovation that produces improvement, long after people had learned to live together in society. Moreover, both India and China received infusions of new energy from conquering peoples with different customs and ways of thinking.

The most rigidly frozen of all civilizations we know of was that of Egypt, where even art eventually took on a fixed and inflexible form. But we know that behind this must have been a time of life and vigor — a freshly developing and expanding civilization, like ours today — or the arts and sciences could never have been carried so far. And recent excavations have uncovered, beneath the Egypt we already knew, an earlier Egypt still — revealed in statues and carvings that, instead of showing a hard and formal style, beam with life and expression, showing art that is struggling, passionate, natural, and free: the sure sign of an active and expanding civilization. So it must once have been with all the civilizations that are now stagnant.

But it's not only these arrested civilizations that the current theory of development fails to explain. It's not just that peoples have gone far along the path of progress and then stopped. It's that peoples have gone far along the path of progress and then gone backward. And this isn't just an isolated case — it's the universal rule. Every civilization the world has yet seen has had its period of vigorous growth, its arrest and stagnation, its decline and fall. Of all the civilizations that have risen and flourished, only those that froze in place remain today — along with our own, which is not yet as old as the pyramids were when Abraham looked upon them, while behind the pyramids lay twenty centuries of recorded history.

That our own civilization has a broader base, is of a more advanced type, moves faster, and reaches higher than any previous one is undoubtedly true. But in these respects it's hardly more ahead of Greco-Roman civilization than Greco-Roman civilization was ahead of the great civilizations of Asia. And even if it were, that would prove nothing about its permanence or future progress, unless it could be shown that it's superior in the things that caused the ultimate failure of its predecessors. The current theory makes no such claim.

In truth, nothing could be further from explaining the facts of universal history than this theory that civilization results from a process of natural selection that improves and elevates human powers. That civilization has arisen at different times in different places and has progressed at different rates is not inconsistent with this theory — that could simply result from the unequal balancing of driving and resisting forces. But the fact that progress, having commenced everywhere (for even among the least developed peoples it's agreed there has been some progress), has nowhere been continuous but has everywhere been brought to a halt or reversed — that is absolutely inconsistent with the theory. For if progress worked to fix improvements in human nature and thereby produce further progress, then while there might be occasional interruptions, the general rule would be that progress is continuous — that each advance would lead to further advances, and civilization would develop into ever higher civilization.

Not just the general rule, but the universal rule, is the opposite of this. The earth is the tomb of dead empires no less than of dead individuals. Instead of progress preparing people for greater progress, every civilization that was in its own time as vigorous and advancing as ours is now has come to a stop on its own. Over and over again, art has declined, learning has sunk, power has waned, population has thinned — until the people who had built great temples and mighty cities, turned rivers and tunneled through mountains, cultivated the earth like a garden and brought the most exquisite refinement to the smallest details of life, survived as nothing but a scattered remnant of impoverished people who had lost even the memory of what their ancestors had accomplished, and regarded the surviving fragments of their grandeur as the work of spirits or of a mighty race before the Great Flood. So true is this that when we think of the past, it seems like an inexorable law from which we can no more hope to be exempt than a young person in the prime of health can expect to escape the death that is the common fate of all. "Even this, O Rome, must one day be thy fate!" wept the Roman general Scipio over the ruins of Carthage, and the historian Macaulay's image of a New Zealander meditating on the broken arch of London Bridge appeals to the imagination even of those who watch cities rising in the wilderness and help lay the foundations of new nations. And so when we build a public building, we hollow out the largest cornerstone and carefully seal within it some mementos of our era, looking forward to the time when our works will be ruins and we ourselves forgotten.

Nor does it matter whether this alternating rise and fall of civilization, this regression that always follows progression, is or isn't the rhythmic movement of an ascending line (and I think, though I won't open the question, that it would be much harder to prove that it is than is generally supposed). In either case the current theory is disproved. Civilizations have died without a trace, and hard-won progress has been lost to humanity forever. But even if we grant that each wave of progress has made possible a higher wave, and each civilization passed the torch to a greater one, the theory that civilization advances through inherited changes in human nature still fails to explain the facts. For in every case, it is not the people who were educated and hereditarily shaped by the old civilization that begin the new one, but a fresh people coming from a lower level. It's the less developed peoples of one era who become the civilized peoples of the next, only to be in their turn succeeded by other less developed peoples. For it has always been the case that people under the influence of civilization, though at first improving, afterward decline. The civilized person of today is vastly superior to their less civilized counterpart. But so, in the time of its vigor, was the civilized person of every dead civilization. Yet there are such things as the vices, the corruptions, and the decay of civilization, which past a certain point have always shown themselves. Every civilization that has been overwhelmed by outside forces had really already perished from internal decay.

This universal fact, the moment it's recognized, disposes of the theory that progress works through hereditary transmission. Looking over the history of the world, the line of greatest advance doesn't coincide for any length of time with any line of heredity. On any particular line of heredity, regression always seems to follow advance.

Shall we therefore say there is a national or societal life, as there is an individual life — that every social group has, as it were, a certain amount of energy, the spending of which inevitably leads to decay? This is an old and widespread idea, still widely held, that can constantly be seen cropping up incongruously in the writings of evolutionary philosophers. Indeed, I don't see why it can't be stated in terms of matter and motion so as to bring it within the framework of evolution. If we think of individuals as atoms, the growth of society is "an integration of matter and concomitant dissipation of motion; during which the matter passes from an indefinite, incoherent homogeneity to a definite, coherent heterogeneity, and during which the retained motion undergoes a parallel transformation."60 And so an analogy can be drawn between the life of a society and the life of a solar system under the nebular hypothesis. Just as the heat and light of the sun are produced by the coming together of atoms, releasing energy that finally ceases when the atoms reach a state of equilibrium and rest — a state of stillness that can be broken only by the impact of external forces, which reverse the process, releasing matter as gas that then condenses again and releases new energy — so, it might be said, does the coming together of individuals in a community release a force that produces the light and warmth of civilization. But when this process stops and the individual components settle into a fixed state, petrifaction follows, and the disruption and scattering caused by an influx of outside peoples becomes necessary to restart the process and spark new civilizational growth.

But analogies are the most dangerous forms of reasoning. They may highlight resemblances while disguising or covering up the truth. And all such analogies are superficial. A community cannot grow old the way an individual does, through the decay of its powers, because its members are constantly being replaced by new children in all the fresh vigor of youth. A community cannot lose its vital energy unless the vital energy of its individual members is diminished.

Yet in both the common analogy that compares the life force of a nation to that of an individual, and in the one I've described above, there lurks the recognition of an obvious truth — the truth that the obstacles which finally bring progress to a halt are raised by the course of progress itself; that what has destroyed all previous civilizations has been the conditions produced by the growth of civilization itself.

This is a truth that the prevailing philosophy ignores. But it is a truth of enormous importance. Any valid theory of human progress must account for it.

Differences in Civilization — To What Due

In trying to discover the law of human progress, the first step must be to determine the essential nature of those differences we describe as differences in civilization.

We've already seen that the prevailing philosophy, which attributes social progress to inherited changes in human nature, doesn't fit the historical facts. And we can also see, if we think about it, that the differences between communities at different stages of civilization can't be traced to innate differences in the individuals who make up those communities. It's true that natural differences between people exist, and hereditary transmission of certain traits is undeniable. But the vast differences between people living in different stages of society can't be explained this way. The influence of heredity, which it's now fashionable to rate so highly, is nothing compared to the influences that shape a person after they come into the world. What is more deeply ingrained in habit than language, which becomes not just an automatic muscular trick but the very medium of thought? What lasts longer, or reveals nationality more quickly? Yet we aren't born with a predisposition toward any language. We call it our "mother tongue" only because we learned it in infancy. Although a child's ancestors may have thought and spoken in one language for countless generations, a child who hears nothing else from birth will learn any other language with equal ease. The same goes for other national, regional, or class traits. They appear to be matters of education and habit, not hereditary transmission. Cases of white children captured by Indigenous peoples in infancy and raised among them show this clearly. They become thoroughly part of that culture. The same is true, I believe, of children raised by Romani people.

That this seems less true of the children of Indigenous or other visibly distinct peoples raised by white families is, I think, due to the fact that they're never treated exactly like white children. A gentleman who had taught at a Black school once told me that he thought the Black children, up to the age of ten or twelve, were actually brighter and learned more easily than white children, but that after that age they seemed to grow dull and indifferent. He thought this was proof of innate racial inferiority, and so did I at the time. But I later heard a highly intelligent Black clergyman, Bishop Hillery, make an offhand remark that, to my mind, provides a sufficient explanation. He said: "Our children, when they are young, are fully as bright as white children, and learn as readily. But as soon as they get old enough to appreciate their status — to realize that they are looked upon as belonging to an inferior race, and can never hope to be anything more than cooks, waiters, or something of that sort, they lose their ambition and cease to keep up." And to this he might have added that, being the children of poor, uneducated, and unambitious parents, their home environment also worked against them. For I believe it's widely observed that in the early stages of education, the children of uneducated parents are just as receptive as the children of educated parents. But eventually the latter, as a general rule, pull ahead and become the more capable adults. The reason is plain. In the first simple things they learn only at school, they're on equal footing. But as their studies grow more complex, the child who at home hears proper grammar, listens to intelligent conversation, has access to books, and can get questions answered has an advantage that shows.

The same thing can be seen later in life. Take someone who has risen from the ranks of common labor. As they come into contact with educated and influential people, they become more knowledgeable and polished. Take two brothers, the sons of poor parents, raised in the same home and the same way. One goes into a rough trade and never gets beyond the need to make a living through hard daily labor. The other, starting as an errand boy, gets a break in a different direction and eventually becomes a successful lawyer, merchant, or politician. At forty or fifty, the contrast between them will be striking, and people who don't think deeply about it will credit it to the greater natural ability that enabled one to get ahead. But just as striking a difference in manners and intelligence will show up between two sisters: one who married a man who stayed poor, whose life has been worn down by petty worries and starved of opportunities; and the other who married a man whose later success brought her into cultured society and opened opportunities that refined her taste and expanded her mind. And the reverse — deterioration — can be observed just as easily. The old saying that "bad company corrupts good character" is just one expression of the general law that human character is profoundly shaped by its conditions and surroundings.

I remember once seeing, in a Brazilian seaport, a Black man dressed in what was clearly an attempt at the height of fashion, but without shoes or socks. One of the sailors I was with, who had made some voyages in the slave trade, had a theory that a Black person was not fully human but a kind of ape, and pointed to this as evidence — arguing that it wasn't natural for a Black person to wear shoes, and that in a "wild state" they would wear no clothes at all. I later learned that it was considered improper in that place for enslaved people to wear shoes, just as in England it's considered improper for a faultlessly dressed butler to wear jewelry. And for that matter, I've since seen white men free to dress however they pleased get themselves up just as oddly as that enslaved Brazilian. But a great many of the facts cited as proof of hereditary transmission have no more relevance than this bit of forecastle Darwinism.

For instance, the fact that a large number of criminals and welfare recipients in New York have been shown to descend from a single pauper three or four generations back is widely cited as proof of hereditary transmission. But it proves nothing of the kind, since a much simpler explanation is right at hand. Paupers will raise paupers, even if the children aren't biologically theirs, just as regular contact with criminals will make criminals of the children of virtuous parents. To learn to rely on charity is inevitably to lose the self-respect and independence needed for self-reliance when times are hard. So true is this that, as is well known, charity has the effect of increasing the demand for charity, and it's an open question whether public relief and private giving don't do far more harm than good in this way. The same goes for the tendency of children to display the same feelings, tastes, prejudices, or talents as their parents. They absorb these traits from their environment just as they absorb them from their regular companions. And the exceptions prove the rule, since strong dislikes and revulsions can also be learned.

And there is, I think, a subtler influence that often accounts for what looks like hereditary throwbacks in character — the same influence that makes a boy who reads adventure novels want to be a pirate. I once knew a gentleman in whose veins ran the blood of Indigenous chiefs. He used to tell me traditions learned from his grandfather that illustrated something hard for an outsider to fully grasp — the Indigenous way of thinking, the intense but patient determination of the hunt, and the courage displayed under the most extreme trials. From the way he dwelt on these, I have no doubt that under certain circumstances, highly educated and civilized as he was, he would have displayed traits that would have been attributed to his Indigenous ancestry — but which in reality would have been fully explained by the way his imagination had dwelt on the deeds of his forebears.61

In any large community, we can see between different classes and groups differences of the same kind as those between communities at different stages of civilization — differences in knowledge, beliefs, customs, tastes, and speech that in their extremes show, among people of the same ancestry living in the same country, gaps almost as wide as those between the most and least developed societies. Just as all stages of social development, from the Stone Age up, can still be found in communities existing today, so in the same country and the same city we find, side by side, groups showing similar disparities. In countries like England and Germany, children of the same heritage, born and raised in the same place, will grow up speaking the language differently, holding different beliefs, following different customs, and showing different tastes. And even in a country like the United States, differences of the same kind, though not the same degree, can be seen between different social circles or groups.

But these differences are certainly not innate. No baby is born a Methodist or a Catholic, programmed to drop its h's or to sound them. All these differences that distinguish different groups or circles are acquired through association with those groups.

The Janissaries were made up of boys taken from Christian parents at an early age, but they were no less fanatical Muslims and no less thoroughly Turkish in their ways. The Jesuits and other religious orders display distinct characters, but these are certainly not perpetuated by hereditary transmission. And even such associations as schools or regiments, where the members stay only a short time and are constantly changing, exhibit general characteristics that are the result of mental impressions perpetuated through association.

Now, it is this body of traditions, beliefs, customs, laws, habits, and associations that arises in every community and surrounds every individual — this "super-organic environment," as Herbert Spencer calls it — that is, as I see it, the great element determining national character. It is this, rather than hereditary transmission, that makes the English person differ from the French, the German from the Italian, the American from the Chinese, and the person of an advanced civilization from the person of a less developed one. It is in this way that national traits are preserved, extended, or changed.

Within certain limits — or, if you prefer, without limits in itself — hereditary transmission may develop or alter qualities. But this is much more true of the physical than of the mental part of a person, and much more true of animals than it is even of the physical part of humans. What we learn from breeding pigeons or cattle doesn't apply to human beings, and the reason is clear. Human life, even in its most basic state, is infinitely more complex. People are constantly acted upon by an infinitely greater number of influences, among which the relative influence of heredity becomes less and less significant. A population of humans with no greater mental activity than animals — people who only ate, drank, slept, and reproduced — could probably, by careful selective breeding over time, be made to show as great a range of physical diversity as similar methods have produced in domestic animals. But no such people exist. In actual human beings, mental influences — acting through the mind on the body — would constantly disrupt the process. You can't fatten someone whose mind is under strain by penning them up and feeding them as you would a pig. In all probability, humans have been on earth longer than many animal species. They have been separated from one another under differences in climate that produce the most dramatic differences in animals, and yet the physical differences between the various peoples of the world are hardly greater than the difference between white horses and black horses — and they're certainly nothing like as great as between dogs of the same subspecies, such as the various types of terrier or spaniel. And even these physical differences between human groups, according to those who explain them through natural selection and hereditary transmission, were developed when humanity was much closer to the animal state — that is, when people had less mind.

And if this is true of the physical makeup of human beings, how much more true must it be of our mental makeup? We bring all our physical parts with us into the world. But the mind develops afterward.

There is a stage in the growth of every organism when it can't be told, except by its surroundings, whether the creature that will emerge will be fish or reptile, monkey or human. And so with a newborn infant: whether the mind that will soon awaken to consciousness and power will be English or German, American or Chinese — the mind of someone in an advanced civilization or the mind of someone in a less developed one — depends entirely on the social environment in which the child is placed.

Take a number of infants born to the most highly civilized parents and transport them to an uninhabited country. Suppose they were somehow miraculously sustained until they were old enough to take care of themselves. What would you have? People more helpless than any pre-industrial society we know of. They would have fire to discover, the crudest tools and weapons to invent, language itself to construct. They would, in short, have to stumble their way to the simplest knowledge that the least developed peoples now possess, just as a child learns to walk. That they would eventually do all these things I have not the slightest doubt, for all these possibilities are latent in the human mind just as the power of walking is latent in the human body. But I don't believe they would do them any better or worse, any faster or slower, than the children of less developed parents placed in the same conditions. Give people the very highest mental powers that exceptional individuals have ever displayed, and what could humanity achieve if one generation were separated from the next by a gap of many years, like the seventeen-year cicadas? One such interval would reduce humanity not to a pre-industrial state, but to a condition compared with which even the least developed societies we know of would seem like high civilization.

And conversely, suppose a number of infants from the least developed societies could, unknown to the mothers — for even this would be necessary to make the experiment fair — be substituted for an equal number of children of civilization. Can we imagine that, growing up, they would show any difference? I think no one who has spent much time among different peoples and classes will think so. The great lesson learned this way is that "human nature is human nature the world over." And this lesson can be learned in the library too. I'm not speaking so much of travelers' accounts, because the descriptions of less developed peoples written by travelers from advanced civilizations are often just the kind of accounts those peoples would write about us if they made brief visits and then wrote books. I mean those records of the life and thoughts of other times and other peoples which, translated into our language of today, are like glimpses of our own lives and gleams of our own thoughts. The feeling they inspire is of the essential similarity of all people. "This," says Emanuel Deutsch, "this is the end of all investigation into history or art. They were even as we are."

There is a people found in all parts of the world who illustrate well which traits are due to hereditary transmission and which to transmission by association. The Jews have maintained the purity of their lineage more carefully and for far longer than any of the European peoples. Yet I'm inclined to think that the only characteristic that can be attributed to this is that of appearance, and even this is far less distinctive than is commonly assumed, as anyone who looks carefully can see. Although they have constantly married among themselves, Jewish communities everywhere have been shaped by their surroundings — English, Russian, Polish, German, and Middle Eastern Jews differing from one another in many respects as much as the other peoples of those countries do. Yet they have much in common and have everywhere preserved their distinctiveness. The reason is clear. It is the Hebrew religion — and religion is certainly not transmitted by genetics but by teaching and association — that has everywhere preserved the distinctiveness of the Jewish people. This religion, which children acquire not the way they get their physical features but through instruction and exposure, is not merely exclusive in its teachings. It has, by generating suspicion and hostility, produced a powerful external pressure that, even more than its own teachings, has everywhere turned the Jews into a community within a community. In this way a distinctive social environment has been built up and maintained, giving a characteristic quality. Jewish intermarriage has been the effect, not the cause, of this. What persecution that stopped short of taking Jewish children from their parents and raising them outside this distinctive environment could not accomplish will be accomplished by the lessening intensity of religious belief, as is already evident in the United States, where the distinction between Jew and Gentile is rapidly disappearing.

And it seems to me that the influence of this social web or environment will explain what is so often taken as proof of racial differences — the difficulty that less industrialized peoples show in adopting more advanced technologies and institutions, and the way some of them decline when they encounter them. Just as one social environment persists, it makes it difficult or impossible for those raised in it to accept another.

The Chinese national character is as fixed as that of any people. Yet the Chinese in California pick up American methods of working, trading, and using machinery with a facility that proves they lack neither flexibility nor natural ability. That they don't change in other respects is due to the Chinese social environment that still surrounds them. Coming from China, they look forward to returning to China and live here in a little China of their own, just as the English in India maintained a little England. It's not merely that we naturally seek out people who share our ways, so that language, religion, and custom tend to persist wherever individuals aren't completely isolated. These very differences provoke an external pressure that forces such association.

These straightforward principles fully account for all the phenomena we see when one stage or body of culture meets another, without resorting to the theory of innate differences. For example, as comparative linguistics has shown, the Hindu is of the same ancestry as the English conqueror. And individual cases have amply demonstrated that if someone from India could be placed completely and exclusively in the English environment — which, as I've noted, could truly be done only by placing infants in English families in such a way that neither they, as they grow up, nor those around them are conscious of any distinction — one generation would be all that's needed to thoroughly establish European ways of thinking and living. But the spread of English ideas and habits in India must necessarily be very slow, because they meet there the web of ideas and habits constantly maintained by an immense population and interwoven with every act of daily life.

Walter Bagehot (in Physics and Politics) tries to explain why less industrialized peoples waste away before modern civilization, while they didn't before ancient civilization, by supposing that the progress of civilization has given us tougher physical constitutions. After noting that no classical writer laments the fate of outsider peoples, and that everywhere they endured contact with the Romans and the Romans intermarried with them, he says (pp. 47-48):

"Savages in the first year of the Christian era were pretty much what they were in the eighteen hundredth; and if they stood the contact of ancient civilized men and cannot stand ours, it follows that our race is presumably tougher than the ancient; for we have to bear, and do bear, the seeds of greater diseases than the ancients carried with them. We may use, perhaps, the unvarying savage as a meter to gauge the vigor of the constitution to whose contact he is exposed."

Bagehot doesn't try to explain how it is that eighteen hundred years ago civilization didn't give the same relative advantage over less developed peoples that it does now. But there's no use debating that point, or the complete lack of evidence that the human constitution has been improved even slightly. To anyone who has seen how the arrival of our civilization actually affects less industrialized peoples, a much more obvious — though less flattering — explanation will occur.

It's not because our constitutions are naturally tougher than those of less industrialized peoples that diseases relatively harmless to us are deadly to them. It's that we know about those diseases and have the means to treat them, while they have neither the knowledge nor the means. The same diseases with which the dregs of civilization — always floating at its advancing edge — infect vulnerable populations would prove just as devastating to people in advanced societies if they had no better idea than to let them run their course, which is exactly what happens when populations encounter them without knowledge or resources. And as a matter of fact, those diseases were just as destructive to people in advanced societies until we figured out how to treat them. And it's not just that. The impact of an advanced civilization colliding with a less developed one weakens the latter without giving its people access to the conditions that empower the former. While their habits and customs still tend to persist, and do persist as far as they can, the conditions to which those habits were adapted are forcibly destroyed. They are hunters in a land stripped of game, warriors stripped of their weapons and told to argue legal technicalities. They aren't just caught between cultures but, as Bagehot says of the European half-breeds in India, caught between moral systems, learning the vices of civilization without its virtues. They lose their accustomed means of survival, they lose self-respect, they lose their moral bearings. They deteriorate and die out. The miserable people who could be seen hanging around frontier towns or railroad stations, ready to beg, steal, or submit to even worse exploitation, were not fair representatives of Indigenous peoples before white settlers had encroached on their lands. They had lost the strength and virtues of their former way of life without gaining those of a more advanced one. In fact, civilization, as it pushed against Indigenous peoples, showed no virtues at all. To the frontier settler, as a general rule, the Indigenous person had no rights that the white person felt bound to respect. They were impoverished, misunderstood, cheated, and abused. They died out as, under similar conditions, we would die out. They disappeared before civilization as the Romanized Britons disappeared before Saxon invasion.

The true reason no classical writer laments the fate of outside peoples, and Roman civilization assimilated rather than destroyed, is, I believe, to be found not only in the fact that ancient civilization was much more similar to the less developed societies it encountered, but in the more important fact that it was not spread the way ours has been. It was carried forward not by an advancing line of colonists but by conquest that merely imposed general political authority, leaving the social and usually the political organization of the people largely intact. So the process of assimilation went on without shattering or deterioration. In a somewhat similar way, Japanese civilization now seems to be assimilating itself to European civilization.

In North America, Anglo-Saxon colonists exterminated rather than civilized the Indigenous peoples, simply because they didn't bring them into their social environment, nor was the contact of a kind that encouraged or allowed the Indigenous web of habitual thought and custom to change rapidly enough to meet the new conditions created by powerful new neighbors. That there is no innate barrier to the reception of our civilization by these peoples has been shown over and over again in individual cases. And it has likewise been shown, as far as the experiments have been permitted to go, by the Jesuits in Paraguay, the Franciscans in California, and the Protestant missionaries on some of the Pacific islands.

The assumption that the human race has physically improved within any time we have records of is utterly without evidence, and within the period Bagehot discusses, it is flatly disproved. We know from classical statues, from the loads carried and the marches made by ancient soldiers, from the records of runners and the feats of gymnasts, that in neither proportions nor strength has the human race improved in two thousand years. But the assumption of mental improvement, which is made even more confidently and widely, is even more absurd. As poets, artists, architects, philosophers, orators, statesmen, or soldiers, can modern civilization show individuals of greater mental power than the ancients? There's no point in listing names — every educated person knows them. For our models and embodiments of mental greatness, we look back to the ancients. And if we could for a moment imagine what is held by that oldest and most widespread of all beliefs — the belief that the philosopher Lessing declared the most probably true on account of its universality, though he accepted it on philosophical grounds — and suppose that Homer or Virgil, Demosthenes or Cicero, Alexander, Hannibal, or Caesar, Plato or Lucretius, Euclid or Aristotle were to reenter this life in the nineteenth century, can we suppose they would show any inferiority to the people of today? Or if we take any period since the classical age, even the darkest, or any earlier period we know anything about, won't we find people who, in the conditions and knowledge of their times, showed mental power of as high an order as anyone shows now? And among less industrialized peoples today, whenever our attention is called to them, don't we find individuals who in their circumstances display mental qualities as great as civilization can show? Did the invention of the railroad, coming when it did, prove any greater inventive power than the invention of the wheelbarrow when wheelbarrows didn't exist? We in modern civilization are raised far above those who came before us and those of less advanced societies who are our contemporaries. But it's because we stand on a pyramid, not because we are taller. What the centuries have done for us is not to increase our stature but to build up a structure on which we can plant our feet.

Let me be clear: I don't mean to say that all people possess the same capacities or are mentally identical, any more than I mean to say they're physically identical. Among all the countless millions who have lived and died on this earth, there were probably never two who were exact physical or mental counterparts. Nor do I mean to deny that there are as clearly marked differences in mind between different groups as there are differences in body. I don't deny the influence of heredity in transmitting mental traits in the same way, and possibly to the same degree, as physical traits are transmitted. But nevertheless, there seems to me to be a common standard and natural balance of mind, just as there is of body, toward which all deviations tend to return. External conditions may produce distortions, as the Flathead people produced them by compressing their infants' skulls, or as the Chinese did by binding their daughters' feet. But just as Flathead babies continue to be born with naturally shaped heads and Chinese babies with naturally shaped feet, so does nature seem to return to the normal mental type. A child no more inherits their father's knowledge than they inherit his glass eye or artificial leg. The child of the most ignorant parents may become a pioneer of science or a leader of thought.

But this is the great fact we're concerned with: that the differences between communities in different places and at different times, which we call differences of civilization, are not differences that inhere in the individuals but differences that inhere in the society. They are not, as Herbert Spencer holds, differences resulting from differences in the units. They are differences resulting from the conditions under which those units are brought together in society. In short, the explanation of the differences that distinguish communities is this: every society, small or great, necessarily weaves for itself a web of knowledge, beliefs, customs, language, tastes, institutions, and laws. Into this web, woven by each society — or rather, into these webs, for every community above the simplest is made up of smaller overlapping and interlacing sub-communities — the individual is received at birth and held until death. This is the matrix in which the mind unfolds and from which it takes its stamp. This is how customs, religions, prejudices, tastes, and languages grow up and are perpetuated. This is how skills are transmitted and knowledge is stored up, and the discoveries of one era become the common property and stepping stone of the next. Though it is this that often presents the most serious obstacles to progress, it is also what makes progress possible. It is this that enables any schoolchild in our time to learn in a few hours more about the universe than the ancient astronomer Ptolemy knew; that places the most ordinary scientist far above the level reached by the towering mind of Aristotle. This is to the human race what memory is to the individual. Our wonderful arts, our far-reaching science, our marvelous inventions — they have all come through this.

Human progress goes on as the advances made by one generation are in this way secured as the common property of the next, and made the starting point for new advances.

The Law of Human Progress

What, then, is the law of human progress — the law under which civilization advances?

It must explain clearly and specifically — not through vague generalities or superficial analogies — why, though humanity presumably started with the same capacities and at the same time, such wide differences in social development now exist. It must account for the arrested civilizations and for the decayed and destroyed civilizations. It must account for the general facts about the rise of civilization, and for the petrifying or weakening force that the progress of civilization has always generated. It must account for regression as well as progression — for the differences in general character between Asian and European civilizations, for the differences between classical and modern civilizations, for the different rates at which progress occurs, and for those bursts, surges, and halts of progress that are so noticeable as smaller-scale phenomena. And it must show us the essential conditions of progress, and which social arrangements advance it and which hold it back.

It's not hard to discover such a law. We only have to look and we can see it. I don't claim to state it with scientific precision, but merely to point it out.

The incentives to progress are the desires built into human nature — the desire to satisfy the wants of our animal nature, the wants of our intellectual nature, and the wants of our social nature; the desire to be, to know, and to do — desires that can never be fully satisfied short of infinity, because they grow by what they feed on.

The mind is the instrument by which humanity advances, and by which each advance is secured and made the foundation for new advances. Though we may not by taking thought add an inch to our height, we may by taking thought extend our knowledge of the universe and our power over it to what, as far as we can see, is an infinite degree. The narrow span of a single human life allows each individual to go only a short distance. But though each generation may accomplish only a little, generations building on the gains of their predecessors may gradually elevate the condition of humanity, as coral polyps, building one generation upon the work of the last, gradually raise themselves from the bottom of the sea.

Mental power is, therefore, the engine of progress. People tend to advance in proportion to the mental power devoted to progression — the mental power directed toward extending knowledge, improving methods, and bettering social conditions.

Now, mental power is a finite quantity — that is, there's a limit to the work a person can do with their mind, just as there's a limit to the work they can do with their body. Therefore, the mental power available for progress is only what's left over after what's required for non-progressive purposes.

These non-progressive purposes that consume mental power can be classified as maintenance and conflict. By maintenance I mean not only keeping ourselves alive, but keeping up the existing social order and holding onto advances already won. By conflict I mean not just warfare and preparation for warfare, but all expenditure of mental power in seeking to satisfy one's desires at the expense of others, and in resisting such aggression.

Think of society as a boat. Her progress through the water will depend not on the total effort of her crew, but on the effort devoted to propelling her forward. This will be reduced by any effort spent bailing, any effort spent fighting among themselves, or any effort spent pulling in different directions.

Now, since in isolation the whole of a person's powers are needed just to stay alive, mental power is set free for higher uses only by the association of people in communities, which allows the division of labor and all the efficiencies that come with the cooperation of larger numbers. Association is therefore the first essential of progress. Improvement becomes possible as people come together in peaceful association, and the wider and closer that association, the greater the possibilities of improvement. And since the wasteful expenditure of mental power in conflict becomes greater or less as the moral law that accords to each person an equality of rights is ignored or recognized, equality — or justice — is the second essential of progress.

Thus, association in equality is the law of progress. Association frees mental power for use in improvement, and equality — or justice, or freedom, for the terms all mean the same thing here: the recognition of the moral law — prevents the waste of that power in fruitless struggles.

Here is the law of progress, which will explain all differences, all advances, all halts, and all regressions. People tend to progress just as they come closer together and, through cooperation, increase the mental power available for improvement. But just as conflict is provoked, or association develops into inequality of condition and power, this tendency toward progress is weakened, checked, and finally reversed.

Given the same innate capacity, it's clear that social development will move faster or slower, will stop or reverse, depending on the resistance it meets. In a general way, these obstacles to improvement can be classified, in relation to the society itself, as external and internal — the first having greater force in the earlier stages of civilization, the latter becoming more important in the later stages.

Human beings are social by nature. They don't need to be caught and tamed to live with their fellows. The utter helplessness with which we enter the world, and the long period needed for our powers to mature, require the family bond — which, as we can observe, is wider and in its extensions stronger among less developed peoples than among more refined ones. The first societies are families, expanding into tribes that still claim mutual blood relationships, and even when they've become great nations, still claiming a common descent.

Given beings of this kind, placed on a globe as varied in surface and climate as ours, it's clear that even with equal capacity and an equal start, social development must vary greatly from place to place. The first limit or resistance to association will come from physical geography, and since these conditions vary enormously by location, corresponding differences in social progress must appear. How fast a population can grow, and how closely people can stay together as they increase, will — in the early state of knowledge when survival depends mainly on what nature provides on its own — depend heavily on climate, soil, and the shape of the land. Where people need large amounts of animal food and warm clothing, where the earth seems poor and grudging, where the teeming life of tropical forests mocks early humanity's feeble efforts to control it, where mountains, deserts, or arms of the sea separate and isolate people — association, and the power of improvement it generates, can at first go only a little way. But on the rich plains of warm climates, where human life can be sustained with less effort and from a much smaller area, people can stay closer together, and the mental power that can be devoted to improvement from the very beginning is much greater. That's why civilization naturally first arises in the great valleys and plateaus where we find its earliest monuments.

But these differences in natural conditions don't merely produce differences in social development directly. By producing those differences, they bring out in human nature itself an obstacle — or rather an active counterforce — to improvement. As families and tribes become separated from each other, the social bond between them breaks down, and differences arise in language, custom, tradition, religion — in short, in the whole social web that every community, however small or large, is constantly spinning. With these differences, prejudices grow, hostilities spring up, contact easily produces quarrels, aggression breeds aggression, and wrongs kindle revenge.62 And so between these separate groups arises the outcast spirit and the murderous instinct. Warfare becomes the chronic and seemingly natural relationship between societies, and the powers of people are consumed in attack and defense, in mutual slaughter and mutual destruction of wealth, or in warlike preparations. How long this hostility persists, the protective tariffs and standing armies of the civilized world today bear witness. How difficult it is to get past the idea that it's not theft to steal from a foreigner, the difficulty of establishing international copyright laws will show. Can we wonder at the perpetual hostilities of tribes and clans? Can we wonder that when each community was isolated from the others — when each, uninfluenced by the rest, was spinning its own separate web of social environment from which no individual can escape — war was the rule and peace the exception? "They were even as we are."

Now, warfare is the negation of association. The separation of people into diverse tribes, by increasing warfare, checks improvement. Meanwhile, in the places where large numbers of people can live close together without much separation, civilization gains the advantage of freedom from tribal war, even when the community as a whole is fighting wars beyond its borders. So where nature puts the least resistance to people living in close association, the counterforce of warfare is likely at first to be least felt. In the rich plains where civilization first begins, it may rise to great heights while scattered tribes elsewhere remain far behind. And so, when small, separated communities exist in a state of chronic warfare that prevents any advance, the first step toward their civilization is often the arrival of some conquering tribe or nation that unites these smaller communities into a larger one, within which internal peace is maintained. Where this power of peaceful association is broken up, whether by external assault or internal conflict, the advance stops and regression begins.

But conquest isn't the only thing that has promoted association and, by freeing mental power from the demands of warfare, promoted civilization. If the varied climates, soils, and shapes of the earth's surface initially separate humanity, they also encourage trade. And commerce, which is itself a form of association or cooperation, promotes civilization not only directly but by building up interests opposed to warfare and dispelling the ignorance that is the fertile mother of prejudice and hostility.

The same is true of religion. Though the forms it has taken and the hostilities it has provoked have often divided people and produced warfare, at other times it has been a powerful means of promoting association. A common worship has often, as among the ancient Greeks, softened the brutality of war and provided a basis for union. And it is from the triumph of Christianity over the peoples of Europe after Rome's fall that modern civilization springs. Had the Christian Church not existed when the Roman Empire broke apart, Europe, without any bond of association, might have sunk to a condition not much above that of the Indigenous peoples of North America, or might have received civilization with an Asian character from the conquering forces that had been welded into a mighty power by a religion that sprang up in the deserts of Arabia, united tribes separated from time immemorial, and, sweeping outward, brought a great part of the human race into the association of a common faith.

Looking over what we know of the history of the world, we see civilization everywhere springing up where people are brought into association, and everywhere disappearing as that association is broken up. The Roman civilization, spread over Europe by conquests that ensured internal peace, was overwhelmed by the invasions of northern peoples that shattered society again into disconnected fragments. And the progress that now goes on in our modern civilization began as the feudal system started to bring people together in larger communities, and the spiritual authority of Rome began to bind those communities into a common relationship, as her legions had done before. As feudal bonds grew into national governments, and Christianity worked the improvement of manners, brought forth the knowledge it had preserved during the dark ages, wove threads of peaceful union through its all-pervading organization, and taught cooperation through its religious orders, greater progress became possible — and as people have been brought into closer and closer association and cooperation, it has gone on with greater and greater force.

But we will never understand the course of civilization, or the varied phenomena its history presents, without considering what I'll call the internal resistances, or counterforces, that arise in the heart of an advancing society. Only these can explain how a civilization once fairly launched should either stall on its own or be destroyed by outside forces.

The mental power that is the engine of social progress is set free by association — which is, to use what may be the more precise term, an integration. In this process, society becomes more complex and its individuals more dependent on one another. Occupations and roles become specialized. Instead of wandering, populations settle in fixed places. Instead of each person trying to supply all of their own needs, various trades and industries are separated — one person develops skill in one thing, another in something else. The same happens with knowledge: the body of knowledge constantly tends to become vaster than any one person can grasp, and splits into different parts that different individuals pursue and master. Similarly, the performance of religious ceremonies tends to pass into the hands of a class of people specially devoted to that purpose. And the preservation of order, the administration of justice, the assignment of public duties and distribution of rewards, the conduct of war, and so on, tend to become the special functions of an organized government. In short, to use the language in which Herbert Spencer defined evolution: the development of society is, in relation to its individual members, the passing from an indefinite, incoherent sameness to a definite, coherent complexity. At the lowest stage of social development, society resembles one of those simplest animal organisms that have no organs or limbs, from which a part can be cut away and still live. At the highest stage, society resembles those higher organisms in which functions and powers are specialized and each part is vitally dependent on the others.

Now, this process of integration — this specialization of functions and powers as society grows — is, by virtue of what is probably one of the deepest laws of human nature, accompanied by a constant tendency toward inequality. I don't mean that inequality is the inevitable result of social growth. I mean that it's the constant tendency of social growth if it's not accompanied by adjustments in social arrangements that secure equality under the new conditions that growth creates. I mean, in a manner of speaking, that the garment of laws, customs, and political institutions that every society weaves for itself is constantly tending to become too tight as the society develops. I mean, in another metaphor, that as humanity advances, it threads a labyrinth in which, if it keeps straight ahead, it will infallibly lose its way — and only reason and justice can keep it continuously on an ascending path.

For while the integration that accompanies growth tends by itself to set free mental power for improvement, there is, both with increasing numbers and increasing complexity of social organization, a countertendency toward the creation of inequality. This inequality wastes mental power, and as it increases, it brings improvement to a halt.

To trace to its highest expression the law by which progress generates the force that stops progress would be, it seems to me, to go far toward solving a problem deeper than the origin of the physical universe — the problem of the origin of evil. Let me content myself with pointing out the ways in which, as society develops, tendencies arise that check development.

There are two qualities of human nature worth calling to mind first, however. One is the power of habit — the tendency to keep doing things the same way. The other is the possibility of mental and moral deterioration. The effect of the first on social development is to continue habits, customs, laws, and methods long after they've lost their original usefulness. The effect of the second is to allow the growth of institutions and ways of thinking from which healthy human instincts naturally recoil.

Now, the growth and development of society don't merely tend to make each person more and more dependent on everyone else, and to shrink the influence of individuals over even their own conditions compared to the influence of society as a whole. The effect of association, or integration, is also to give rise to a collective power that is distinct from the sum of individual powers. Analogies — or perhaps more accurately, illustrations of the same law — can be found everywhere. As animal organisms increase in complexity, there arises above the life and power of the parts a life and power of the integrated whole; above the capability of involuntary movements, the capability of voluntary ones. The actions and impulses of large groups, as has often been observed, are different from those that would arise in individuals under the same circumstances. The fighting quality of a regiment may be very different from that of the individual soldiers. But we don't need illustrations. In our inquiry into the nature and origin of rent, we traced the very thing I'm talking about. Where population is sparse, land has no value. As people come together, land value appears and rises — a clearly distinguishable thing from values produced by individual effort; a value that springs from association, increases as association grows, and disappears when association breaks up. And the same is true of power in forms other than wealth.

Now, as society grows, the tendency to continue existing social arrangements tends to lodge this collective power, as it arises, in the hands of a portion of the community. And this unequal distribution of the wealth and power gained as society advances tends to produce ever greater inequality, since aggression grows by what it feeds on and the sense of justice is dulled by the habitual toleration of injustice.

In this way, the patriarchal organization of society can easily grow into hereditary monarchy, in which the king is treated as a god on earth and the masses of the people are mere slaves to his whims. It's natural that the father should be the head of the family, and that at his death the eldest child, as the oldest and most experienced member of the little community, should succeed to the leadership. But to continue this arrangement as the family expands is to lodge power in a particular family line, and the power thus lodged necessarily grows as the common resources become larger and the power of the community increases. The head of the family becomes the hereditary king, who comes to regard himself — and to be regarded by others — as a being of superior rights. With the growth of collective power relative to individual power, the ruler's ability to reward and punish increases, and so do the incentives to flatter and fear. Until finally, if the process is not disrupted, a nation grovels at the foot of a throne, and a hundred thousand people toil for fifty years to build a tomb for one of their own mortal kind.

So too the war-chief of a small band of early warriors is merely one of them — the one they follow as the bravest and most cunning. But when large forces come to act together, personal choice becomes harder, a more unquestioning obedience becomes necessary and enforceable, and from the very necessities of warfare conducted on a large scale, absolute power arises.

And so with the specialization of function. There is a clear gain in productive power when social growth has advanced far enough that instead of every worker being called from their job for military duty, a regular military force can be maintained. But this inevitably tends to concentrate power in the hands of the military class or their commanders. The preservation of internal order, the administration of justice, the construction and care of public works, and especially the observance of religious ceremonies — all tend in a similar way to pass into the hands of special classes, whose natural inclination is to magnify their own importance and extend their power.

But the great cause of inequality is the natural monopoly given by the ownership of land. The earliest human instinct seems always to recognize land as common property, but the crude methods by which this is first put into practice — such as annual redistributions or farming in common — are consistent with only a low stage of development. The idea of property, which naturally arises with things that people produce, is easily transferred to land. And an institution that, when population is sparse, merely secures to the improver and user the fair reward of their labor eventually, as population grows dense and economic rent arises, operates to strip producers of their wages. Not only that, but the collection of rent for public purposes — the only way that, with anything like an advanced society, land can readily be kept as common property — becomes, when political and religious power passes into the hands of a class, the ownership of the land by that class. The rest of the community become merely tenants. And wars and conquests, which tend to concentrate political power and establish slavery, naturally result, where social growth has given land a value, in the seizure of the soil. A ruling class that concentrates power in its hands will also soon concentrate land ownership. They get the large shares of conquered territory, which the former inhabitants farm as tenants or serfs. And the public lands or common lands — which in the natural course of social growth are left for a while in every country, and which the traditional system of village farming preserves as pasture and woodland — are readily acquired, as modern examples show. And once inequality is established, land ownership tends to concentrate further as development continues.

I'm merely trying to lay out the general fact that as social development goes on, inequality tends to establish itself, not to trace the particular sequence, which must necessarily vary with different conditions. But this central fact makes all the phenomena of stagnation and regression understandable. The unequal distribution of the power and wealth gained by the integration of people in society tends to check, and finally to counterbalance, the force by which improvements are made and society advances. On one side, the masses are compelled to spend their mental powers merely maintaining existence. On the other, mental power is spent on maintaining and intensifying the system of inequality — on ostentation, luxury, and warfare. A community divided into a class that rules and a class that is ruled, into the very rich and the very poor, may "build like giants and finish like jewelers." But what they build will be monuments to ruthless pride and empty vanity, or to a religion turned from its purpose of elevating people into a tool for keeping them down. Invention may for a while continue to some degree, but it will be the invention of refinements in luxury, not inventions that relieve toil and increase productive power. In the inner chambers of temples or in the private offices of court physicians, knowledge may still be pursued. But it will be hidden as a secret thing, and if it dares come out to elevate common thought or brighten common life, it will be trampled down as a dangerous innovation. For just as inequality tends to reduce the mental power devoted to improvement, it also makes people hostile to improvement. How strong the resistance to new methods is among the classes kept in ignorance by being forced to work for mere survival is too well known to need illustration. And the conservatism of the classes who benefit from the existing social order is equally obvious. This tendency to resist innovation, even when it's genuine improvement, can be observed in every specialized organization — in religion, in law, in medicine, in science, in professional guilds — and it becomes more intense the more closed the organization is. A closed guild has always an instinctive dislike of innovation and innovators, which is just the expression of an instinctive fear that change may tear down the barriers that separate it from the common crowd and rob it of importance and power. It is always inclined to guard its special knowledge or skills jealously.

It is in this way that petrifaction follows progress. The advance of inequality necessarily brings improvement to a halt, and as it persists or provokes futile reactions, it draws even upon the mental power needed for mere maintenance, and regression begins.

These principles make the history of civilization intelligible.

In the places where climate, soil, and physical geography put the least resistance to people staying together as they grew in numbers — where the first civilizations consequently arose — the internal resistances to progress would naturally develop in a more regular and thorough way than in places where smaller communities that had developed distinct identities in their separation were later brought together into a closer association. This, it seems to me, is what accounts for the general characteristics of the earlier civilizations compared with the later civilizations of Europe. Homogeneous communities, developing from the start without the friction of conflict between different customs, laws, religions, and so on, would show much greater uniformity. The concentrating and conservative forces would all, so to speak, pull together. Rival chiefs wouldn't counterbalance each other, nor would competing beliefs hold the growth of priestly influence in check. Political and religious power, wealth and knowledge, would all tend to concentrate in the same centers. The same causes that produced the hereditary king and hereditary priest would produce the hereditary artisan and hereditary laborer, separating society into rigid castes. The power that association sets free for progress would be wasted, and barriers to further progress would gradually be raised. The surplus energies of the masses would be devoted to building temples, palaces, and pyramids — to feeding the pride and indulging the luxury of their rulers. And should any impulse toward improvement arise among the leisured classes, it would be instantly checked by the dread of innovation. A society developing this way must eventually freeze in a conservatism that permits no further progress.

How long such a state of complete petrifaction, once reached, will last seems to depend on external causes, for the iron bonds of the social environment that grows up suppress forces of change along with forces of improvement. Such a community is easily conquered, because the masses are trained to passive acceptance of a life of hopeless labor. If the conquerors merely take the place of the ruling class, as the Hyksos did in Egypt and the Tartars in China, everything goes on as before. If they ravage and destroy, the glory of palace and temple remains only in ruins, population thins out, and knowledge and art are lost.

European civilization differs in character from civilizations of the Egyptian type because it springs not from the association of a homogeneous people developing from the beginning, or at least for a long time, under the same conditions, but from the coming together of peoples who in their separation had developed distinctive social characteristics, and whose smaller organizations longer prevented the concentration of power and wealth in a single center. The physical geography of the Greek peninsula is such as to split the population at first into a number of small communities. As those petty republics and nominal kingdoms stopped wasting their energies in warfare, and the peaceful cooperation of commerce expanded, the light of civilization blazed up. But the principle of association was never strong enough to save Greece from wars between its own communities. When those wars were ended by conquest, the tendency toward inequality — which Greek sages and statesmen had fought with various devices — had its way, and Greek valor, art, and literature became things of the past. And so in the rise and extension, the decline and fall of Roman civilization, we can see the working of these two principles — association and equality — from whose combination progress springs.

Springing from the association of the independent farmers and free citizens of Italy, and gaining fresh strength from conquests that brought hostile nations into common relationships, Roman power hushed the world in peace. But the tendency toward inequality, checking real progress from the first, increased as Roman civilization expanded. Roman civilization did not freeze as the homogeneous civilizations did, where the strong bonds of custom and superstition that held the people in subjection probably also protected them, or at least kept peace between rulers and ruled. It rotted, declined, and fell. Long before Goth or Vandal had broken through the cordon of the legions, even while its frontiers were still advancing, Rome was dead at the heart. Great estates had ruined Italy. Inequality had dried up the strength and destroyed the vigor of the Roman world. Government became despotism so extreme that even assassination couldn't temper it. Patriotism became servility. The most revolting vices paraded themselves in public. Literature sank to trivialities. Learning was forgotten. Fertile districts became wastelands without any foreign invasion — everywhere inequality produced decay: political, mental, moral, and material. The barbarism that overwhelmed Rome came not from without but from within. It was the necessary product of a system that had replaced the independent farmers of Italy with slaves and tenant laborers, and carved the provinces into estates for senatorial families.

Modern civilization owes its superiority to the growth of equality alongside the growth of association. Two great causes contributed to this: the shattering of concentrated power into countless small centers by the influx of the northern peoples, and the influence of Christianity. Without the first, there would have been the stagnation and slow decay of the Eastern Empire, where church and state were tightly joined and the loss of external power brought no relief from internal tyranny. And without the second, there would have been nothing but scattered groups with no principle of association or improvement. The petty chiefs and local lords who everywhere seized local power held each other in check. Italian cities recovered their ancient liberty, free towns were founded, village communities took root, and serfs acquired rights in the soil they tilled. The leaven of Germanic ideas of equality worked through the disorganized and fragmented fabric of society. And although society was split into innumerable separate pieces, the idea of closer association was always present — it existed in the memory of a universal empire; it existed in the claims of a universal church.

Though Christianity became distorted and diluted in percolating through a decaying civilization — though pagan gods were absorbed into its pantheon, pagan forms into its rituals, and pagan ideas into its creed — yet its essential idea of the equality of all people was never wholly destroyed. And two developments occurred of the utmost importance to the young civilization: the establishment of the papacy and the celibacy of the clergy. The first prevented spiritual power from concentrating in the same family lines as political power. The second prevented the establishment of a priestly caste during a time when all power tended to take hereditary form.

In the Church's efforts to abolish slavery; in her Truce of God; in her monastic orders; in her councils that united nations and her edicts that ran without regard to political boundaries; in the lowborn hands in which she placed a symbol before which the proudest knelt; in her bishops who by consecration became the peers of the greatest nobles; in her "Servant of Servants" — for so his official title ran — who, by virtue of the ring of a simple fisherman, claimed the right to arbitrate between nations, and whose stirrup was held by kings: the Church, in spite of everything, was a promoter of association, a witness for the natural equality of all people. And by the Church herself was nurtured a spirit that — when her early work of association and emancipation was nearly done, when the ties she had knit had become strong and the learning she had preserved had been given to the world — broke the chains with which she would have fettered the human mind, and across a great part of Europe tore her organization apart.

The rise and growth of European civilization is too vast and complex a subject to be thrown into proper perspective in a few paragraphs. But in all its details, as in its main features, it illustrates the truth that progress goes on just as society tends toward closer association and greater equality. Civilization is cooperation. Union and liberty are its factors. The great extension of association — not just in the growth of larger and denser communities but in the increase of commerce and the countless exchanges that knit each community together and link them with others however widely separated; the growth of international and domestic law; the advances in security of property and person, in individual liberty, and toward democratic government — advances, in short, toward the recognition of the equal rights to life, liberty, and the pursuit of happiness — it is these that make our modern civilization so much greater, so much higher, than any that has gone before. It is these that have set free the mental power that has rolled back the veil of ignorance hiding all but a small portion of the globe from human knowledge; that has measured the orbits of the planets and revealed pulsing life in a drop of water; that has opened the antechamber of nature's mysteries and read the secrets of a long-buried past; that has harnessed in our service physical forces beside which human effort is puny; and increased productive power through a thousand great inventions.

In the spirit of fatalism I've described as pervading current thinking, it's fashionable to speak even of war and slavery as means of human progress. But war, which is the opposite of association, can aid progress only when it prevents further war or breaks down antisocial barriers that are themselves a form of passive war.

As for slavery, I can't see how it could ever have helped establish freedom — and freedom, the synonym of equality, is, from the very earliest state in which we can imagine human beings, the stimulus and condition of progress. Auguste Comte's idea that the institution of slavery destroyed cannibalism is as fanciful as the essayist Charles Lamb's humorous theory of how humanity first acquired a taste for roast pork. It assumes that a tendency never found in human beings except under the most extreme and unnatural conditions — the direst starvation or the most brutalizing superstitions63 — is an original impulse, and that human beings, even at the lowest level the highest of all animals, have appetites that the nobler animals don't show. And the same goes for the idea that slavery launched civilization by giving slave owners leisure for improvement.

Slavery never has and never could have aided improvement. Whether the community consists of a single enslaver and a single enslaved person, or of thousands of enslavers and millions of enslaved, slavery necessarily involves a waste of human power. Not only is slave labor less productive than free labor, but the power of the enslavers is also wasted in holding and watching the enslaved, and diverted from directions in which real improvement lies. From first to last, slavery — like every other denial of the natural equality of human beings — has hampered and prevented progress. Just in proportion as slavery plays an important part in the social organization does improvement cease. That slavery was so universal in the classical world is undoubtedly the reason why the mental activity that so polished literature and refined art never hit on any of the great discoveries and inventions that distinguish modern civilization. No slave-holding people was ever an inventive people. In a slave-holding community the upper classes may become luxurious and polished, but never inventive. Whatever degrades workers and robs them of the fruits of their toil stifles the spirit of invention and forbids the use of inventions and discoveries even when they are made. To freedom alone is given the spell of power that summons the forces in whose keeping are the treasures of the earth and the invisible energies of nature.

The law of human progress — what is it but the moral law? Just as social arrangements promote justice, just as they acknowledge the equality of right between person and person, just as they ensure to each the perfect liberty that is bounded only by the equal liberty of every other, must civilization advance. Just as they fail in this, must advancing civilization come to a halt and fall back. Economics and social science cannot teach any lessons that are not embraced in the simple truths that were taught to poor fishermen and Jewish peasants by One who eighteen hundred years ago was crucified — the simple truths that, beneath the distortions of selfishness and the corruptions of superstition, seem to underlie every religion that has ever tried to express the spiritual yearnings of humanity.

How Modern Civilization May Decline

The conclusion we've reached here fits perfectly with everything we've found before.

This examination of the law of human progress doesn't just bring the economic laws we've worked out within the scope of a higher law — perhaps the very highest law our minds can grasp. It also proves that making land common property in the way I've proposed would give civilization an enormous boost, while refusing to do so will inevitably cause us to slide backward. A civilization like ours must either advance or retreat; it cannot stand still. It's not like those rigid, uniform civilizations — such as Egypt's Nile Valley civilization — that molded people for their assigned places and set them there like bricks in a pyramid. Ours much more resembles that civilization whose rise and fall is recorded in history, and from which ours sprang.

Right now there's a tendency to scoff at any suggestion that we're not progressing in every way. The spirit of our times recalls the edict that a flattering minister proposed to the Chinese Emperor who burned the ancient books: "that all who dare to speak together about the old classics be put to death; that those who mention the past so as to blame the present be put to death along with their relatives."

Yet it's obvious that there have been times of decline, just as there have been times of advance. And it's equally obvious that these periods of decline couldn't have been widely recognized when they first began.

It would have taken a bold person to predict decline when Augustus was transforming Rome from a city of brick to a city of marble — when wealth was growing and magnificence increasing, when victorious legions were pushing the frontier outward, when manners were becoming more refined, language more polished, and literature reaching new heights of splendor. Anyone who said then that Rome was entering its decline would have been called reckless. Yet that's exactly what was happening.

And anyone who looks can see that although our civilization appears to be advancing faster than ever, the same force that turned Roman progress into decline is at work right now.

The Pattern That Destroys Civilizations

What has destroyed every previous civilization has been the tendency toward the unequal distribution of wealth and power. This same tendency, operating with increasing force, is visible in our civilization today. It shows up in every growing community, and more intensely the faster the community is growing. Wages and interest constantly tend to fall, rent to rise. The rich become vastly richer, the poor become more helpless and hopeless, and the middle class gets swept away.

I've traced this tendency to its cause. I've shown by what simple means this cause can be removed. Now I want to point out how, if this is not done, progress must turn to decay and modern civilization must decline into barbarism, just as every previous civilization has done. It's worth showing how this could happen, because many people, unable to see how progress could reverse into decline, think such a thing is impossible. The historian Edward Gibbon, for example, thought modern civilization could never be destroyed because there were no barbarians left to overrun it. And it's a common belief that the invention of printing, by multiplying books, has made it impossible for knowledge to ever be lost again.

Equality as the Engine of Progress

The conditions of social progress, as we've traced the law, are association and equality. The general tendency of modern development, since we can first glimpse civilization's light in the darkness that followed the fall of the Western Roman Empire, has been toward political and legal equality — toward the abolition of slavery; the elimination of inherited status; the sweeping away of hereditary privileges; the replacement of arbitrary rule with representative government; the right of personal judgment in matters of religion; the more equal protection of person and property for high and low, weak and strong; and greater freedom of movement, occupation, speech, and the press. The history of modern civilization is the history of advances in this direction — of struggles and triumphs for personal, political, and religious freedom. And the general law is confirmed by the fact that wherever this tendency has asserted itself, civilization has advanced; wherever it has been crushed or pushed back, civilization has stalled.

This tendency has reached its fullest expression in the American Republic, where political and legal rights are fully equal. Thanks to the rotation of officeholders, even the growth of a permanent bureaucracy is prevented. Every religious belief — or non-belief — stands on the same footing. Every child may hope to become President, every citizen has an equal voice in public affairs, and every official depends directly or indirectly on a popular vote for the short term of their office. This tendency still has some victories to win in England, in extending the vote and sweeping away the remnants of monarchy, aristocracy, and established church. In countries like Germany and Russia, where divine right is still much more than a legal fiction, it has a long way to go. But it's the prevailing direction, and how soon Europe will be fully republican is only a matter of time — or, really, of chance. The United States is therefore the most advanced of the great nations in a direction all are heading. And in the United States, we can see exactly how much this tendency toward personal and political freedom can, by itself, accomplish.

Why Political Equality Alone Isn't Enough

Now, the first effect of political equality was to distribute wealth and power more equally. When population is relatively sparse, inequality in wealth comes mainly from inequality in personal rights, and it's only as material progress advances that the inequality built into private land ownership begins to show itself strongly. But it's now clear that absolute political equality does not, by itself, prevent the inequality that comes from private land ownership. And it's further evident that political equality, existing alongside a growing concentration of wealth, must ultimately produce either the despotism of organized tyranny or the worse despotism of anarchy.

To turn a republic into the most brutal despotism, you don't need to formally change its constitution or abandon elections. It was centuries after Caesar before the absolute ruler of the Roman world stopped pretending to rule by the authority of a Senate that trembled before him.

When Democracy Turns on Itself

But forms are nothing when substance is gone. And the forms of popular government are those from which the substance of freedom can most easily vanish. Extremes meet: a government of universal suffrage and theoretical equality may, under the right conditions, most easily become a despotism. Because in a democracy, despotism advances in the name and with the power of the people. Once that single source of power is captured, everything is captured. There's no disenfranchised class to appeal to, no privileged orders who might defend everyone's rights while defending their own. No bulwark remains to hold back the flood, no high ground to rise above it. It was armored barons led by an archbishop who forced the Plantagenet kings to accept the Magna Carta. It was the middle classes who broke the pride of the Stuarts. But a mere aristocracy of wealth will never fight as long as it can hope to bribe a tyrant.

And as inequality grows, universal suffrage actually makes it easier to seize power. The greater the gap, the larger the share of political power falls to people who feel no direct stake in good government — people who, crushed by want and degraded by poverty, are ready to sell their votes to the highest bidder or follow the loudest demagogue. Or people who, embittered by hardship, may even watch corrupt and tyrannical government with the satisfaction we can imagine the working poor and enslaved people of Rome felt watching a Caligula or Nero rage among the wealthy patricians. Take a community with republican institutions where one class is so rich that no amount of bad governance can touch their luxuries, and another so poor that a few dollars on election day means more than any abstract principle; where the few roll in wealth and the many seethe with discontent at conditions they don't know how to fix — and power will inevitably fall into the hands of political bosses who buy and sell it like the Praetorian Guard once sold the Roman throne, or into the hands of demagogues who seize it for a time, only to be replaced by worse demagogues.

The Danger of Democracy Without Justice

Where wealth is fairly distributed — where there is widespread patriotism, integrity, and education — the more democratic the government, the better it will be. But where wealth is grossly unequal, the more democratic the government, the worse it will be. A rotten democracy may not in itself be worse than a rotten autocracy, but its effects on national character are far more damaging. To give the vote to people who are homeless, destitute, people for whom the chance to work at all is a gift, people who must beg, steal, or starve — is to invite destruction. To put political power in the hands of people embittered and degraded by poverty is to tie burning torches to foxes and set them loose in the grain fields; it is to blind Samson and wrap his arms around the pillars of national life.

Even the randomness of hereditary succession or selection by lot — the method of some ancient republics — may sometimes place the wise and just in power. But in a corrupt democracy, the tendency is always to elevate the worst. Honesty and patriotism are handicaps; ruthlessness brings success. The best sink to the bottom, the worst float to the top, and the corrupt will only be replaced by the more corrupt. And as national character gradually takes on the qualities that win power and therefore respect, that slow corruption of values goes on which, in the long panorama of history, we can see over and over again transforming free peoples into servile ones.

When Parliament was just a closed club of aristocrats, as in eighteenth-century England, a corrupt oligarchy clearly separated from the masses could exist without much damage to national character, because people associated power with things other than corruption. But where there are no inherited distinctions and people regularly see others rise from the lowest positions to wealth and power through dishonest means, tolerance of those qualities eventually becomes admiration. A corrupt democratic government must eventually corrupt the people themselves. And when a people become corrupt, there is no coming back. The life is gone; only the shell remains. All that's left is for the plows of fate to bury it out of sight.

Decline Has Already Begun

Now, this transformation of popular government into despotism of the most degrading kind — the inevitable result of the unequal distribution of wealth — is not something in the far future. It has already begun in the United States, and it's happening rapidly before our eyes. That our legislatures are steadily declining in quality; that people of the highest ability and character are forced to avoid politics while the skills of the political operator count for more than a reputation as a statesperson; that voting grows more reckless and the power of money increases; that it's harder to rouse the public to demand reforms and harder still to carry them out; that political differences are ceasing to be differences of principle and abstract ideals are losing their power; that parties are falling under the control of what in national government would be oligarchies and dictatorships — these are all signs of political decline.

The symbol of modern growth is the great city. Here you find the greatest wealth and the deepest poverty. And it is here that popular government has most clearly broken down. In every great American city today there is a ruling class as clearly defined as in the most aristocratic countries in the world. Its members carry voting districts in their pockets, control the slates at nominating conventions, and hand out offices as they bargain among themselves. Though they neither toil nor spin, they wear the finest clothes and spend money lavishly. They are people of power, whose favor the ambitious must court and whose anger they must avoid. Who are these people? The wise, the good, the learned — people who have earned the trust of their fellow citizens through the integrity of their lives, the brilliance of their talents, their faithfulness in public trust, their deep study of governance? No. They are gamblers, saloon keepers, thugs, or worse, who have made a business of controlling votes and buying and selling offices and official favors. They stand to the government of these cities as the Praetorian Guard stood to declining Rome. Anyone who wants power must go — or send messengers — to their camps, bearing gifts and making promises. It is through these people that rich corporations and powerful financial interests can pack the Senate and the courts with their creatures. It is these people who choose school directors, supervisors, assessors, state legislators, members of Congress. There are many election districts in the United States where a George Washington, a Benjamin Franklin, or a Thomas Jefferson couldn't win a seat in a state legislature any more than a common-born peasant could have become a Marshal of France under the old regime. Their very character would be a fatal disqualification.

In theory, we are passionate democrats. The proposal to sacrifice pigs in the temple would hardly have raised greater horror in ancient Jerusalem than the idea of conferring a title of rank upon our most prominent citizen would raise among us. But isn't there growing up among us a class that has all the power of an aristocracy without any of its virtues? We have ordinary citizens who control thousands of miles of railroad, millions of acres of land, the livelihoods of vast numbers of people; who name state governors as they name their clerks, choose senators as they choose attorneys, and whose will is as absolute with legislatures as a French king's sitting in his court. The undercurrents of the times seem to be sweeping us back toward the old conditions we thought we had escaped. The rise of artisan and merchant classes gradually broke down feudalism after it had become so complete that people imagined heaven itself was organized on feudal lines, ranking the first and second persons of the Trinity as overlord and chief vassal. But now the growth of manufacturing and trade, operating in a society where land is private property, threatens to force every worker to seek a master — just as the chaos following the final collapse of the Roman Empire forced every free person to seek a lord. Nothing seems exempt from this tendency. Industry everywhere takes a form in which one is master and many serve. And when one is master and the others serve, the master will control the others even in matters like voting. Just as the English landlord votes their tenants, so does the New England mill owner vote their workers.

The Signs Are All Around Us

There's no mistaking it — the very foundations of society are being undermined before our eyes, while we ask, "How is it possible that a civilization like this, with its railroads and daily newspapers and electric telegraphs, could ever be destroyed?" While our literature breathes nothing but the belief that we have been, are, and always will be leaving barbarism further and further behind, there are signs that we're actually turning back toward it. Let me illustrate.

One hallmark of barbarism is a low regard for the rights of persons and property. That the laws of our Anglo-Saxon ancestors imposed a fine for murder proportioned to the victim's rank, while our law recognizes no distinction of rank and protects the lowest from the highest with the uniform penalty of death — this is seen as evidence of their barbarism and our civilization. And that piracy, robbery, slave trading, and extortion were once considered legitimate occupations is taken as proof of the primitive stage from which we've progressed so far.

But the fact is that, despite our laws, anyone with enough money who wants to kill another person can walk into any of our great population centers, do the deed, and then turn themselves in to the authorities, with the odds roughly a hundred to one that they'll suffer no greater penalty than a temporary imprisonment and the loss of a sum proportioned partly to their own wealth and partly to the wealth and standing of the person they killed. Their money will be paid not to the murdered person's family, who have lost their provider; not to the state, which has lost a citizen; but to lawyers who know how to get delays, find witnesses, and get juries to disagree.

And if someone steals enough, their punishment will amount in practice to nothing more than the loss of a fraction of what they stole. And if they steal enough to walk away with a fortune, they'll be greeted by their acquaintances the way a Viking might have been greeted after a successful raid. Even if they robbed people who trusted them, even if they robbed the widow and the orphan — they only have to get enough, and they can safely flaunt their wealth in the light of day.

This tendency is growing stronger. It shows itself most where the inequalities of wealth are greatest, and it intensifies as those inequalities increase. If this isn't a return to barbarism, what is it? The failures of justice I've described are only examples of the increasing weakness of our legal system in every area. It's becoming common to hear people say it would be better to throw out the whole system and start over, because then the people would form vigilance committees and take justice into their own hands. Does that sound like progress or decline?

The Erosion of Faith in Democracy

All of this is common knowledge. Though we may not say it openly, the general faith in republican institutions is, where they've reached their fullest development, narrowing and weakening. It's no longer the confident belief in the republic as the source of national blessings that it once was. Thoughtful people are beginning to see its dangers without seeing how to escape them; beginning to accept the skeptical view of Macaulay and distrust the optimism of Jefferson.64 And the public at large is getting used to the growing corruption. The most ominous political sign in the United States today is the growth of a sentiment that either doubts that an honest person exists in public office or considers them a fool for not seizing their opportunities. In other words, the people themselves are becoming corrupted. This is the course republican government must inevitably follow under conditions that cause the unequal distribution of wealth.

Where that course leads is clear to anyone who will think. As corruption becomes chronic; as public spirit disappears; as traditions of honor, virtue, and patriotism weaken; as law falls into contempt and reform becomes hopeless — then in the festering mass, volcanic forces will build, forces that shatter and tear when some accident gives them release. Strong, unscrupulous leaders, rising on the tide of blind popular desires or fierce popular passions, will push aside forms that have lost their vitality. The sword will again be mightier than the pen, and in bursts of destruction, brute force and wild frenzy will alternate with the exhaustion of a declining civilization.

I speak of the United States only because it is the most advanced of the great nations. What shall we say of Europe, where dams of ancient law and custom hold back the swelling waters and standing armies weigh down the safety valves, even as year by year the fires grow hotter underneath? Europe moves toward republicanism under conditions that won't allow true republicanism — conditions that substitute for the calm and majestic figure of Liberty the arsonist and the guillotine!

Where will the new barbarians come from? Walk through the slum quarters of the great cities, and you can already see their gathering hordes! How will learning perish? People will stop reading, and books will be used to kindle fires and make ammunition!

It's startling to consider how slight the traces our civilization would leave if it went through the kind of upheaval that has accompanied the decline of every previous civilization. Paper doesn't last like parchment, and our most massive buildings and monuments can't compare in solidity with the rock-cut temples and colossal structures of ancient civilizations.65 And invention has given us not just the steam engine and the printing press, but petroleum, nitroglycerin, and dynamite.

We Can't See Our Own Decline

Yet to suggest today that our civilization might be tending toward decline seems like the wildest pessimism. The specific dangers I've pointed to are obvious to thoughtful people, but among the majority of thinkers, as with the general public, the belief in steady progress is deep and strong — a fundamental conviction that admits not the shadow of a doubt.

But anyone who thinks it through will see that this must necessarily be the case when advance gradually turns into decline. In social development, as in everything else, motion tends to continue in a straight line. So where there's been a long period of advance, it's extremely difficult to recognize decline even when it's fully underway. There's an almost irresistible tendency to believe that the forward movement that has been progress, and is still going on, must still be progress. The web of beliefs, customs, laws, institutions, and habits of thought that every community is constantly weaving — and that shapes everyone within it, producing all the differences of national character — is never unwound. That is, in the decline of civilization, societies don't go back down the same paths they came up.

For instance, the decline of civilization as expressed in government wouldn't take us back from republicanism to constitutional monarchy and then to feudalism — it would take us to dictatorship and anarchy. As expressed in religion, it wouldn't take us back to the faiths of our ancestors, to Protestantism or Catholicism, but into new forms of superstition, of which perhaps Mormonism and other even cruder movements may give some vague idea. As expressed in knowledge, it wouldn't take us back toward Bacon, but toward the rigid scholasticism of imperial China.

And how the decline of civilization, following a period of advance, may be so gradual that no one notices at the time — how that decline must necessarily be mistaken for progress by the vast majority — is easy to understand. For instance, there's an enormous difference between Greek art of the classical period and that of the late Roman Empire. Yet the change was accompanied — or rather caused — by a change in taste. The artists who most quickly followed this new taste were regarded in their day as the superior artists. And so with literature: as it became more shallow, childish, and artificial, it would be in response to a shifting taste that viewed increasing weakness as increasing strength and beauty. The truly good writer wouldn't find readers; they'd be dismissed as crude, dry, or dull. The same with drama: it wouldn't decline because good plays were lacking, but because prevailing taste became more and more that of a less educated public, who naturally consider what they admire most to be the best of its kind. And so too with religion: the superstitions that a superstitious people add to it will be regarded by them as improvements. Meanwhile, as the decline continues, the return to barbarism — where it isn't itself regarded as an advance — will seem like a necessary response to the demands of the times.

Consider: flogging as a punishment for certain crimes has recently been restored to the penal code of England, and has been strongly advocated on this side of the Atlantic too. I express no opinion on whether this is or isn't a better punishment than imprisonment. I only point to it as an illustration of how increasing crime and the growing difficulty of maintaining prisons — both obvious current trends — could lead to a fuller return to the physical cruelty of more barbarous legal systems. It's easy to see how the use of torture in judicial investigations, which grew steadily as Roman civilization declined, might be demanded as a necessary improvement of criminal law as manners coarsen and crime increases.

The Critical Moment

Whether the current drift of opinion and taste already shows signs of decline is a question I don't need to answer. But many undeniable facts show that our civilization has reached a critical moment, and that unless a fresh start is made in the direction of social equality, the nineteenth century may mark its high point for future generations to look back on. These industrial depressions, which cause as much waste and suffering as famines or wars, are like the tremors and shocks that precede paralysis. Everywhere it's clear that the tendency toward inequality — the inevitable result of material progress where land is monopolized — can't go much further without sending our civilization down that path which is so easy to enter and so hard to leave.

Everywhere the intensifying struggle to survive, the increasing need to strain every nerve to avoid being thrown down and trampled in the scramble for wealth, is draining the energies that create and sustain progress. In every civilized country, poverty, crime, mental illness, and suicides are increasing. In every civilized country, the diseases are increasing that come from overstrained nerves, poor nutrition, squalid housing, unhealthy and monotonous work, premature child labor, and the burdens and hardships that poverty forces on women. In every highly civilized country, life expectancy — which gradually rose over several centuries and seems to have peaked around the first quarter of this century — now appears to be declining.66

Dying from the Bottom Up

It's not an advancing civilization that these figures show. It is a civilization whose undercurrents have already begun to flow backward. When the tide turns in a bay or river from flood to ebb, it doesn't happen all at once; in one place it still rushes in, even as in another it has already begun to retreat. When the sun passes its highest point, you can tell only by which way the short shadows fall — the heat of the day still increases. But as surely as the turning tide must soon run full ebb, as surely as the declining sun must bring darkness, just as surely — though knowledge still grows and invention marches on, though new territories are being settled and cities still expand — civilization has begun to wane when, in proportion to population, we must build more and more prisons, more and more poorhouses, more and more asylums for the mentally ill. Societies don't die from the top down. They die from the bottom up.

But there are signs far more obvious than any statistics can provide of the ebb of civilization. There is a vague but widespread feeling of disappointment; a growing bitterness among the working classes; a pervasive mood of unrest and looming revolution. If this were accompanied by a clear idea of how to find relief, it would be a hopeful sign. But it's not. Although public education has been expanding for some time, the general ability to trace effects to their causes seems not at all improved. The drift back toward protectionism, like the return to other discredited government policies, shows this.67 And even the most philosophical freethinker can't look at the vast transformation of religious belief now sweeping the civilized world without sensing that this enormous change may have the most momentous consequences, which only the future can reveal. For what's happening isn't a change in the form of religion but the destruction of the very ideas from which religion springs. Christianity isn't simply shedding its superstitions — in the popular mind, it's dying at the roots, just as the ancient pagan religions were dying when Christianity first entered the world. And nothing is rising to take its place. The fundamental beliefs in an intelligent Creator and in a future life are rapidly weakening in the general mind. Now, whether or not this is in itself an advance, the enormous role that religion has played in world history shows the significance of the change now underway. Unless human nature has suddenly changed in what the universal history of our species shows to be its deepest characteristics, the mightiest actions and reactions are being prepared. Such stages of thought have always marked periods of transition in the past. On a smaller scale and to a lesser depth, a similar state of thought preceded the French Revolution. But the closest parallel to the collapse of religious ideas now taking place is to be found in that period when ancient civilization began to pass from splendor to decline. (For I think anyone who pays attention to the drift of our literature and talks about such things with the people they meet will see that materialist ideas are doing not surface plowing but deep subsoil work.)

What change may come, no one alive can tell. But that some great change must come, thoughtful people are beginning to feel. The civilized world is trembling on the brink of a great movement. Either it must be a leap upward, opening the way to advances not yet dreamed of, or it must be a plunge downward, carrying us back toward barbarism.

The Central Truth

In the limited space to which this final part of our inquiry has necessarily been confined, I've had to leave out much I would have liked to say, and to touch briefly on subjects that deserved a thorough treatment.

Nevertheless, this much at least is clear: the truth we arrived at in the economic branch of our inquiry is equally apparent in the rise and fall of nations and the growth and decay of civilizations. And it agrees with those deep-seated recognitions of relationship and consequence that we call moral perceptions. Our conclusions have thus been given both the greatest certainty and the highest authority.

A Menace and a Promise

This truth carries both a warning and a promise. It shows that the evils arising from the unjust and unequal distribution of wealth — evils becoming more and more apparent as modern civilization advances — are not side effects of progress, but forces that must bring progress to a halt. They will not cure themselves. On the contrary, unless their cause is removed, they must grow greater and greater until they sweep us back into barbarism by the same road every previous civilization has traveled. But this truth also shows that these evils are not imposed by natural laws. They spring entirely from social arrangements that ignore natural laws. And in removing their cause, we would give progress an enormous boost.

The poverty that pinches and degrades people in the midst of abundance, and all the countless evils that flow from it, spring from a denial of justice. In allowing the monopolization of the opportunities that nature freely offers to all, we have violated the fundamental law of justice — for, as far as we can see, when we look at things on a large scale, justice appears to be the supreme law of the universe. But by sweeping away this injustice and affirming the rights of all people to natural opportunities, we would align ourselves with that law. We would remove the great cause of unnatural inequality in the distribution of wealth and power. We would abolish poverty. We would tame the ruthless passions of greed. We would dry up the springs of vice and misery. We would light the lamp of knowledge in dark places. We would give new energy to invention and fresh momentum to discovery. We would replace political weakness with political strength. And we would make both tyranny and anarchy impossible.

The reform I've proposed is consistent with everything that is politically, socially, or morally desirable. It has the qualities of a true reform, because it would make all other reforms easier. What is it, after all, but carrying out in letter and spirit the truth proclaimed in the Declaration of Independence — the "self-evident" truth that is the heart and soul of the Declaration: "That all men are created equal; that they are endowed by their Creator with certain unalienable rights; that among these are life, liberty, and the pursuit of happiness!"

These rights are denied when the equal right to land — on which and from which people can alone live — is denied. Equal political rights don't compensate for the denial of an equal right to the bounty of nature. Political liberty, when the equal right to land is denied, becomes — as population increases and technology advances — merely the liberty to compete for employment at starvation wages. This is the truth we have ignored. And so beggars appear in our streets and homeless wanderers on our roads. Poverty enslaves people we boast are political sovereigns. Want breeds an ignorance that our schools cannot overcome. Citizens vote as their bosses dictate. The demagogue takes the statesperson's place. Gold tips the scales of justice. In high places sit those who don't pay civic virtue even the compliment of hypocrisy. And the pillars of the republic we thought so strong already bend under an increasing strain.

Liberty Demands Full Service

We honor Liberty in name and in form. We set up her statues and sing her praises. But we have not fully trusted her. And as we grow, so grow her demands. She will have no half service!

Liberty! It is a word to conjure with, not to cheapen with empty boasting. For Liberty means Justice, and Justice is the natural law — the law of health and harmony and strength, of community and cooperation.

Those who think Liberty has done her job once she's abolished hereditary privileges and given people the ballot — those who believe she has no further connection to the everyday affairs of life — have not seen her real grandeur. To them, the poets who have sung of her must seem daydreamers, and her martyrs fools! As the sun is the lord of life as well as of light — as its rays not merely pierce the clouds but sustain all growth, drive all motion, and call forth from what would otherwise be a cold and lifeless mass all the infinite variety of life and beauty — so is Liberty to humankind. It is not for an abstraction that people have labored and died; that in every age witnesses for Liberty have stood forth, and martyrs for Liberty have suffered.

We speak of Liberty as one thing, and of virtue, wealth, knowledge, invention, national strength, and national independence as other things. But of all these, Liberty is the source, the mother, the necessary condition. She is to virtue what light is to color; to wealth what sunshine is to grain; to knowledge what eyes are to sight. She is the genius of invention, the muscle of national strength, the spirit of national independence. Where Liberty rises, there virtue grows, wealth increases, knowledge expands, invention multiplies human powers, and in strength and spirit the freer nation rises among its neighbors as Saul among his brethren — taller and fairer. Where Liberty sinks, there virtue fades, wealth diminishes, knowledge is forgotten, invention ceases, and empires once mighty in arms and arts become helpless prey to freer peoples!

Only in broken gleams and partial light has the sun of Liberty yet shone upon the world, but all progress has she called forth.

Liberty's Record in History

Liberty came to a people enslaved and crouching under Egyptian whips, and led them from the House of Bondage. She hardened them in the desert and made of them a nation of conquerors. The free spirit of the Mosaic law lifted their thinkers to heights where they beheld the unity of God, and inspired their poets with verses that still express the highest exaltations of thought. Liberty dawned on the Phoenician coast, and ships sailed past the Pillars of Hercules to plow the unknown sea. She shed a partial light on Greece, and marble grew to shapes of ideal beauty, words became instruments of the subtlest thought, and against the small citizen-armies of free cities the countless hosts of the Persian Great King broke like waves against a rock. She cast her beams on the small farms of Italian farmers, and born of her strength, a power came forth that conquered the world. They glinted from the shields of Germanic warriors, and Augustus wept for his legions. Out of the night that followed her eclipse, her slanting rays fell again on free cities, and a lost learning revived, modern civilization began, a new world was unveiled. And as Liberty grew, so grew art, wealth, power, knowledge, and refinement.

In the history of every nation we may read the same truth. It was the strength born of the Magna Carta that won Crecy and Agincourt. It was the revival of Liberty after the despotism of the Tudors that made the Elizabethan age glorious. It was the spirit that brought a crowned tyrant to the execution block that planted here the seed of a mighty tree. It was the energy of ancient freedom that, the moment it achieved unity, made Spain the mightiest power in the world — only to fall to the lowest depths of weakness when tyranny replaced liberty. See, in France, all intellectual vigor dying under the tyranny of the seventeenth century, only to revive in splendor as Liberty awoke in the eighteenth — and in the liberation of French peasants during the Great Revolution, the foundation of that extraordinary strength which has in our time survived even defeat.

Shall we not trust her?

The Choice Before Us

In our time, as in times before, the insidious forces creep on that, by producing inequality, destroy Liberty. On the horizon the clouds begin to gather. Liberty calls to us again. We must follow her further; we must trust her fully. Either we wholly accept her, or she will not stay. It is not enough that people should vote; it is not enough that they should be theoretically equal before the law. They must have the freedom to make use of the opportunities and means of life; they must stand on equal terms with respect to the bounty of nature. Either this, or Liberty withdraws her light! Either this, or darkness comes on, and the very forces that progress has created turn into powers of destruction. This is the universal law. This is the lesson of the centuries. Unless its foundations are laid in justice, the social structure cannot stand.

Our most basic social arrangement is a denial of justice. In allowing one person to own the land on which and from which other people must live, we have made them that person's subjects to a degree that increases as material progress goes on. This is the subtle alchemy that, in ways they don't realize, is extracting from the working masses in every civilized country the fruits of their weary labor. It is creating a harder and more hopeless slavery in place of the one that was destroyed. It is producing political despotism out of political freedom, and must soon transform democratic institutions into anarchy.

What Injustice Does

It is this that turns the blessings of material progress into a curse. It is this that crowds human beings into filthy cellars and squalid tenement houses; that fills prisons and brothels; that drives people with want and consumes them with greed; that robs women of the grace and beauty of full womanhood; that takes from little children the joy and innocence of life's morning.

A civilization built on this foundation cannot continue. The eternal laws of the universe forbid it. The ruins of dead empires testify, and the witness within every soul confirms, that it cannot be. It is something grander than Benevolence, something more commanding than Charity — it is Justice herself who demands that we right this wrong. Justice that will not be denied; that cannot be put off — Justice who carries the sword alongside the scales. Shall we fend off the blow with prayers and rituals? Shall we avert the decrees of unchangeable law by building churches while hungry infants cry and weary mothers weep?

Though it may use the language of prayer, it is blasphemy to attribute to the mysterious will of God the suffering and degradation that come from poverty — to turn with folded hands to the Creator and lay upon the divine the responsibility for the want and crime of our great cities. We insult the Eternal. We slander the Just One. A merciful person would have better ordered the world; a just person would crush such a festering anthill underfoot! It is not God, but we who are responsible for the vice and misery that fester within our civilization. The Creator showers gifts upon us — more than enough for all. But like pigs scrambling for food, we trample them in the mud — trample them in the mud, while we tear and rend each other!

A Prayer That Can't Be Answered

In the very centers of our civilization today there is want and suffering enough to sicken the heart of anyone who doesn't close their eyes and steel their nerves. Dare we turn to the Creator and ask for relief? Suppose the prayer were heard, and at the same command that brought the universe into being, the sun should glow with greater power; the air should fill with new vitality; the soil should gain fresh vigor; suppose that for every blade of grass that now grows, two should spring up, and the seed that now multiplies fifty-fold should multiply a hundredfold! Would poverty be lessened or want relieved? Obviously not! Whatever benefit came would be only temporary. The new bounty flowing through the material world could only be used through land. And since land is private property, the classes that now monopolize the Creator's bounty would monopolize all the new bounty as well. Landowners alone would benefit. Rents would increase, but wages would still tend toward the starvation point!

This isn't merely a deduction of economics; it is a fact of experience. We know it because we've seen it. Within our own lifetimes, before our very eyes, that Power which is above all, and in all, and through all — that Power of which the whole universe is but the expression — that Power which makes all things, and without which nothing is made that is made — has increased the bounty available to humanity just as truly as if the fertility of nature had been multiplied. Into the mind of one person came the idea that harnessed steam for the service of humankind. To the inner ear of another was whispered the secret that compels lightning to carry a message around the globe. In every direction the laws of nature have been revealed; in every branch of industry, arms of iron and fingers of steel have appeared whose effect on the production of wealth has been exactly the same as an increase in natural fertility. What has been the result? Simply that landowners get all the gain. The astonishing discoveries and inventions of our century have neither raised wages nor lightened toil. The effect has simply been to make the few richer and the many more helpless!

The Reckoning

Can it be that the gifts of the Creator may be seized this way without consequence? Is it a small thing that labor should be robbed of its earnings while greed rolls in wealth — that the many should go without while the few are gorged? Turn to history, and on every page you can read the lesson that such injustice never goes unpunished, that the Nemesis that follows injustice never stumbles or sleeps! Look around today. Can this state of things continue? Can we even say, "After us, the flood!"? No — the pillars of the state are trembling even now, and the very foundations of society begin to shake with pent-up forces that glow underneath. The struggle that must either revitalize or shatter us is close at hand, if it has not already begun.

The decree has gone forth! With steam and electricity, and the new powers born of progress, forces have entered the world that will either lift us to a higher plane or overwhelm us, as nation after nation, as civilization after civilization, have been overwhelmed before. It is the delusion that precedes destruction to see in the popular unrest now feverishly pulsing through the civilized world only the passing effect of temporary causes. Between democratic ideals and the aristocratic structures of society there is an irreconcilable conflict. Here in the United States, as there in Europe, it is visibly rising. We cannot go on letting people vote and forcing them to wander homeless. We cannot go on educating children in our public schools and then denying them the right to earn an honest living. We cannot go on proclaiming the inalienable rights of humanity and then denying the inalienable right to the bounty of the Creator. Even now, in old bottles the new wine begins to ferment, and elemental forces gather for the struggle!

The Vision

But if, while there is still time, we turn to Justice and obey her, if we trust Liberty and follow her, the dangers that now threaten must disappear, the forces that now menace will become instruments of progress. Think of the powers now wasted; of the infinite fields of knowledge still to be explored; of the possibilities that the wondrous inventions of this century only hint at. With want destroyed; with greed transformed into noble passions; with the fellowship born of equality replacing the jealousy and fear that now set people against each other; with mental power unleashed by conditions that give every person comfort and leisure — who can measure the heights to which our civilization may rise? Words fail the thought! It is the Golden Age of which poets have sung and visionary seers have spoken in metaphor! It is the radiant dream that has always haunted humanity with fitful gleams of splendor. It is what was seen by the one whose eyes on Patmos were closed in vision. It is the fulfillment of Christianity — the City of God on earth, with its walls of jasper and its gates of pearl! It is the reign of the Prince of Peace!

Conclusion

The Problem of Individual Life

My task is done.

Yet thought still reaches further. The problems we've been considering lead into a problem higher and deeper still. Behind the problems of social life lies the problem of individual life. I've found it impossible to think about one without thinking about the other, and I imagine it will be the same for those who, reading this book, follow me in thought. For, as the historian Guizot said, "when the history of civilization is completed, when there is nothing more to say about our present existence, we inevitably ask whether all is exhausted, whether we have reached the end of all things."

I can't take up this problem now. I speak of it only because a thought that came to me with inexpressible encouragement while writing this book may also encourage some who read it. For whatever its fate, this book will be read by some who in their heart of hearts have taken up the cross of a new crusade. This thought will come to them without my suggesting it, but we are surer we see a star when we know that others see it too.

The truth I've tried to make clear will not find easy acceptance. If it could, it would have been accepted long ago. If it could, it would never have been obscured. But it will find friends — those who will work for it, suffer for it, if need be, die for it. This is the power of Truth.

Will it ultimately prevail? Yes, ultimately. But in our own times, or in times of which any memory of us remains — who can say?

For the person who, seeing the want and misery, the ignorance and degradation caused by unjust social institutions, sets out, with whatever strength they have, to right them, there is disappointment and bitterness. It has always been so. It is so even now. But the bitterest thought — and it sometimes comes to the best and bravest — is the thought of hopelessness: the futility of the effort, the pointlessness of the sacrifice. How few of those who sow the seed ever see it grow, or even know with certainty that it will grow.

Let's not disguise it. Over and over again the banner of Truth and Justice has been raised in this world. Over and over again it has been trampled down — often in blood. If the forces opposed to Truth are weak, why has Error prevailed so long? If Justice has only to raise her head for Injustice to flee, why has the cry of the oppressed gone up for so many ages?

But for those who see Truth and would follow her, for those who recognize Justice and would stand for her, success is not the only thing. Success! Falsehood often has that to give, and Injustice often has that to give. Mustn't Truth and Justice have something to give that is their own by right — theirs in essence, and not by accident?

That they do, and that here and now, everyone who has felt their power knows. But sometimes the clouds sweep down. It is sad, sad reading — the lives of those who tried to do something for their fellow human beings. To Socrates they gave the hemlock; the Gracchi they killed with sticks and stones; and One, the greatest and purest of all, they crucified. These seem like archetypes. Today Russian prisons are full, and in long processions, people who but for their high-minded patriotism might have lived in ease and luxury march in chains toward the living death of Siberia. And in poverty and want, in neglect and contempt, without even the sympathy that would have been so sweet — how many in every country have closed their eyes? This we see.

But do we see it all?

In writing I have picked up a newspaper. In it is a short account, evidently translated from a semi-official report, of the execution of three Nihilists at Kiev — the Prussian subject Brandtner, the unknown man calling himself Antonoff, and the nobleman Ossinsky. At the foot of the gallows they were permitted to kiss one another. "Then the hangman cut the rope, the surgeons pronounced the victims dead, the bodies were buried at the foot of the scaffold, and the Nihilists were given up to eternal oblivion." So says the account. I do not believe it. No; not to oblivion!

In this inquiry I've followed the course of my own thought. When I first set out on it in my mind, I had no theory to defend, no conclusions to prove. I only knew that when I first saw the squalid misery of a great city, it appalled and tormented me and would not let me rest — for thinking of what caused it and how it could be cured.

But out of this inquiry has come something I didn't expect to find, and a faith that was dead has come back to life.

The longing for a life beyond this one is natural and deep. It grows with intellectual growth, and perhaps no one feels it more than those who have begun to see how vast the universe is and how infinite are the horizons that every advance in knowledge opens before us — horizons that would require nothing less than eternity to explore. But in the intellectual climate of our times, for the great majority of people on whom established creeds have lost their hold, it seems impossible to regard this longing as anything but a vain and childish hope, arising from human self-importance, a hope for which there is not the slightest evidence but which, on the contrary, seems to contradict everything we know.

Now, when we trace these ideas that destroy the hope of a future life back to their source, we'll find them rooted, I believe, not in any discoveries of physical science, but in certain teachings of social and economic theory that have deeply shaped thinking in every direction. They are rooted in the doctrines that population tends to grow faster than it can be provided for; that vice and misery result from natural laws and are the means by which progress occurs; and that human progress happens through slow racial development. These doctrines, which have been widely accepted as established truth, do what the advances of physical science, except as they've been colored by these theories, do not do: they reduce the individual to insignificance. They destroy the idea that there can be, in the ordering of the universe, any regard for a person's existence or any recognition of what we call moral qualities.

It's hard to reconcile the idea of human immortality with the idea that nature wastes people by constantly bringing them into existence where there's no room for them. It's impossible to reconcile the idea of an intelligent and compassionate Creator with the belief that the wretchedness and degradation suffered by so many people result from divine decrees. Meanwhile, the idea that human beings, mentally and physically, are the product of slow changes passed down through heredity irresistibly suggests that it is the life of the species, not the individual life, that is the purpose of human existence. In this way, that belief which in the struggles and sorrows of life offers the strongest support and deepest consolation has vanished for many of us, and is still vanishing for more.

Now, in the inquiry we've just completed, we've encountered these doctrines and exposed their errors. We've seen that population does not tend to outrun the means of survival. We've seen that the waste of human potential and the abundance of human suffering do not spring from natural laws, but from the ignorance and selfishness of people who refuse to conform to natural laws. We've seen that human progress does not come from changing human nature, but that, on the contrary, human nature seems, generally speaking, always to be the same.

And so the nightmare that has been driving the belief in a future life out of the modern world is dispelled. Not that all difficulties are removed — for turn whichever way we may, we come to what we cannot comprehend. But the difficulties that seemed conclusive and insurmountable have been removed. And with that, hope springs up.

But this is not all.

Economics has been called the dismal science, and as conventionally taught, it is hopeless and despairing. But this, as we've seen, is solely because the discipline has been degraded and shackled — its truths dislocated, its harmonies ignored, the words it would speak gagged, and its protest against wrong twisted into an endorsement of injustice. Freed, as I've tried to free it — restored to its own proper form — economics is radiant with hope.

For properly understood, the laws that govern the production and distribution of wealth show that the want and injustice of our current social order are not inevitable. On the contrary, a social order is possible in which poverty would be unknown, and all the better qualities and higher powers of human nature would have room for full development.

And further still: when we see that social development is governed neither by a special providence nor by a merciless fate, but by law — at once unchangeable and beneficial; when we see that human will is the great factor, and that, taken as a whole, people's condition is what they make it; when we see that economic law and moral law are essentially one, and that the truth the intellect grasps only after painful effort is the same truth the moral sense reaches by quick intuition — a flood of light breaks in on the problem of individual life. These countless millions like ourselves, who on this earth of ours have passed and still are passing, with their joys and sorrows, their labor and their striving, their hopes and their fears, their deep sense of things beyond what the senses perceive, their common feelings that form the basis of even the most different creeds — their little lives don't seem so much like meaningless waste.

The Universality of Law

The great fact that science in all its branches reveals is the universality of law. Wherever it can be traced — whether in the fall of an apple or in the orbit of binary stars — the astronomer sees the same law at work, operating in the smallest distances we can measure just as it does across the immeasurable reaches of space. A moving body comes from beyond the telescope's range and disappears again. For the portion of its path that is visible, the law holds true. Does the astronomer say this is an exception? On the contrary: this is merely the part of the orbit that was visible; beyond the telescope's reach, the law holds good. Calculations are made, and centuries later they are confirmed.

Now, if we trace out the laws that govern human life in society, we find that they are the same in the largest community as in the smallest. What at first look like exceptions and divergences turn out to be expressions of the same principles. And we find that everywhere we can trace it, social law merges with and confirms moral law: in the life of a community, justice invariably brings its reward and injustice its punishment. But we cannot see this in individual life. If we look only at individual life, we cannot see that the laws of the universe have the slightest connection to good or bad, right or wrong, just or unjust.68 Shall we then say that the law clearly at work in social life doesn't apply to individual life? That would not be scientific. We wouldn't say that about anything else. Shouldn't we rather say: this simply proves that we don't see the whole of individual life?

The laws that economics discovers, like the facts and patterns of physical nature, harmonize with what appears to be the law of mental development — not a necessary and automatic progress, but a progress in which human will is the initiating force. But in life as we know it, mental development can go only a little way. The mind has barely begun to awaken before the body's powers decline. It only becomes dimly aware of the vast fields before it, only begins to learn and use its strength, to recognize relationships and extend its sympathies, when, with the death of the body, it passes away. Unless there is something more, there seems to be a break here, a failure. Whether it's a Humboldt or a Herschel, a Moses who looks from the mountaintop, a Joshua who leads the march, or one of those gentle and patient souls who live radiant lives in quiet circles — if the mind and character developed here can go no further, there seems a purposelessness that is inconsistent with everything else we can see of the connected sequence of the universe.

By a fundamental law of our minds — the very law, in fact, on which economics relies for all its reasoning — we cannot conceive of a means without an end, a device without a purpose. Now, across all of nature as we encounter it in this world, the support and use of human intelligence provides just such an end and purpose. But unless humanity itself may rise to or bring forth something higher, our existence is unintelligible. So strong is this need for meaning that those who deny the individual anything beyond this life are compelled to transfer the idea of perfection to the species. But as we've seen — and the argument could have been made much more fully — there is nothing whatever to show any fundamental improvement in the species. Human progress is not the improvement of human nature. The advances that make up civilization are secured not in the makeup of individuals, but in the structure of society. They are therefore not fixed and permanent but may be lost at any time — indeed, are constantly in danger of being lost. And beyond this: if human life doesn't continue past what we see of it here, then we face the same difficulty with the species as with the individual! For it is as certain that the species must die as that the individual must die. We know there have been geological conditions under which human life was impossible on this earth. We know they must return. Even now, as the earth circles in its orbit, the northern ice cap slowly thickens, and the time gradually approaches when glaciers will flow again, and southern seas, sweeping northward, will bury the seats of present civilization under ocean depths — as perhaps they now bury what was once a civilization as advanced as our own. And beyond these cycles, science glimpses a dead earth, an exhausted sun — a time when, colliding together, the solar system will dissolve into gas, only to begin immeasurable transformations again.

What then is the meaning of life — of life absolutely and inevitably bounded by death? To me it seems intelligible only as the entrance and vestibule to another life. And its facts seem explainable only by a truth that can't be expressed except in myth and symbol, and which, everywhere and at all times, the myths and symbols through which people have tried to express their deepest perceptions do in some form convey.

The scriptures of those who have been and gone — the Bibles, the Zend Avestas, the Vedas, the Dhammapadas, and the Korans; the hidden teachings of ancient philosophies, the inner meaning of strange religions, the formal pronouncements of church councils, the preaching of the Foxes, Wesleys, and Savonarolas, the traditions of Indigenous peoples and beliefs of peoples around the world — all share a heart and core on which they agree. It is something that seems like the variously distorted glimpses of a primary truth. And out of the chain of thought we've been following, there seems vaguely to rise a vision of what they dimly saw — a shadowy gleam of ultimate realities, the attempt to express which inevitably falls into symbol and allegory. A garden in which are planted the trees of good and evil. A vineyard in which there is the Master's work to do. A passage — from the life behind to the life beyond. A trial and a struggle, of which we cannot see the end.

Look around today.

Here, now, in our civilized society, the old allegories still carry meaning, the old myths are still true. Into the Valley of the Shadow of Death the path of duty still often leads; through the streets of Vanity Fair walk Christian and Faithful; and on Greatheart's armor ring the clanging blows. Ormuzd still fights with Ahriman — the Prince of Light against the Powers of Darkness. Those who will hear, to them the trumpets of the battle call.

How they call, and call, and call, till the heart swells that hears them! Strong spirits and bold action — the world needs them now. Beauty still lies imprisoned, and the machinery of injustice still grinds over the goodness, truth, and beauty that could spring from human lives.

And those who fight with Ormuzd, though they may not know each other — somewhere, sometime, the muster roll will be called.

Though Truth and Right seem often overcome, we may not see it all. How can we see it all? Everything that is happening, even here, we cannot tell. The vibrations of matter that give us the sensations of light and color become indistinguishable to us when they pass a certain range. It is only within a similar range that we perceive sounds. Even animals have senses that we lack. And here? Compared with the solar system, our earth is barely a speck; and the solar system itself shrinks to nothing when measured against the depths of the stars. Shall we say that what passes beyond our sight passes into oblivion? No; not into oblivion. Far, far beyond our understanding, the eternal laws must hold their sway.

The hope that rises is the heart of all religions! The poets have sung it, the seers have spoken it, and in its deepest pulses the human heart beats in response to its truth. This is what Plutarch said, and what in all times and in all tongues has been said by the pure-hearted and the clear-sighted, who, standing as it were on the mountaintops of thought and looking out over the shadowy ocean, have seen the distant outline of land:

"Men's souls, encompassed here with bodies and passions, have no communication with God, except what they can reach to in conception only, by means of philosophy, as by a kind of an obscure dream. But when they are loosed from the body, and removed into the unseen, invisible, impassable, and pure region, this God is then their leader and king; they there, as it were, hanging on him wholly, and beholding without weariness and passionately affecting that beauty which cannot be expressed or uttered by men."

This modernized edition was produced using Claude by Anthropic, following the original 1879 text from Standard Ebooks. The original work is in the public domain.