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The Injustice of Poverty Second Edition Chapter 2: The Economics of a Free-Trade, Capitalist Society By Punkerslut
Section I: Some Foundational Principles of Economics The study of Economics (or "Political Economy") is the study of the rules which typically govern the distribution of wealth. The rules are crafted around logic, and examples throughout history. Much like any other science, it is based first on observing the physical phenomena of the world. Then, it forms rules which manage to account for all past phenomena, and these rules are typically used by interested parties in predicting the future events of the concerned science. How is it that wealth exchanges hands? What are the conditions which can alter this exchange in favor of one or the other party? What causes a person to lower or increase the price of their commodity? These are all economic questions. Much like any other field of study, however, the study of Economics has certain premises to it. Without them, the field of Economics would be rather non-nonsensical and without much aid in prediction. The fields of study in natural science, for instance, are premised with the idea that evidence is required for a theory to be sustained, among other ideas which form the idea of the Scientific Theory. The study of Economics may be premised by two ideas: (1) that people act, with a more or less degree, towards their self interest, (2) that people act, with a more or less degree, rationally towards these interests. By the first of these ideas, I mean that a person will respond to their conditions in a method that benefits them. By the second, I mean that in their response to these conditions, they will react in some way that answers their self interest, in some manner that procures the object of their desire or want. When it comes to the idea that people act in accordance to their self-interest, there is little debate of this. In 1720, Isaac Gervaise wrote, "This Desire may be look'd upon as the great Spring that forces Movement or Labour; and the Love of Ease, as the small Spring or Pendulum, that keeps Men in a continual Equilibral Vibratin of Rich and Poor: so that the one always ballances the other, in such manner, as keeps Labour or Movement continually going, in a certain equal proportion." [*1] In 1767, James Steuart wrote, "Man we find acting uniformly in all age, in all countries, and in all climates, from the principles of self-interest, expediency, duty, or passion. In this he is alike, in nothing else." [*2] and elsewhere, "Another principle, as naturally inherent in the mind, as the first is in the body, is self-love, or a desire of ease and happiness, which prompts those who find in themselves any superiority, whether personal or political, to make use of every natural advantage." [*3] In another part, he writes, "Wants promote industry..." [*4] and "...industry is chiefly promoted by the motive of providing for our children..." [*5] In 1815, J. C. L. Simonde de Sismondi wrote...
In 1862, T. E. Cliffe Leslie would write, "New desires for health, decency, knowledge, refinement, and intellectual pleasures, have, in fact, revolutionised production." [*7] In an article published in June of 1866, the economist William Stanley Jevons would write...
During the late 1800's, the desire to obtain wealth was just as strong as it had ever been, but new means and methods of reducing cost had be achieved. The sweatshop was born. One newspaper describes the decrease in cost of production because of sweatshop labor, "At different parts of the stage were cloaks, shirts, and trousers, with cards announcing the prices paid "sweat shop" labor today as compared with prices paid three and four years ago. As an illustration, the card on a plush cloak announced that the cost of making in 1886 was $3.25; 1887, $2.75; 1889, $1.30; 1893, 90 cents." [*9] In September of 1901, describing the situation of the rent the poor must pay for apartments, Robert Alston Stevenson wrote, "It is simply a contest between honest building and management against greed-as anyone can see after looking the matter over." [*10] Between the years of 1908 and 1909, Joseph Schumpter would write an essay on the idea of "social value." In it, he wrote, "Almost every modern writer starts with wants and their satisfaction, and takes utility more or less exclusively as the basis of his analysis. (4) Without expressing any opinion about this modus procedendi, I wish to point out that, as far as it is used, it unavoidably implies considering individuals as independent units or agencies. For only individuals can feel wants. [*11] The book "Lords of Industry," a collection of articles by Henry Demarest Lloyd, would be published in 1910, though he had died years before its publication. In this book was written a very simple and factual statement, "In abstract political economy, wealth is the subject, desire of wealth the motive..." [*12] In May of 1922, Frank H. Knight would write, "Of the various sorts of data dealt with in economics no group is more fundamental or more universally and unquestioningly recognized as such than human wants." [*13] and "...desire is ... fundamental to conduct..." [*14] Finally, he would write, "The economic motives are supposed to be more 'fundamental'; they arise out of necessities, or at least needs, or at the very least out of the more universal, stable, and materially grounded desires of men." [*15] Also, when it comes to the idea that people respond to their self-interest with a somewhat rational act that satisfies their wants, there is still little doubt to this theory. In 1691, Dudley North wrote a discourse on trade, commerce, and economics, as it had been understood up to that point in history. In this discourse, he wrote, "Trade is nothing else but a Commutation of Superfluities; for instance: I give mine, what I can spare, for somewhat of yours, which I want, and you can spare.... Thus Trade, whilst it is restrained within the limits of a Town, Country, or Nation, signifieth only the Peoples supplying each other with Conveniences, out of what that Town, Country, or Nation affords." [*16] and elsewhere he wrote, "The main spur to Trade, or rather to Industry and Ingenuity, is the exorbitant Appetites of Men, which they will take pains to gratifie, and so be disposed to work, when nothing else will incline them to it; for did Men content themselves with bare Necessaries, we should have a poor World." [*17] In the 1700's, the author of the magnificent political essay, "Crime and Punishment," Marqui Caesar Beccaria Bonesaria, also referred to "Cesare Beccaria," would come to write an economics work. In it, he stated, "All the arts and sciences have taken their rise from our wants..." [*18] In 1767, James Steuart wrote, "Oeconomy, in general, is the art of providing for all the wants of a family, with prudence and frugality." [*19] and "...the human species will multiply pretty much in proportion to their industry; their industry will increase according to their wants..." [*20] In 1815, J. C. L. Simonde de Sismondi would write, "Man brings into the world with him certain wants, which he must satisfy in order to live; certain desires which lead him to expect happiness from particular enjoyments; and a certain industry or aptitude for labour, which enables him to satisfy the requisitions of both." [*21] In an article published in June of 1866, William Stanley Jevons would write, "A principle of the mind which any true theory must take into account is that of foresight. Every expected future pleasure or pain affects us with similar feelings in the present time, but with an intensity diminished in some proportion to its uncertainty and its remoteness in time." [*22] and elsewhere, "...the [economic] theory proceeds from feelings to the useful objects or utilities by which pleasurable feeling is increased or pain removed." [*23] In a testimony before the Committee Manufactures on the Sweating System, T. J. Morgan describes the activities of entrepeneurials in this industry...
Thorstein Veblen, a famous sociologist, in an article published in the American Journal of Sociology for the years 1898 to 1899, would write, "...man is an agent that acts in response to stimuli afforded by the environment in which he lives. Like other species, he is a creature of habit and propensity. But in a higher degree than other species, man mentally digests the content of the habits under whose guidance he acts, and appreciates the trend of these habits and propensities." [*25] and "Until recently there has been something of a consensus among those who have written on early culture, to the effect that man, as he first emerged upon the properly human plane, was of a contentious disposition, inclined to isolate his own interest and purposes from those of his fellows, and with a penchant for feuds and brawls." [*26] Very simply and eloquently, he writes, "...the great body of the people have almost everywhere, in their everyday life, been at work to turn things to human use." [*27] In an article published in an economics journal, for the year 1908 to 1909, Joseph Schumpeter would write, "They severally apply their means to the satisfaction of their own wants." [*28] Frank H. Knight in May of 1922 would accurately describe this idea of rational response to self interest, as he would write, "...the wants which impel economic activity and which it is directed toward satisfying are the products of the economic process itself. [...] ...the ordinary meaning of the verb to economize, that is, to use resources wisely in the achievement of given ends. [...] ...the rational man, the man who knows what he wants and orders his conduct intelligently with a view to getting it." [*29] The importance of understanding these premises is fundamental towards understanding the study of Economics. For instance, if we are curious of economics, and in particular, we want to know what determines the wages of workers, on what premises are we to follow? First, since we know that wages are given by an employer to workers in exchange for their labor power, it is the self-interest of all parties we must consider. An employer will want to ensure their own wealth, their own self interest, and they do so rationally. By this, they will endeavor to keep wages low. They rationalize, as any simple man can, that by paying less for the labor, they are keeping more to themselves. Thus, they are rationally responding to their self interest. The same can be said of buyers and sellers. A seller will try to sell as much as it can as high as it can, to the point where it does not overbid the competition, otherwise buyers will resort to buying from another. Here we find sellers understanding their own self-interest of wealth, and responding to it rationally by augmenting the prices of their products. Imagine the study of Economics without these two premises. If an employer had no self-interest at all, then he would have no need to try to keep wages and expenditure low, and no desire to make profit. Civilization arises from our needs, our wants, and the method of satisfying these wants. If an employer did not respond rationally to his conditions, yet he still had self-interest and wanted to become wealthy, then to increase his wealth, he may respond by increasing the wages of his workers to the point where he would become bankrupt in two days. So, by understanding these two premises, self-interest and rational action, one can then go on to understand Economics, or the mechanics of the laws which govern the distribution of wealth. It is from this -- want -- that the understanding of economics arises If a man had no hunger pains when he would fast, no fear of death, or desire to avoid it, then he would not labor to produce food to quench his hunger. Other interests and desires arose. Water and food are absolutely necessary to existence. Shelter is sometimes necessary for protection against the elements, other times it is unnecessary. Man may oftentimes develop an interest in art or entertainment. He will not only labor for water, food, and shelter, but he will labor so that he can have that ticket to the play, or those expensive clothes, or that mug of malt liquor. By desiring, by needing these substances, society comes to a process of productions and exchanges, to meet these needs. It is this process of productions and exchanges that we call Political Economy, or today as they call it, Economics. All of these productions and exchanges arise from those wants of men, sometimes these needs born in mind in a natural state, sometimes acquired by being in the society of men. Either way, men have desires, it is these desires which lead them to produce and exchange. From the rise of these desires, we have a foundation point, to begin our investigation into the matter of Political Economy. Section II: The Society of Men If a man were secluded in nature, and he had to supply himself with his own wants, there would certainly be a struggle with the elements. If he were to be a hunter gatherer, the chance of coming across food would vary, with the conditions hindering or helping. If in winter, the chances of finding edible plants will be unlikely, but by following herds, he would be led to warmer climates. The availability of animals would be higher in summer, where those whom naturally hibernate are awake. If this man in nature were to be a farmer, cultivating and harvesting the land, it would be long and hard work. Typically, he would be employed through most of the day. His chances of survival, though, would probably be improved. Since he would not have to travel to unfamiliar, possibly dangerous lands in pursuit of his food source, he would be exempt from those injuries which occur to travelers. Still, the chance of death is a possibility. If a bad winter were to hit him, or if he were to plant his crops prematurely, or if he were to harvest them too late or too soon, or if some natural occurrence were to plague him, then he would die from starvation. This is one man, though, secluded in nature. Here we see the basic premises of economics: (1) the man follows his self-interests, (2) the man follows these interests rationally. For the first premise, in either case of being a hunter gatherer or a farmer, the man was attempting to suffice to his own need of food, an impulse which is not foreign to any living creature. For the second premise, the man did follow his desires rationally. In the case of being a hunter gatherer, he sought out food. He was actively attempting to satisfy his desires. When he decided to upgrade his condition to that of a farmer, his security increased, though possibly sacrificed with an increase of labor. In this scenario, how the man responded to these interests, and in what manner, has be regarded by authors as Domestic Economy. By placing man in society, where he exchanges the fruit of his production, where mutual agreements take place, we come to the study of Political Economy, or Economics. By understanding a person's conditions, and their interests and their rational responses to these interests in their present conditions, we can theorize on how people will react in similar conditions and in the future. In a society of men, each person gains something -- or so, it is believed in industrial society. The general premise is that, by working together, two men will produce more, than had they worked apart. This can be seen in countless examples. Take three men, for example. Ask each of them to deseed cotton. Now, ask the first to be a lumberjack to cut down trees, ask the second to fashion the wood into a cotton gin, and ask the third to operate that cotton gin. The combination and cooperation of their efforts will yield a produce that is at least fifty times what they would have yielded if they had labored separately and without each other's aid. In society, then, we have a higher rate of production. However, in a society, there are countless other things to be taken into consideration, such things which have been subject to examination and hypothesis in Economics. Section III: Competition and Modern Society Competition is something which must be recognized in a society. But, before going any further, I must denote something of particular importance. When I speak of a society in this sense, I mean a society in its most natural state, where economic liberty is in tact. By this, I mean there are no laws which prohibit the sale of any objects or restrict prices, either for commodities or labor. This economy would be called a Capitalist economy. Competition is something that is part of the natural economy. If, for instance, a man is offered the option to buy a bushel of corn for twenty dollars, as opposed to the forty which he has regularly paid, this man will follow his self interest rationally, and will make the switch to the cheaper corn. Thus, the two business compete against each other, one providing corn for cheaper than the other. The first business may respond in lowering it's price to equal, or other methods of adding appeal to their product. All competition, though, comes down to this: not improving the product necessarily, but convincing consumers to purchase it. Improving the product or lowering its price have been typical methods to increase product appeal. If a business cannot convince consumers to buy its products over its competitors, its revenue will decrease, and it will eventually fail. Besides improving the product or lowering its price, businesses have used advertising or the like to promote their product. However, as many economists assert that competition means that consumers will purchase a better product, this is untrue -- competition means that consumers will purchase the product which they have been convinced to purchase, convinced by the price, quality, and advertising, or advertising-like techniques of the business proprietor. Here, though, is competition, the force in an economy. To quote Adam Smith...
This rather famous passage of Smith has had the unfortunate accident of being mistaken sometimes as a defense of free economy, whereas it may best be described as an explanation of competition in a free economy. When a person sells their products, they do so in a manner not advocating love, but rather, advocating that there will be a benefit for the consumer, if they so decide to purchase the commodity. It is important to understand competition if we so desire to understand the economic conditions of today. With the rise of machinery, of the parts of a modern, industrial society, we saw that more was produced with a smaller amount of labor, thus, the production costs were lowered. When a consumer had the decision, to purchase a product from a supplier, he had two choices... Those products which were created with machinery, and those which were not. Since machinery was capable of reducing production costs, it enabled those suppliers to compete with other suppliers much better. They could offer a lower price than those suppliers which did not use machinery. Since the consumer only followed his self interest in a rational manner, he would purchase those products which appealed to him most, oftentimes being the cheaper product. Those suppliers which did not use machinery either converted to machine-using businesses, or they failed. Competition has been theorized, and proven to exist in practice, by a variety of authors, of different backgrounds. Describing the element of competition as it occurs in borrowing, Dudley North writes, "...if there be more Lenders than Borrowers, Interest will also fall..." [*31] and "That as more Buyers than Sellers raiseth the price of a Commodity, so more Borrowers than Lenders, wil raise Interest." [*32] In 1767, James Steuart describes the labor market: "But where every one lives by his own industry, a competition comes in, and he who works cheapest gains the preference." [*33] He then describes the general consumer market: "...because diminishing expence is the only method of gaining a preference at market." [*34] In a longer section, he describes the cause of an increase in the cost of goods...
In 1847, Karl Marx would deliver a speech describing the most basic and fundamental aspects of the labor market in a free economy, which would later be published in a pamphlet later that century. In this speech, he said...
The rise of the sweatshops in the economy would be prevalent in the late nineteenth century. Since employees worked in their own homes, developing the concept of "homework," the employer did not need to pay the normal expenses of owning and operating a factory. He completely eliminated maintenance and taxes of a factory. With this, those who did not decrease their cost lost the competition, while those who did convert their labor force managed to successfully compete. Describing a worker whose efficiency has been inhibited, Florence Kelley writes in 1892...
In an article by E. R. L. Gould in an economic journal of 1899-1900, it is written, "Under the principle of competition, good dwellings naturally receive the preference [from renters], and, when well built, will of course last longer." [*38] In a different economics journal, of the year 1908 to 1909, Joseph Schumpeter wrote, "Our individual will now put a new value on his goods because of what he can get for them in the market; and this new value depends on how much other people want them." [*39] In 1910, a book by Henry Demarest Lloyd would read, "In abstract political economy... competition [is] the regulator..." [*40] Describing how people are drawn to buy cheaper products regardless of its final consequences, he writes, "It is only lack of wit and lack of civilization that lead the community to buy cheap of a market invader who puts prices down only to ruin a rival and gain the power of putting them up afterward." [*41] An 1888 report by the United States Congress describes what the economic situation of the railroads were prior to the rise of monopolies...
Section IV: Economic Classes Since suppliers which employed many workers to work in conjunction with machinery were successful, we see in society a division of classes. There are those whom are proprietors of machinery, of land, of factories, and there are those who are employed in making such objects useful. These items, which have productive capability when coupled with labor, have been termed capital. Aside from those whom are the proprietors of machinery, there are those who work the machinery, receiving a wage in advance for the production which they give to their employer. These two classes, the industrialists and the workers, the employers and the employees, are instrumental towards understanding economic relations. We are studying economics, and the relations between the members of society in economic terms. It is important to recognize the presence of these classes. Someone may inquire, and justly so, why is it that we recognize the presence of these classes, of the owners of capital and those who work the capital? Why not recognize the presence of classes of people, based on their education, or perhaps based on their inherited wealth? It is a reasonable question, and I shall endeavor to answer it quickly. When I recognize these two classes in society, those who own the capital and those who labor with the capital (and perhaps some who are in both categories), the reason I am recognizing them is because they will help us determine the general laws which govern economic conditions. In the era when classical economic works were most written, most land which was used for farming or manufactures was rented, and this caused my classical economists to devote some chapters, or even some of their books, to studying the nature of rent. In that same spirit, in our society where there is an obvious distinction of classes, understanding this can help us better understand the whole of the economy. Perhaps one of the greatest economic questions of all.... what is the distribution of wealth? We can determine this, once we understand the separation of these two, distinct classes: those who own capital and those who do not own capital. Those who own capital I shall refer to as Capitalists, while those who do not own capital I shall refer to as Proletarians, or the Proletariat. Section V: Class War Since competition gave rise to rich, powerful owners of machinery -- in that consumers chose their products because they were cheaper, therefore, factory owners succeeded over small shops -- since almost all production of goods occurred in situations where one individual was the proprietor of the capital, those who were not members of the Capitalist class became members of the Proletariat class. The Proletariat class were the workers, the creators of wealth. They operated the machinery on the farm or in the factory, producing goods to that were sold to satisfy the needs of the consumers. By what general laws can we deduct the way in which wages are determined? Well, it is rather quite simple... We must understand the interests of the parties involved. The Capitalist wants to maintain his wealth and riches, and to do so, he rationally responds by competing with others who are selling the same product. The Proletarian worker wants to obtain the necessities for living in comfort and happiness, with as little labor as possible. However, when it comes to determine the price of the wage, the Capitalist will respond by wanting it as low as possible, and the Proletarian will want it as high as possible. In attempting to secure these interests, the Capitalist will hold out, refusing a contract with the workers unless they submit to a low wage. The Capitalist, by his economic condition, has the right of holding out as long as he wishes. Up to several years, perhaps decades, he can avoid any contractual work with laborers. He can do this on account of the wealth which he owns. Since he is a Capitalist, he already has liquid wealth (cash) and capital (means of production). For several months or years, he can sustain his health on the cash, but once that runs out, he can begin to sell his capital, his machines, so that he can receive money to feed and clothe himself. The Proletarians, however, are under a radically different situation. They cannot sustain themselves for very long without employment, and it would be a rare situation to find one worker who could live a month without a wage. The significance of a wage is that it translates, to the worker, into food, housing, and clothing, for himself and his family. Since it is in the interest of every worker to sustain themselves, to survive, they must submit to the demands of the Capitalist. Some of them may quietly predict to themselves, that if they do not receive food in three days, they will starve, and others will believe that they have only four or five days longer. Knowing their own physical limits, the workers submit to be paid a subsistence wage. In this case, the Capitalist has won and the worker has lost. Thus, the workers are afforded a subsistence wage, where they are paid only enough to sustain themselves and their families. The reason why the laboring, wage-earning class of society earns a subsistence wage is the lack of their ability to negotiate with their employers. Of all ideas on economics, the idea of a subsistence wage is the one most universally acknowledged, from economists and non-economists alike. Without the ability to produce with maximum effectiveness, that would give them an edge in the competition of free markets, the workers must work under employment from those who have the means of production. The effectiveness of machinery and technology, and specialization, was well emphasized in the first chapter for a reason: it is important to understand if we must properly understand the economic mechanics of a free society. In the 1600's, the only fields of understanding -- when it came to the study of economics, or "Political Economy" -- the only fields of understanding that existed were on ways of effective taxation, or how some nations have gathered wealth over others, or very vague dissertations on the balance of trade between nations, or even regions. In 1668, Josiah Child wrote a treatise on trade, in which he wrote, "...the Peazants are little better then Slaves, because they can possess nothing but at the will of others." [*43] In a bit of a longer section, he emphasizes the importance of recognizing the relationship between employer (or investor) and employee (or worker)...
The year 1683 would be the year that Matthew Hale, a Humanitarian, would publish "A Discourse Touching Provision for the Poor." In it, he accurately describes the relationship between employer and employed: "...the poor Workmen not being able to live without Work..." [*45] In the 1700's, Thomas Paine would write a great deal of influential material, on matters of politics, society, and religion, all of it ground-breaking and inspiring work. In one piece, he writes, "Civilization, therefore, or that which is so-called, has operated two ways: to make one part of society more affluent, and the other more wretched, than would have been the lot of either in a natural state." [*46] In 1767, describing the relations between classes, James Steuart wrote, "...found in different countries... [is] subordination of classes..." [*47] In a section of his writing that perhaps most accurately illustrates my opinion on this matter, he writes further...
The principle that he brought up is a rather simple one to understand. Though he wrote in a time where this was much less obvious, prior to what historians call the Industrial Revolution, he still had the scientific eye to see it. He further writes...
James Steuart was probably the most aware and intelligent economist of his time, until the publication of "Wealth of Nations" by Adam Smith -- which would come ten years after Steuart's book would be out. Still elsewhere, Steuart writes, "Men were then forced to labour because they were slaves to others; men are now forced to labour because they are slaves to their own wants." [*50] and elsewhere still, this time describing the Capitalist class: "...the higher classes who do not labour..." [*51] In the year 1798, Thomas Malthus would published his world-renowned essay on population, which was something of a combination of sociology and economics. In it, he would write...
J. C. L. Simonde de Sismondi was an economist who would publish his opinions on society in the year 1815. Somewhat unlike the economists that preceded him, he had dedicated a chapter of his book to improving the condition of the poor -- but, it was mostly through the means of taxation, and it wasn't anything radical like would be seen with Marx and Marxist economist philosophers In a section of this book by Simonde de Sismondi, describing the principle of a subsistence wage, he writes...
Still theorizing on this principle of the subsistence wage, he would write in shorter sections: "Labourers outbid each other, and at length go so far as to content themselves with the most niggardly subsistence, with a portion barely sufficient in good years, and which in bad years leaves them a prey to famine." [*54] Elsewhere, talking about the workers, he writes, "...they merely engage to work by the day, at a fixed wage, on the farm where they live; but their competition with each other has forced them to be satisfied with a wage of the lowest possible kind." [*55] And, still elsewhere, he writes, "...the poverty of day-labourers, forced by competition to content themselves with what is necessary for life; though commerce may profit by the circumstance, it is nothing better than a national calamity." [*56] All of what J. C. L. Simonde de Sismondi wrote was still at the dawn of an era that would meet a full forced industrial revolution. He was still standing at the beginning of a very new time, but he accurately saw what was ahead of him. The early 1800's were still a time when workers were treated poorly, not only in an economic sense but in a political sense. Thomas Hodgskin, a Humanitarian and staunch defender of labor rights, would publish a pamphlet on behalf of those living on a subsistence. In it, he writes, "Wages vary inversely as profits; or wages rise when profits fall, and profits rise when wages fall; and it is therefore profits, or the capitalist's share of the national produce, which is opposed to wages, or the share of the labourer." [*57] In another part, he writes, "The labourers do only receive, and ever have only received, as much as will subsist them, the landlords receive the surplus produce of the more fertile soils, and all the rest of the whole produce of labour in this and in every country goes to the capitalist under the name of profit for the use of his capital." [*58] He would also write, "The labourer must, however, live, though the exorbitant claims of capital allow him only a bare subsistence." [*59] and elsewhere still, "The capitalists permit the labourers to have the means of subsistence because they cannot do without labour..." [*60] In a lecture delivered in 1830, Nassau Senior would make a very to-the-point statement: "The employer is interested in keeping down the price of labour..." [*61] It would also be in the early to middle 1800's that Socialism would rise, but in a much different form that it is understood today. The first Socialists, who called themselves this, were simply philosophers and sociologists, whose primary interest was to reorganize society in a means that was of greatest benefit to everyone. It would slowly divide into sects and subjects, with Claude-Henry Saint-Simon spear-heading the movement of Scientific Socialism, a movement that stressed giving more power to scientists and artists, "the leaders and founders of society." It would only be in the later years of the 1800's and onward that Socialism would be seen as, what someone told me recently, "a lesser form of Communism." Also in the early roots of Socialism, there was Louis Blanc, who most closely resembled the modern form of a Socialist. In a work entitled, "The Organisation of Labour," he would write...
In another part of the same essay, Louis Blanc wrote, "A systematic lowering of wages resulting in the elimination of a certain number of laborers is the inevitable effect of free competition.... " [*63] and elsewhere still he wrote, "In the industrial world in which we live, all the discoveries of science are a calamity, first because the machines supplant the laborers who need work to live, and then, because they are also murderous weapons, furnished to industry which has the right and faculty to use them against all those who have not this right and power." [*64] It was in his time, that he could see the gears of the industrial revolution, and its effects upon the economic mechanics of society. As the effects of this industrial revolution became more clear, and more evident, in everyday life, other writers would become aware of its presence. It would no longer be a thing just in view of the scholarly economist, but a cold, hard fact that would be dealt with by every person who lived in the bosom of "civilization," and had the chance to say his or her thoughts. In December of 1847, Karl Marx would deliver a speech detailing the most primary aspects of the Capitalist, or Free Trade, economy. It would later be converted by Friedrich Engels into a pamphlet. In the pamphlet, it was written...
The image and ideal of Karl Marx are intrinsically tied to the ideas of Communism, though he is inaccurately sometimes associated with the ideas of a police state or Totalitarianism, or what others have done in his name. One who would actually sit down and try to read Marx, not attempting to understand him as a Communist revolutionary for the people nor as a dictator attempting to grasp control of the people, but trying to understand him as an economist with his own thoughts -- one who tries this will discover a great deal of knowledge, though some of it is written in a dry style. Elsewhere in this pamphlet, he writes, "In those branches of industry in which hardly any period of apprenticeship is necessary and the mere bodily existence of the worker is sufficient, the cost of his production is limited almost exclusively to the commodities necessary for keeping him in working condition. The price of his work will therefore be determined by the price of the necessary means of subsistence." [*66] In another part, he writes...
1848 would be the year that Karl Marx and Friedrich Engels composed the Manifesto of the Communist Party, which would be looked to by many as the foundation and cornerstone of Communist Revolution. Unfortunately, an understanding in economic, social, historical, and other concepts would be necessary to obtain the full meaning of this text. In this work, Marx and Engels wrote, "The bourgeoisie [or Capitalist class] keeps more and more doing away with the scattered state of the population, of the means of production, and of property. It has agglomerated population, centralized the means of production, and has concentrated property in a few hands." [*68] And, elsewhere, too, it is written, "All [workers employed by the Capitalists] are instruments of labor, more or less expensive to use, according to their age and sex." [*69] In a slightly longer section, they write...
In a paper that was never completed, in May to June of 1876, Friedrich Engels wrote, "...all wealth becomes more and more concentrated in the hands of non-workers..." [*71] Ida M. Van Etten had one of her articles published in the year 1893, in which she wrote, "compelled by their necessities to accept any wages offered to them..." [*72] And speaking of the tendencies of the Capitalist class, she writes, "The rich Jew, like the rich Christian, invariably buys his labor at the cheapest possible rates." [*73] In 1893, T. J. Morgan would be questioned by the Committee on Manufactures on the Sweating System, in which she was asked, "Please describe it in your own way and according to your own understanding." -- to which she would reply, "A. I would describe it that the work is taken out by sweaters. They go to the large firms and make a contract for so much work at such a price, and then they employ men, women, and children and pay their wages at the very lowest..." [*74] When asked another question, concerning the policy of the Capitalist class, she would respond, "...if they discharge one class of men or women there are others to take their places at the same starvation wages." [*75] On December 26th of 1894, John B. Clark would deliver an address to the Seventh Annual Meeting of the American Economic Association, where he describes the power of great Capitalist enterprises, when it comes to deciding prices (even for labor)...
It must always be remembered that the study of economics is a sociological study: it seeks to understand the rules, and possible exceptions to those rules, when it comes to the exchanges that occur within society. Thorstein Veblen, a noted Sociologist, in 1898 to 1899 volume of the American Journal of Sociology, wrote of labor: "It is not only a mark of inferior force, but it is also a perquisite of the poor. This is the situation today. Labor is morally impossible by force of the ancient tradition that has come down from early barbarism, and it is shameful by force of its evil association with poverty. It is indecorous." [*77] As well as the beginning of the Industrial Revolution, the 1800's would give birth to the defined theory of Anarchism. Mikhail Bakunin would be one of the initial philosophers to defend this theory. In an undated document, presumably written in the late 1800's to early 1900's, he very accurately described the Capitalist system when it comes to the price of labor...
In another part, he wrote, "The worker is in the position of a serf because this terrible threat of starvation which daily hangs over his head and over his family, will force him to accept any conditions imposed by the gainful calculations of the capitalist, the industrialist, the employer." [*79] What some other philosophers, economists, and sociologists saw within society earlier is becoming more and more apparent. It is not only apparent among those whose hobby it is to study society from high above, but it is growing apparent with those who must live and work in such a society. For Anarchism, truly, is a people's movement. In another section of this piece, Mikhail Bakunin still illuminates the matter more...
Another Anarchist, Peter Kropotkin, would write a great deal of material at around the same time as Mikhail Bakunin. In 1901, he wrote, "...the wage system, the modern form of ancient serfdom..." [*81] and elsewhere still, he writes, "Economists represented the enforced contract (under the threat of hunger) between master and workingman as a state of freedom. Politicians, again, so called the present state of the citizen who has become a serf and a taxpayer of the State." [*82] Though the words of Kropotkin and Bakunin may appear a bit more emblazed with the passion of revolutionaries, it still is the echo of what sociologists and economists have been saying for centuries. Though in the old times, economists worked through deductive reasoning, there would be a resurrection in the idea of using empirical evidence -- instead of logical proofs -- to demonstrate a point. Many of the reformers, reporters, investigators, and even muckrakers of the late 1800's and early 1900's would discover proof of the subsistence wage. In 1902, Reverend John McDowell tells a story about miner boys... "I'm twelve years old, goin' on thirteen," said the boy to the boss of the breaker. He didn't look more than ten, and he was only nine, but the law said he must be twelve to get a job. He was one of a multitude of the 16,000 youngsters of the mines, who, because miners' families are large and their pay comparatively small, start in the breaker before many boys have passed their primary schooling. [*83] Annie S. Daniel, who studied the situation of those working and living in tenement houses, would write an article discussing it in April of 1905. In it, she wrote, "In no case in over 515 families was any woman working other than from dire necessity." [*84] Just like McDowell, she demonstrated more empirical evidence to substantiate the theory of a subsistence wage paid to workers. Also in the article, she describes the process by which large businesses run by Capitalists are capable of securing trade, and eliminating the possibility of workers working by themselves without the means of production. She writes, "By the consumers--An article costs a little less. And what are the dangers?" [*85] In an article published on October 7th of 1905, John Daniels -- who studied the economic situation of African men -- wrote of the general working population, "Down at the bottom industrially, they, like the hack-writers of literature, are forced to take whatever they can get." [*86] While some who observed the mechanics of society created, supported, and promoted radical theories, such as Communism and Anarchism, there were those writers who simply observed and condemned society for its workings. Such seems to be the case today: that one is intellectually safe so long as they observe, but not align themselves with any political theory. J. W. Hart, a writer for the Christian Advocate, was who supposed Socialism and protection of the working people, though not expressedly a Communist or Anarchist. On October 4th of 1906, he would write, "To give one man or set of men the power to compel others to work at starvation wages is slavery." [*87] and elsewhere, too, he wrote, "If the only answer of the church is that capital has a right to buy labor where it can buy it the cheapest, and the law must protect capital in this right, we may expect the worst." [*88] Mary Van Kleeck, in an article published in the 1906-1907 volume of Charities and Commons, would support the law protecting the working people, just as J. W. Hart had. In this article, she had written, "Industrialization that brought fortunes to some relied on the cheap labor of many..." [*89] In a bit of a lengthier section of the article, she wrote...
In another part of the same article, she wrote, "...the state [should] extends legal protection where (by reason of economic inequality) the contract is not free...." [*91] The author, Mary Van Kleeck, was not an economist or a sociologist. She was simply one who observed the mechanics of society, because it confronted her in her everyday life. In other parts, she writes...
...and...
Very much so in a style of Bakunin or Kropotkin, or other authors who were filled with a zest to change their times, Mary Van Kleeck wrote, "It is not true that these factory women are free to contract. When one side can say to the other, 'Work on these terms or lose your job,' 'Work or starve,' the contract is not free." [*94] On January 18 of 1908, Mary Van Kleeck would have another article published in Charities and the Commons. In it, she wrote, "The evils of the system,-intense competition among unskilled workers in a crowded district, low wages, unrestricted hours of work, irregularity of employment, and utilization of child labor,-are the very conditions which make the system possible and profitable to the employer." [*95] 1910 is the date marking the publication of the important works by Henry Demarest Lloyd, a muckraker in the late 1800's, before the term was widely known. In this articles, where he expresses a condemnation towards Capitalists for their activities in general -- particularly those of the coal and railroad monopolies -- he would definitely express in some parts his agreement with the theory of employers only paying a subsistence wage. In this book, he writes, "A few individuals are becoming rich enough to control almost all the great markets... We feel ourselves caught in the whirl of new forces, and flung forward every day a step farther into a future dim with the portents of struggle between Titans reared on steam, electricity, and credit." [*96] Describing the history of Indian royalty, he writes, "The Mohammedan emperors of Delhi, the Mahratta princes, the Sikhs of the Punjab, different in many other things, were alike, Maine says, in this, that they took so much of the produce of the soil as to leave the cultivators little more than the means of bare subsistence." [*97] In another part, he describes the economic and financial strength that some businesses are capable of procuring, where he writes, "...bringing all the owners of the crop into one place, and then overcoming them by a combination of capital, banks, and the courts..." [*98] Describing one case of the reduction of wages of some workers, he writes...
In another part of the book, Henry Demarest Lloyd writes, "These companies flood the coal country with helpless laborers, Italians, Poles, and Huns, as well as Americans, in order to create a condition of 'supply and demand' in which wages will steadily tend downward, and 'to terrify them into subjection whenever they should be moved to strike or refuse to submit like angels to lockouts.'" [*100] In another part, he describes the contracts between employees and employers, writing, "They are devoid of the essential attributes of contracts. They will be simply servitudes imposed by wealth on poverty, by strength on weakness, by knowledge on ignorance, and by plutocracy on the people." [*101] In a very impassioned article, full of the fire of human emotion, Lloyd writes, "...living under a high death-rate in tenement houses, in full view of the unoccupied prairies, with wife and children forced to work to get enough food for the family, is not life; working ten to twelve hours a day, when the citizen wants to work but eight, signing ironclad contracts because he is hungry..." [*102] The admirable qualities of Henry Demarest Lloyd were that he was thorough, his ideas were evidenced, and beyond all doubt, he strongly held his ideas of justice and truth. In another section of this book, a collection of his articles, he writes...
The idea that by purchasing cheap products of large businesses, and avoiding the purchase of commodities which are more expensive but made by individual workmen, this idea is prevalent in the work of Henry Demarest Lloyd. He writes, "It is only a question of time when the people will perceive it to be intolerable to buy their commodities of those who allow them no voice in the bargain but that of suicide." [*104] In another part, he describes the relation that a worker has with his work, using a miner as an example, "...from whom the miner can obtain that necessity of life-work..." [*105] Finally, in one passionate and bold passage, Lloyd writes...
Elizabeth C. Watson was a writer in the early 1900's. In one article, published on February 4th of 1911, she describes her opinion of a single man owning the means of production: "This gives manufacturer and contractor power to dictate the lowest terms..." [*107] Gustave Schmoller was a sociologist, and to another extent an economist, of the early 1900's. In an essay published in the American Journal of Sociology, in the 1914-1915 volume, he would writes of class differences, "The increase of money and entrepreneur economy has done most to intensify these contrasts and to lead to class conflicts." [*108] Unlike the muckrakers of this time, he still manages to keep a decent amount of whatever political passion he has inside, and stay in tune with the attitude kept by the classical economists. In another part of this essay, he writes, "The upper classes retained the lion's share of conquered lands, of captured cattle, of slaves or serfs, without stopping for justification." [*109] In a rather effective passage, he describes the mechanics of modern society using an ancient parallel: "....we understand by class-dominance the social dependency relations which result from the customary industrial connections between the upper and the lower classes, between masters and slaves, between entrepreneurs and laborers, between creditors and debtors, between the strong merchants and the weak buyers. " [*110] In 1917, Joseph Dana Miller wrote an article on efforts to end child labor. In it, she writes, "The phenomenon of child labor is the inevitable accompaniment of low wages, and low wages result from a condition of land monopoly..." [*111] In an inaugural address in Australia, the year 1930, L. F. Giblin spoke...
As much empirical evidence as there may be, as many studies that may be done to understand the depths of poverty in the working class, there are few things so convincing as the words from a person's own mouth. In 1969, a miner who was suffering from a disease known as "Black Lung," which leads to death, was suggested by friends to stop working. But, in reply to his friends, and talking about his own family, this miner who was on death's bed said, "I don't care what happens after that, but I can't stop working now. We'd starve to death." [*113] Section VI: Diversity of Wages Among the Proletarian class, there exists a diversity. Not every worker is paid the same wage. This cannot be denied. There have been some general ideas proposed on suggesting what differentiates the lower class from the middle class, or attempting to discover those basic principles which will allow for an increase in wages. Some have argued that the conditions of work are those which are determinant of pay. Others have argued, with more success, that a middle class can be differentiated from a lower class in its skill, ability, or education, which allow it greater productive ability. I think that the diversity of the Proletarian class can be seen best in the income of those members. A lawyer's income, for instance, is remarkably higher than those who work in a factory. Just as a doctor's income is higher than an engineer's, and higher still than those who hold the position of a clerk. Some economists have attributed a worker's wage to his education. However, education is not exactly proportionate to one's wage. For instance, with a college degree, a person can earn perhaps up to $40,000 a year, but there are other professions which can earn more than twice that without a college degree, such as bartenders and strip dancers. While economists try to understand the diversity of the Proletarian class, and the causes of their wages, they apply various laws to this phenomena -- the way a scientist would attempt to formulate laws to explain the natural world. As far as the lower, middle, and upper classes of the Proletarian class, the only method of determining that a Proletariat belongs to one of these classes, is determinant wholly on the income they receive, or their wages. Sometimes, though, an economist may be mistaken, by classifying a Proletariat into a different class based on their ability to generate a higher wage from an employer. A Proletariat is either higher or lower in their own class by how much money they make. What determines their ability to make a good wage is an entirely different question, though of importance. A person's wage depends on various factors. The primary factor is their ability to use capital in a manner that produces wealth, in comparison to others of the same field. So, it is true, there is a sort of competition. In professional sports, for instance, some are paid tens of millions of dollars. Is this due to their invaluable ability to play well and generate wealth for the owners of the sport? Partly, yes, but it is also due to the fact that such an ability is a rarity. When there are more workers in an industry than there are required, then a competition exists between these workers, each lowering their wage to the bare minimum required for subsistence. They require employment for the simple fact that, without it, they would starve. An individual who is a lawyer provides an invaluable service, but it is also the rarity of lawyers which gives them their wage. For, if every person had a law degree and could practice law, I would not be surprised if a lawyer's wage dipped down close to a subsistence wage. But, it is also the value of a lawyer's services that give them their wage. If a man, for instance, had the ability to stretch his arm out for five feet, he may very well be the only human being capable of this. He would be rare, yes, but that would not mean his wages are high, because it is the usefulness of an employee that is the reason for their employer's interest. It is the simple law of supply and demand applied to employment. It may very well be rare for a person to discover and attempt to sell a human toe, but the price would only be based on the demand of those interested, and the interest would be from some sort of usefulness of the item -- in this case, probably novelty. In ending, I will sum up my opinion on the determination of wages as this... Determined by two factors: the usefulness of the employee, and the rarity of the employee's abilities. Section VII: The Cost of Labor and Commodities It is often stipulated by economists that an increase in productivity, or profit, or the cause of such by a decrease in the cost of expense, that all things which benefit the employer will trickle down and benefit the employee. In all of the evidence considered, it is solely competition among a group of buyers or sellers which determines the cost of items, as well as convincing the other party that they need such a commodity. Those Proletarian members whose labor consists in rather simple work tend to be paid a subsistence wage. This does not change whether their employers receive a great or small amount of wealth from their labor. If an employer, for instance, makes more profit, those who are working for him, especially those performing simple tasks, will not receive an increase in their wage. The reason for this is rather simple... The Capitalist has his own interest: his wealth. And, furthermore, he has the ability to reason: he reasons that by refusing to pay higher wages, he is benefiting his own interest of wealth. If a Capitalist, however, finds cheaper labor, or a cheaper method of production, still creating the same product or service as before, the product will not necessarily be cheaper. It must be understood that, as the production expenses decrease, product prices remain virtually unchanged. A businessman, for instance, who owns a factory producing clothing, may discover an ingenious method in which he can produce two shirts for what once cost him for one shirt. He has no need to pay his workers more, as they are working for a subsistence wage. The only need he has, though, for decreasing the cost of his product, is in competition to others. He may, for instance, decrease the cost by 10% (even though production was increased by 100%). The decrease of the cost, however, will very rarely be equal to the new cheapness of production. The benefit of technology does not improve the lot of the laboring poor. It only improves the condition of the businessmen, by producing more for less. The only reason why there would be a decrease in the cost of commodities by one business is to compete with other businesses. Still, though, people would buy from other businesses. So, instead of decreasing the price, that additional wealth may go into advertising, or convincing consumers to buy this other product. The Capitalist may even use the technology as an advertising ploy. But, once the consumer purchases the products of this Capitalist, they have gained no real advantage, when compared with other products, since the additional productivity of capital has only rendered more wealth to the Capitalist, and not the consumer or the worker (and, it must be understood, that most of the time, the terms "consumer" and "worker" are dealing with different sides of the same person). The reason for a Capitalist to compete is simple: self interest. By decreasing the cost, this Capitalist may argue, he is selling more than before, thus making more profit, which is what he is rationally pursuing by decreasing cost. There is ample evidence to support the theory that production cost is not the only determining factor of a commodity's retail value. In his famous essay of 1778, Thomas Malthus wrote, "The increasing wealth of the nation has had little or no tendency to better the condition of the labouring poor." [*114] And, elsewhere, too, he writes, "...the increase of wealth of late years has had no tendency to increase the happiness of the labouring poor." [*115] Describing the fluctuations of an economy, and its relation to the cost of goods (and, therefore, to the cost of living)...
What is it that precisely determines the retail cost of a good? In essence, there are two rules: first, the retail cost must cover the cost of production, otherwise the business will fail to make a profit and go under; and second, the retail cost will go as high as the consumers are willing to pay for it. This can be seen in our everyday lives, where the cost of things dramatically rises before holidays, such as Christmas, Halloween, or other assorted special days of the year. Prior to the holiday, the price soars, but once the holiday is over, the commodities assorted with that holiday decrease in price. Section VIII: Surplus Value When a worker labors for his wage, often times he is laboring productively. By this, I mean he is creating wealth for his employer. If a Capitalist employs 10 workers to plant and harvest a field, by the end of the season, he may find himself with 10,000 crops. Since the workers are paid a subsistence wage, the Capitalist pays each of these workers an amount of money that would keep them subsisting, or in this scenario, perhaps an amount of money equal to 1,000 crops. So, 1/10th of his income goes to pay for his expenses. The rest, 9/10ths, becomes profit. (In a realistic scenario, there are other expenses incurred, such as taxes, capital, etc., etc., but I am simply trying to demonstrate a point here.) The 9/10ths, though, is 9,000 crops. To a region of people, there is value in 9,000 crops. But, to a Capitalist, every crop, besides those he does not eat, is useless. If, in a month, a Capitalist can only eat 100 of these crops, then the rest, 8,900, which would have gone bad, are completely useless to him. He may trade them, very well, to another Capitalist. Perhaps another Capitalist employs 10 workers to operate a factory, and creates 1000 pairs of clothes in a season. The owner of the farm can trade his crops for clothing, but beyond several pairs of clothes, the rest are useless. Perhaps the Capitalist can trade the surplus of crops to a construction firm, to build him several small huts, but every hut beyond the one he uses, is completely useless to him. He may, in the end, trade all of his crops for money, which would be rational, but money is only a sort of credit. It only means that in the future, he will be able to purchase these common items: clothing, food, housing. But, all of the money that he cannot use before he dies, will be completely useless. The surplus, which he has procured through legal contracts, becomes utterly useless to him. Here, though, we will see something that is rather marked in every nation's economy: the rise of industry which cater to the desires of the wealthy. Factories, farms, and mines will be erected that create things which only the wealthy could afford. The laborers here, however, labor with a certain unproductivity. For instance, a garment that a wealthy person would typically wear. Perhaps it is equal in production cost to ten commoner garments. It may very well take ten workers to create it in a day, whereas if those same ten workers were employed in making commoner garments, they would be able to produce a single garment each. Food, as well, will be of the best quality, often times made in a method, or of a distinct nature, that it is difficult to obtain. Clams, for instance, are often times a food of the Capitalists. If ten Proletarian workers, all of them working on a boat obtaining these claims, had abandoned this task, and one of them had decided to work the fields of a farm, they will produce more than the nine other Proletarians working on the ship. If every worker on the ship had decided to work on a farm, but was only required to produce as much food, each would be working one tenth of the normal time. It is quite true, also, that Capitalists enjoy rather expensive, fancy housing, some of their purchases being compared to palaces. So, once a Capitalist produces 10,000 crops, his profit being 9,000 of those crops, they will be useless to him, so he will trade them for things which are of worth to him. Instead of living in a hut, he will live in a mansion. Instead of eating corn, he will eat clams and caviar. Instead of wearing commoner garments, he will wear outfits which had been reserved for royalty and wealth. Also, since there are some workers which are paid more than a subsistence wage, there will also be a rise of industries which cater to the needs of those workers. The foods, clothing, and housing, for instance, which are between commoner and wealth, are sold to those whom are Proletarians, but paid more based on their skill, education, or ability. There are countless specific examples of Capitalists using their funds to support extraordinary luxuries. In 1668, Josiah Child writes, "Many of whom then would not go to the price of a whole Sattin Doubtlet; the Embroiderer being yet living, who hath assured me he hath made many hundreds of them for the Nobility with Canvas backs." [*117] In 1691, Dudley North writes, "A very rich Man hath much Plate, for Honour and Show." [*118] In 1755, Jean Jacques Rousseau, sometimes called the peoples' philosopher, would write in an economic treatise, "As long as there are rich people in the world, they will be desirous of distinguishing themselves from the poor..." [*119] In document which I cannot find a date for, David Hume wrote (presumably around the mid 1700's), "Great quantities of plate are used in private houses; and all the churches are full of it." Since all the wealth and luxury that is used by the wealthy is obtained by the poor and laboring classes, it is the poor who have produced such wealth. In 1767, James Steuart writes, "...the progress of luxury brings distress upon the poor industrious man..." [*121] Describing the principle of trading useless objects for items which are usable, Steuart further writes, "Otherwise, the plenty produced, remaining in the hands of those who produced it, will become to them an absolute superfluity; which, had they any trade with a neighbouring state, they would sell, or exchange..." [*122] Still describing the transactions of common items for extravagant ones, Steuart writes, "...when raw silk and delicate wines, &c. are given in exchange for grain and other provisions." [*123] And elsewhere he writes: "...the wealthy among them insist upon purchasing all the instruments of luxury which they formerly were used to enjoy..." [*124] In one last final part, he still describes the lifestyle of the wealthy, "The most virtuous man in France may have the most splendid table, the richest clothes, the most magnificent equipages, the greatest number of useless horses, the most pompous palace, and most extensive gardens. The most enormous luxury to be conceived..." [*125] Thomas Malthus, the classical economist, in 1778 would write...
In his 1830 speech, Nassau Senior would describe the mechanics of workers, their subsistence, and the Capitalist employing them, and -- inevitably -- the wealth that the workers create for their employer: "He [an economist] supposes him [the capitalist] to have been in the habit of commencing every year with a capital consisting of wages for a certain number of labourers, which we call twenty-six, and of employing that capital in hiring twenty men, to reproduce, during the year, wages for the whole twenty-six, and six to produce commodities for himself." [*127] In November of 1862, the T. E. Cliffe Leslie would have an article published entitled, "The Love of Money." In it, he writes, "The mistake made by the ladies of our time seems to be that of aiming at show and accomplishing waste; while the mistake of the gentlemen is that of aiming at plainness and accomplishing gloom." [*128] Describing the other ways in which the wealthy manage to accomplish extravagance...
John Muir was a Conservationist of the late 1800's, who greatly opposed the destruction of the natural environment for corporate profits -- a trend that could be seen in society by just about anyone. On March 25th of 1873, he described a luxury of the wealthy: "...the costly lily gardens of the rich..." [*130] Thorstein Veblen, speaking more as a sociologist than an economist, in an article published in a journal for the year 1898 to 1899, would write, "Notions of economic rank and discrimination between persons, whether in point of possessions or in point of comfort, are almost, if not altogether, in abeyance." [*131] In another part, he writes more authoritatively, "In the further cultural development, when some wealth has been accumulated and the members of the community fall into a servile class on the one hand and a leisure class on the other..." [*132] Lawrence Veiller had an article published in the Charities Review of 1900 to 1901, in which he wrote, "The well to do classes do not live in the country, and so long as they live here there will be a large number of persons to do their work, on whom they are dependent for their very lives, 'hewers of wood and drawers of water,' or their modern equivalent." [*133] As a reformer, who was sick of society and the way things were being done, J. W. Hart says with a sense of bitterness: "Give a man the right to come and go as he will, the employer the right to hire and discharge at will, and that is all there is to it in their estimation. Comfortably housed and well fed they have no conception of conditions among honest, hard-working men." [*134] In another part, he writes still with more emotion in his words, "If there was famine in the land and no help could be given we might stand these things, but the problem of production has been so successfully solved that we have 'over-production' in every department of industry. The cause of the trouble is that a few are determined to pile up millions they have no use for, and we will not stand it to see our children sacrificed on the altar of greed and oppression." [*135] Lewis E. Palmer was a tenement inspector, whose job it was to make sure that residents of rented housing were living in sanitary and safe conditions. He published an article in the 1906 to 1907 year of a journal. In it, he describes a story of one of his fellow building inspectors...
In the 1908-1909 volume of the Quarterly Journal of Economics, Joseph Schumpter's article reads: "Nobody values bread according to the quantity of it which is to be found in his country or in the world, but everybody measures the utility of it according to the amount that he has himself, and this in turn depends on his general means." [*137] The book by Henry Demarest Lloyd of 1910 would be full of examples describing the luxury of the wealthy. In one part he describes the home of a Capitalist of a major monopoly: "...his marble fortress on Twenty-third Street..." [*138] Describing the recreational activity of the investors: "...a party of Chicago business men were idling in their yacht over the cool waters of Lake Michigan..." [*139] Still describing their recreational activities, he writes, "They all do something to raise prices, or hold them up, and they wind up with banquets for which we pay." [*140] And finally: "The livery companies of London, with their gloomy guildhalls, their wealth, their gluttony and wine-bibbing, their wretched Irish estates..." [*141] In his inaugural lecture of 1930, L. F. Giblin spoke to his audience...
Section IX: The Nature of Profit A business owner, motivated by his own self interest and with his reasoning ability, will be desirous of gaining wealth. The primary goal is to increase profit. There are two ways of going on about this: decreasing cost while maintaining revenue, or increasing revenue while maintaining cost. For instance, a grocery store owner is buys bread for $0.50 a loaf, and is selling bread for $2.00 a loaf. When he ups the price to $2.25, he is making an additional $0.25 profit per loaf sold, for a total of $1.75 of profit per loaf. There are net costs to calculate, such as the cost of the store, the cost of personnel, among other things, but to keep it simple, I will avoid expanding upon those. By increasing the cost by $0.25 per loaf sold, he is gaining in profit. This translates to something else, though. By increasing profit, he is expanding how much wealth he personally obtains. For instance, if the businessman's particular interest is the consumption of expensive, 100 year old wine, and he managed to purchase 25 bottles a month. However, with this increase in revenue, and thus, increase in profit, he now manages to purchase 26 bottles a month, an additional bottle. There are, of course, various possibilities to consider. For instance, an increase in cost may deter consumers to purchase other brands, or perhaps other products altogether. Perhaps it does, and it leads to an extraordinary decrease in sales. Or, perhaps it does, and it leads to a very small amount of decrease in sales. Whatever the case, I shall ignore these various cases, for the sake of demonstrating a point on the nature of profit. Essentially, when the customer pays an increased price for a product, they are buying more for the individual selling them the product. Since they are paying more for the business owner's wealth, this means they must cut spending in other areas, or work more to receive a paycheck to sustain their means of living. As the cost of the product rises, so does the wealth and expenditure of the business owner, which translates to a demand on luxury business, or business which caters to the interests of business owners and the wealthy. The only individuals who will be willing to work, now, though, are those willing to sustain their current status. An increased profit, or at least, a higher price, translates to a person working harder and more to produce the wealth that will be consumed by others. In the 1910 publication of some of the collected works of Henry Demarest Lloyd, there is a great deal of insight in the matter concerning the nature of profit. In it, he writes describing one situation which explains the point I am trying to make...
Section X: Economic Fluctuation It has been supposed, by some economists, especially those dubbed as "classical," that when there is an influx of employment, it is due to an increase in production, and when there is a decrease of employment, it is due to a decrease in production. For instance, when there is a famine, a plague, or a war, few people will be consuming or producing, or labor will merit a smaller amount of produce. It is true, I admit, that these instances may exist, and that they may burden an economy. However, there are times when famines, plagues, and wars do not exist, and still there are few employed, poverty runs rampant, and misery is a commonplace existence of the great masses. Such periods of time may be called depressions or recessions. When trying to understand the cause of these, there is a variety of factors that one might take into consideration. I will try to, with as much deductive reasoning and evidence as I can must, I will try to explain what I think is the most accurate explanation of these depressions or recessions. My thesis, concerning the economic fluctuations, of the rise and fall of employment in an economy, is that it is wholly and entirely caused by underinvestment of the Capitalist class. Now, I will try to prove this... First, we must take into consideration the evidence of the previous chapter. In the previous chapter, I discussed the leisures of the wealthy Capitalist class. They enjoyed everything that they could afford, purchasing luxurious forms of housing, clothing, food. The necessities of mankind including food and housing. They still needed this, but they refused to take it in a form that was not luxurious or reflecting their taste. So, too, recreation is also a necessity to any person who is expected to have a strong work ethic. But, the Capitalist is not fit to have any form of recreation that the commoner is fit to have. He must have for himself the most luxurious form that he is capable of purchasing. Why is it that a Capitalist, or any wealthy person, would do this? Part of it has to do with the human desire to progress and move forward, even when it comes to pleasing the interests of self. Another part of it has to do with the uselessness of surplus value. If a Capitalist has produced 10,000 pounds of grain, and used 3,000 pounds of it to pay off workers, the 7,000 pounds belong to him -- but everything beyond what he can't eat is completely useless to him, because he will never be at the point where it can satiate his desires. So, he trades it, for higher class food. Maybe 10 pounds of grain is the equivalent of a side of steak, or maybe 100 pounds of grain is equivalent to a small jar of caviar. At least he is using the wealth that he has produced. Appeasing his needs, of housing, food, and recreation, the Capitalist has managed to turn his life into what many others would call a dream life. This principle must taken into consideration. With this concept understood, we must understand further what it is that causes the depressions and recessions of the past, and of our own times. Why is it that unemployment may be up or down at the current time? Such questions have plagued economists, particularly those of modern times. The overly confusing philosophy of Keynes seems to ward off those interesting in discovering what John Maynard Keynes thought. So, what is the answer? Why is it that an area is stricken with poverty and misery at one time, but flourishing at another? It was the answer of most classical economists that such turns in the economy were mostly caused by natural disasters, or wars, or other things which would naturally inhibit the production, distribution, or consumption of commodities. There is no denying merit to this theory. While there is a horrible war occurring, there is a low chance that the economy will be booming, since much manpower -- on and off the field -- is dedicated to the war effort. The same can be said of a widespread natural disaster, such as a tornado or a hurricane, which destroyed factories, crop fields, and the roads used for transportation. However, the fault of this theory is that the economy is slumping and otherwise resembling a dead, rotting creature when all wars, natural disasters, and other inhibitors of trade are as far away as can be. Who is it that controls the matter of employment and unemployment? The answer to this is remarkably simple: the Capitalist. Those who own, but do not operate, the means of production in a society are those who choose to employ people to run it for them. However, this is not evidenced enough to immediately indict those who own the means of production for the fluctuation of economics. One must first ask: why is it that Capitalists would have no need for those they employ? A variety of reasons could be offered. Perhaps a new machine has been invented that replaced manual labor. Perhaps the Capitalist subcontracted to another Capitalist that was more efficient at a particular task. When the stocking machine was invented, the productivity of workers increased by 100 times. Imaginably so, there were great amounts of layoffs. These workers, who must work so that they can live and eat, flooded the market. They went into the other industries: they tried to become farmers for agricultural Capitalists, they tried to become machine workers for manufacturing Capitalists. They were endlessly seeking out that one thing that would keep them alive in this society: employment. Where was it that these workers ended up, who had been replaced by new machines? Where is it that any unemployed worker ends up, once replaced by a budget-saving device? They flood into other industries, bringing down the market value of labor. (As the rule of competition has shown us, once the availability of a commodity increases, its price decreases -- and the rules do not change with labor.) If they cannot find employment, then they remained unemployed, but willing to work. In that sort of economy, what would it be that would inspire the Capitalist to employ workers who have no niche in society? Since all people work on the principle of self-interest, it would only be for the sake of wealth. How is it that a Capitalist could make wealth out of employing these temporarily undesirable workers? The answer is in fact quite simple: set them to work producing a commodity that would be purchased by the public, and make sure that they produce more wealth than they cost. The result of this is also simple to see: more wealth in the pocket of the Capitalist, meaning more surplus value. With that said, it must be understood that the only reason why employment exists is because, as Bakunin said, that the Capitalist comes to the market expecting to become rich. At what point, then, is it that the Capitalist ceases to become rich? The answer one must deduct, similarly, must be easy: at the point by which their surplus value is overexcessive. Capitalists use their extra wealth in a way that is meaningful and useful to them. A palace for a home instead of a hut, caviar and veal for food instead of a loaf of bread, and extravagant robes for clothing instead of rags. Once the Capitalist has reached the point where he has wanted to with his surplus value, with his profit, then it serves him no purpose to continue his conquest for wealth. Instead of using the remaining parts of his wealth to hire workers to produce things that will be desirable to either ordinary consumers or extravagant Capitalists, or even something in between, the Capitalist locks up that wealth and refuses to use it. With this, we have decreased employment, decreased trade. The primal cause of economic fluctuation, the reason why it soars so high and the reason why it dips so low, is because of the same cause: the will of the Capitalist to invest in industry. Section XI: Summation In the reasoning of my estimation, I believe I have accounted for, largely, the economic whole of our society: the origins and nature of the different classes of society and what produce them. My reasoning was based on rather simple and human premises. In short, I shall list the premises, as they lead one to the other... Section I: Some Foundational Principles of Economics...
Section II: The Society of Men...
Section III: Competition and Modern Society...
Section IV: Economic Classes...
Section V: Class War...
Section VI: Diversity of Wages...
Section VII: The Cost of Labor and Commodities...
Section VIII: Surplus Value...
Section IX: The Nature of Profit...
Section X: Economic Fluctuation...
Section XII: Preface to the Following Chapters I must admit, before going on, that the economics I dealt with in this section were only the ones necessary for demonstrating the effects of Capitalism upon society. How is it, one may ask, that wealth is distributed among the members of society, from the Proletarian class to the Capitalist class, from the lowly, unskilled factory worker to that of a university-educated doctor? Why is one better off, financially, than the other? To these questions, I have provided the preceding explanation of economics. There are a great deal of other economic concepts that I completely ignored and passed off, but I did so quite intentionally. Concepts such as what determines the rate of interest on business or personal loans, the degree to which economic prosperity or decay contribute to the rent of land whether used for personal or business reasons, the effects of foreign trade on domestic territory, the results of large-scale corporations governing the majority of trade -- all of these concepts are dealt with in economics. Though I offer my work here as a whole economic treatise, I am ignoring these concepts because they do not directly relate to the issue at hand: the effects of Capitalism upon society. With all of that said, I present the following chapter as a dissertation of the result of these Capitalist economics upon society. Punkerslut, Resources 1. Gervaise, Isaac, "The System or Theory of the Trade of the World," 1720. London, Printed by H. Woodfall; and Sold by J. Roberts, near the Oxford-Arms in Warwick-Lane, MDCCXX, (Price Sixpence). Section: Of Gold and Silver, or Real Denominator.
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