CHAPTER IVToC

Income of working class (33,000,000 people)about£650,000,000Income of middle class (all except manual labourers and the rich—small business men, managers, clerks, public servants, &c., with incomes up to £700—9,750,000 people)about475,000,000Income of rich (with incomes £700 and above) (1,250,000 people)about600,000,000Totalabout£1,725,000,000[140]

From the foregoing statement it appears that the rich draw not two-thirds, but only one-third, of the national income, and this fact should be carefully borne in mind in view of the contents of the following pages.

The pamphlet states on page 6 that 650,000,000l.per annum are paid in the shape of rent and interest, "not in return for any service rendered to the community, but merely as the payment for permission to use the land and the already accumulated capital of the country." The national capital is invested chiefly in perishable objects such as houses, factories, railways, steamships, mines, &c., which depreciate unless kept in proper repair. There is wear and tear in capital as in everything else. Capital is lost and destroyed every day. Lastly, the national capital is growing, and must continue growing, in accordance with the growing capital requirements of the time and the growing number of its inhabitants, or the country will decay. New houses, new factories, new railways, new steamships must be built and new mines be opened to increase the comfort of all. From 200,000,000l.to 300,000,000l.are thus reinvested every year in Great Britain, and only by this constant process of reinvestment is it possible to maintain and increase the productive power of the country for the benefit of all. The 200,000,000l.to 300,000,000l.which are yearly reinvested in reproductive undertakings are found by the capitalists, the trustees, directors and managers, not the consumers, of the national industry and of the national wealth. This sum comes out of their earnings, which thus benefit not only the capitalists but the whole nation. Much irrelevant statistical matter is given in the pamphlet, but this large item is left out. That is dishonesty number three.

On page 6 the profits of public companies are treated as "Interest on capital," and interest on capital is disparagingly called "unearned income" on page 7. MostBritish industries are carried on by limited companies, and limited companies are as a rule formed in this way, that the partners in the former private enterprise become directors. As directors they receive a purely nominal salary. They work as much as they did whilst the business was a private concern, and their income depends on their usually very large holding of shares. The large director-shareholders, and their number is very great, earn their dividends by hard work. Nevertheless their whole income is included in the item "interest on capital," and called "unearned income." This is dishonesty number four.

On page 7 the property of the "manual labour class," or the poor, in land and capital is given as follows:—

In 1901 the deposits in P.O. Savings Bank were£140,392,916The deposits in Trustee Savings Banks were51,966,386Consols purchased for small holders were14,450,877In 1900 the capital of Building Societies was46,775,143The funds of Trade-Unions, Co-operative, Friendly, and Provident Societies were72,219,991The funds of Industrial Life Assurance Societies were22,998,793Total£348,804,106[141]

In reality the property of the "manual labour class" in land and capital amounts not to 348,804,106l., but to at least 1,000,000,000l.[142]This is dishonesty number five.

The imports of Great Britain are larger than the exports by about 150,000,000l.The larger part of the money paid for these imports goes in wages paid toforeigners, and is paid away by the British capitalist class out of their earnings. British wage-earners surely cannot expect to be paid wages in respect of articles made abroad. However, no allowance for this large item has been made in comparing the appropriation of the national income between capital and labour. This is dishonesty number six.

Between one hundred and two hundred million pounds of the national income is derived from foreign investments. The income derived from foreign investments should in fairness either be left out of the account or the income of foreign labour, received in respect of these investments, be added to the British labour income. In comparing the income of capital and labour, the pamphlet takes note of the earnings of British capital on all five continents and on the sea, and compares with it only the income of British labour—although foreign, not British labour, produces the foreign income of British capital.

Giving as authority an ancient Board of Trade Return, and wishing to magnify the difference in the earnings of the idle rich and the industrious poor, the average yearly income of "those of the manual labour class who are best off" is given at 48l.per adult. This means 18s.per week. In view of the fact that most British workers earn between 1l.and 2l.per week, that in many Trade-Unions theaveragewage is about 35s.per week, the figures given are palpably wrong unless the female workers are included. Whether this is the case or no is not stated, but even if the wages of both sexes should be joined together they appear to be very considerably understated. This is dishonesty number seven.

There are many more unfair, misleading, and dishonest statements in this pamphlet which it would lead too far to enumerate.

Most of the important pamphlets issued by the Fabian Society are signed by their authors. The fact that themost effective, "Facts for Socialists," is unsigned seems to indicate that the author—apparently a well-known leader of the Fabians—had some sense of shame, and it is to be hoped that the Fabian Society will immediately, and publicly, repudiate this dishonest pamphlet.

The statements contained in the pamphlet "Facts for Socialists," may be misleading and utterly dishonest, but they are very useful for propaganda purposes. Nothing is more likely to inflame the masses than to be told that the "idle rich" take more than two-thirds of the national income. The practical effect of this pamphlet may be seen in utterances such as the following: "It has been estimated that in our country of the wealth produced, one-third is enjoyed by those who earn it and two-thirds by those who have not laboured for it. To put it in other words, of every three pounds earned by labour, one pound goes to him who earned it and two pounds to others who have done nothing towards its production."[143]"For two-thirds of his time the worker is a slave, labouring not for himself but for others."[144]"On the average at the present time the workers produce nearly four times as much as they consume."[145]"Nearly two-thirds of the wealth produced is retained by an eighth of the population."[146]"The great mass of the people, the weekly wage-earners, four out of five of the whole population, toil perpetually for less than a third of the aggregate product of labour, at an annual wage averaging at most 40l.per adult, and are hurried into unnecessarily early graves by the severity of their lives."[147]"Out of the wealth which his labour creates, the worker receives but one-third. He is paid one-third the value of his labour, and when heseeks to lay it out he is robbed of one-half its purchasing power, and all this is done by a Christian people."[148]"Q.How does the capitalist act?A.He extorts from those labourers who are excluded from the land a share of all that they produce, under threat of withholding from them the implements of production and thus refusing to let them work at all.—Q.On what terms does the capitalist allow the labourers to work?A.The capitalist agrees to return to them as wages about a quarter of what they have produced by their work, keeping the remaining three-quarters for himself and his class.—Q.What is this system called?A.The capitalist system."[149]"By analysing the returns of the income-tax, various economists show that the value received by the working class and the superintendents of labour amount to a third or less of the wealth produced. The income-tax returns, however, are not a very reliable test of the degree of exploitation, though, of course, they afford us valuable and incontestable evidence that the worker does not receive more than a third of what he produces. One to four, or one to five, in my opinion, expresses more accurately the rate of exploitation."[150]

I am not prepared to give an estimate how the national income is distributed between hand workers, brain workers, and men who live on their income without doing any useful work, because such an estimate could be arrived at only by guesswork. However, it is quite clear that it is untrue that the wage-earners receive only one-third, one-fourth, or one-fifth of the wages which they ought to receive, as is constantly stated.

[95]Justice, October 19, 1907.

[96]Social-Democratic Federation Song Book, p. 13.

[97]The Worker's Burden, p. 1.

[98]Hyndman,Social Democracy, p. 9.

[99]Macdonald,Socialism, p. 12.

[100]Protect the Home, p. 1.

[101]John Ball, p. 10.

[102]Facts for Socialists, p. 12.

[103]Sidney Webb,The Difficulties of Individualism, p. 15.

[104]Ibid.p. 7.

[105]Ibid.p. 12.

[106]Keir Hardie,Can a Man be a Christian on a Pound a Week?p. 12.

[107]McClure,Socialism, p. 27.

[108]Ethel Snowden,The Woman Socialist, p. 11.

[109]Joynes,The Socialist Catechism, p. 5.

[110]To the Man in the Street, Social-Democratic Federation Leaflet.

[111]Hyndman in Debate,Will Socialism Benefit the English People?p. 5.

[112]Leatham,The Class War, p. 4.

[113]Socialism, For and Against, p. 6.

[114]Snowden,Socialists' Budget, p. 11.

[115]Debs,Industrial Unionism, p. 5.

[116]Kautsky,Class Struggle, p. 10.

[117]Hall,The Old and New Unionism, p. 4.

[118]Lister,Riches and Poverty, pp. 13, 14.

[119]Bax and Quelch,A New Catechism of Socialism, p. 7.

[120]Poems for Socialists, p. 8.

[121]Social-Democratic Federation Song Book, p. 25.

[122]Washington,A Corner in Flesh and Blood, p. 14.

[123]Ibid.

[124]Benson,Socialism, p. 5.

[125]Washington,Nation of Slaves, p. 11.

[126]Davidson,The Old Order and the New, p. 30.

[127]Some Objections to Socialism, p. 7.

[128]Davidson,The Old Order and the New, p. 45.

[129]Morris,Useful Work and Useless Toil, p. 30.

[130]Some Objections to Socialism, p. 20.

[131]Keir Hardie,From Serfdom to Socialism, p. 52.

[132]Hall,The Old and New Unionism, p. 5.

[133]Macdonald,Socialism, p. 6.

[134]The Socialist Annual, 1907, p. 16 f.

[135]Facts for Socialists, p. 5.

[136]Facts for Socialists, pp. 6, 7.

[137]Ibid.p. 7.

[138]Ibid.p. 8.

[139]Facts for Socialists, pp. 8, 9.

[140]SeeDaily News, November 28, 1907.

[141]Facts for Socialists, p. 7.

[142]See Mr. Quail's paper in theContemporary Reviewfor August 1907.

[143]Ward,The Ideal City, pp. 5, 6.

[144]Keir Hardie,From Serfdom to Socialism, p. 15.

[145]Quelch,Social-Democratic Federation, p. 5.

[146]Manifesto of the Socialist Party of Great Britain, p. 8.

[147]Sidney Webb,The Difficulties of Individualism, p. 8.

[148]Keir Hardie,Can a Man be a Christian on a Pound a Week?p. 7.

[149]Joynes,The Socialist Catechism, p. 2.

[150]Hazell,Summary of Marx's "Capital,"p. 9.

In describing the doctrines of Socialism I do not mean to state in detail the whole of the Socialistic theories. Such a statement would fill a volume, it would be excessively tedious to most readers, and it is for all practical purposes quite unnecessary. A statement of the leading doctrines on which the activity of the Socialists is based—the doctrines which are constantly asserted and which are the fundamental dogmas of the Socialist faith—will enable us to obtain a clear view of the foundations upon which the theoretic fabric of Socialism is built, and to judge whether that foundation is scientific and sound, or unscientific and unsound.

The basic doctrine of Socialism, upon which the great edifice of Socialistic theory has been reared, may be summed up in the phrase

"Labour is the only Source of Wealth"

Therefore we read in the celebrated pamphlet "Facts for Socialists," of which some important extracts were given in the preceding chapter: "Commodities are produced solely by the 'efforts and sacrifices' (Cairns), whether of muscle or of brain, of the working portion of the community, employed upon the gifts of Nature. Adam Smith 'showed that labour is the only source of wealth.... It is to labour, therefore, and to labour only, that man owes everything possessed of exchangeablevalue (McCulloch's 'Principles of Political Economy,' Part II., section 1). 'No wealth whatever can be produced without labour' (Professor Henry Fawcett (Cambridge), 'Manual of Political Economy,' p. 13),"[151]

This statement is scarcely honest, for it quotes opinions of Adam Smith and others which are erroneous, as will be seen in the following, and which have been generally abandoned. This statement may impose upon the simple by its show of learning, but it is somewhat vague, for it only suggests, but does not distinctly assert, that manual labour is the only source of wealth. However, in most—one might say in nearly all—Socialist books, pamphlets, and declarations of policy we find the basic doctrine of Socialism asserted in a form which leaves no doubt that according to the Socialist theories the manual labour of the labourer is the only source of wealth.

The founder of modern Socialism declared, "Labour is the only source of wealth,"[152]and his disciples—at least his British disciples—support that declaration. "All wealth is due to labour; therefore, to the labourers all wealth is due."[153]"Labour applied to natural objects is the source of all wealth."[154]The Socialist Party of Great Britain declares: "Wealth is natural material converted by labour-power to man's use, and as such is consequently produced by the working class alone."[155]The Independent Labour party asserts: "No man or class of men made the first kind of wealth, such as land, minerals, and water. Therefore no man or class of men should be allowed to call these things their own, or to prevent others from using them (except on certain conditions), as the landowners and mine-owners do now.The only class of human beings who make the second kind of wealth are the workers. Working men and women produce and prepare for us all those things which we use or consume, such as food, clothing, houses, furniture, instruments and implements, trams, railways, pictures, books, gas, drains, and many other things. They produce all the wealth obtained by toil from the land."[156]

Those who maintain that labour, or, as some Socialists assert, the labourer's labour, is the only source of wealth, look merely at the mechanical factor, but omit the force which directs and controls it. The Socialistic argument "We can run the mills without the capitalists, but they cannot run them without us"[157]is misleading. Labour is certainly an indispensable ingredient in production, but it is no more indispensable than is direction, invention, and thrift. Hence it is as absurd to assert "All wealth is due to labour" as to say "All wealth is due to invention," or "All wealth is due to thrift." As the brain is more important than the hand, at least in a highly organised state of production, so invention, organisation, management, and thrift are more important than manual labour, because invention, organisation, management, and thrift alone enable manual labour, working with modern machinery, to be highly productive. In fact, it may be asserted that wealth is created not so much by labour as by the saving of labour. A factory-owner who is dissatisfied with the profits of his factory or with its products does not get better workers, but gets a better manager or better machinery, keeping his workers. This fact proves that labour is the least important factor in modern production. The doctrine "Labour is the only source of wealth" is untenable and absurd.

Another fundamental doctrine of Socialism is that of

"The Iron Law of Wages"

According to that law, "wages under competition can never be higher than that which will just support the labourer and enable him to renew his kind."[158]In the words of Lassalle, the inventor of the Iron Law of Wages, "the wages of the labourer are limited to the exact amount necessary to keep him alive."[159]

The British Socialist writers tell us: "The average price of wage-labour is the minimum wage—i.e.that quantum of the means of subsistence which is absolutely requisite to keep the labourer in bare existence."[160]"The labourer cannot as a rule command more than his cost of subsistence in return for his labour. This principle, that the return to labour is determined by the cost of subsistence of the labourer, is generally known as 'The Iron Law of Wages.' But has not this law been discarded even by some Socialists? There have been attempts in some quarters to demonstrate that this law does not actually operate with the rigidity at first claimed for it; but in truth, it stands as firmly to-day as when insisted upon by Lassalle."[161]"Capitalism always keeps the wages down to the lowest standard of subsistence which the people will accept,"[162]for "the basis of wages is the cost of subsistence of the labourer. This is called the 'Iron Law of Wages.'"[163]"By the Iron Law of Wages the recompense of the workers always tends to the minimum on which they are willing to subsist. If they are content with water to drink and cabbage to eat, they may be sure that the means of buying whisky or roast beef willvery soon be taken from them. Messrs. Rentmonger, Interestmonger, and Profitmonger will speedily scent additional swag, and they will have it, too."[164]"The 'Iron Law of Wages' reduces the wages to as near the level of the means of subsistence as local circumstances will admit of."[165]If these arguments were correct it would follow that the workers could cause their wages to rise by drinking wine instead of whisky, and by smoking Havana cigars instead of pipe-tobacco.

This theory of wages is called the "Iron Law of Wages" because of its absolute and pitiless rigidity. For instance, the Iron Law of Wages will prevent lower prices of food benefiting the workman in any way. "If the working class is enabled to buy cheap bread, the operation of the 'Iron Law of Wages' will secure all the advantage for the capitalists, as it did in the days of the saintly Bright, when the corn laws were repealed. Capital is always the same in its effect on the working-class, whether manipulated by an individual capitalist, joint-stock enterprise, municipality, or government, and with each step in concentration the working-class gets relatively less and the master class gets richer, more corrupt, and more bestial, as recent events in Berlin and elsewhere show."[166]The "Iron Law of Wages" is irrefutable and irresistible. "Economists have come to talk about the 'Iron Law of Wages' with as much assurance as if it were an irreversible law of Nature."[167]

The Iron Law of Wages exists chiefly in the imagination of British Socialists. The general wage of British workmen living in towns ranges from, say 18s.to more than 2l.per week, and its amount does not depend on the cost of subsistence, but on the working skill andvarious other factors. If the Iron Law of Wages were correct, wages would be almost uniform. The Iron Law of Wages can possibly apply only to one small class of workers, the lowest and least skilled labourers, provided that unemployment is so great among them that they abandon collective bargaining and underbid one another down to the level of subsistence. When workers are organised, the Iron Law of Wages does not apply. The level of wages depends, broadly speaking, on supply and demand. Wages rise when two employers run after one workman; wages fall when two workmen run after one employer. An employer who engages a workman does not ask, "How much do you eat?" but "What can you do?" and he proportions the worker's remuneration not to his appetite, but to his ability and his value as a producer. The wages paid to married men and to unmarried men are identical in the same trade. If there was an "Iron Law of Wages," the wages of married men should be about twice as large as those of unmarried men.

The Iron Law of Wages is manifestly absurd. It has therefore been officially abandoned by the German Socialists at the Halle Congress of 1890 "as being scientifically untenable."[168]"German Social Democracy no longer recognises the Iron Law of Wages."[169]The British Socialists have not abandoned it, probably not because they believe it to be scientifically correct—no one can believe that—but because it is a plausible and effective means of poisoning the minds of the people.

As regards the factors which determine wages, one of the foremost Socialist authorities says: "Thoughtful workmen in the staple trades have become convinced by their own experience, no less than by the repeated arguments of the economists, that a rising standard of wages and other conditions of employment must dependultimately on the productivity of labour, and therefore upon the most efficient and economical use of credit, capital, and capacity."[170]In other words, productivity and profit determine wages, and it is ridiculous that Socialists argue: "Over 90 per cent. of our women do not drink, back horses, smoke, attend football or cricket matches, they do not stop off their work to watch England and Australia play at cricket, and the result is they are paid less wages than men in our factories for doing the same work."[171]Does Councillor Glyde really believe that women's wages would rise as soon as they took to smoking and drinking?

According to this law the improvements in machinery, the increase of capital and increase of production do not benefit the worker. They only lead to a decline in wages and thus increase the workers' misery. "In proportion as the use of machinery and division of labour increases, in the same proportion the burden of toil also increases whether by prolongation of the working hours, by increase of the work exacted in a given time, or by increased speed of the machinery, &c."[172]"The faster productive capital increases, the more does the division of labour and the employment of machinery extend. The more the division of labour and the employment of machinery extend, so much the more does competition increase among the labourers and so much the more do their average wages dwindle. And thus the forest of arms outstretched by those who are entreating for work becomes ever denser and the arms themselves grow ever leaner."[173]"The more the worker labours the less reward he receives for it;and that for this simple reason, that he competes against his fellow-workmen and thus compels them to compete against him and to offer their labour on as wretched conditions as he does, and that he thus, in the last result, competes against himself as a member of the working-class."[174]"The worker in the factory gets, as a worker, absolutely no advantage from the machinery which causes the product of his labour to be multiplied a hundredfold."[175]"John Stuart Mill, it will be remembered, questioned whether mechanical invention had lightened the labours of a single human being."[176]"With increasing powers of production, the worker's share, and therefore his purchasing power, grows less."[177]"Wage-labour rests exclusively on competition between the labourers."[178]"The iron law of competition means, and must mean, continued degradation for the workers, even though their physical condition in youth may be improved."[179]"The worker in the factory is now seen to work no shorter hours or gain no higher wages merely because the product of his labour is multiplied a hundredfold by machinery which he does not own. 'The remuneration of labour as such,' wrote Cairnes in 1874, 'skilled or unskilled, can never rise much above its present level.'"[180]

The celebrated "Doctrine of Increasing Misery" stands in diametrical opposition to those facts with which nowadays every child is acquainted. During the time when our Socialists have been preaching the "Doctrine of Increasing Misery" working hours have been very greatly diminished and wages have not been reduced, but have risen by about 100 per cent. During the same time working hours in Germany have also beenreduced and wages have risen up to 400 per cent.[181]The German Socialists have been honest enough to abandon the Doctrine of Increasing Misery under the guidance of Bernstein; the French have dropped it under the guidance of Sorel; the Dutch have seen its absurdity, guided by Vandervelde, their foremost leader. The British Socialists, on the other hand, have not abandoned it, though they must see its absurdity, probably because, though palpably and ridiculously false, the Doctrine of Increasing Misery is considered to be a useful and effective part of the Socialist agitator's stock-in-trade.

The next doctrine to be considered is

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