Nature of Society   by   Leon Maclaren

Chapter VI

Theory  and  Fact

In the last chapter the forces governing the distribution of wealth between rent and wages were examined and the result of each was measured. the conclusions reached are of major importance and are neither to be lightly accepted nor rejected. It is proposed, therefore, to put them to three powerful tests. The first will be - do these conclusions explain why, as civilization advances, wages tend to decrease.

In old established countries where wages have long since been reduced to a bare minimum, this tendency of wages to fall as civilization advances is not at once apparent. In territories where white men have recently settled, however, as in the case with the United States of America, the downward sweep of wages is within living memory.

When the North American continent was first being colonized, the homes and communities the emigrants made for themselves were of necessity primitive; but the knowledge they carried with them and their communications with the western world enabled them to advance rapidly. At first, there were no rich men and everyone was obliged to work for his daily bread, but there were no poor men. As these early settlements grew rapidly into great cities, as the population increased bringing with it all the advantages of the division of labour, as scientific methods were introduced and the powers of production leapt up, at the same time wages were driven down; some men grew very rich, but the majority were slowly reduced to poverty. With the railway engine came the tramp and with the library and museum the beggar and the pauper.

This same movement can be traced through the development of the older nations of the western world from the barbaric tribes which swept across the territories controlled by the crumbling Roman Empire. That there was a steady, uninterrupted decline in wages is not the case, there have been ups and downs, but after civilization passed a certain point the general tendency was for wages to fall towards a minimum.

Thus in the last hundred years in England there has been a considerable improvement in the standard of living amongst the poorer people. Two hundred years ago, however, the average working week in industry was four days. Then the artisan earned enough in these four days to maintain himself during the whole week at a standard of comfort which satisfied him. True, running water was not laid on to his house, he had no wireless set and could not indulge his leisure at the cinema; but these amenities were denied to King George himself. Relatively, the artisan of those days was far better paid than the tradesman of today. Four hundred years ago the lot of the poorer classes, judged by their wages, was better still. In the 1540's the golden age of English history was drawing to a close.

If the conclusions which were reached in the last chapter are correct, they must accord with these undoubted facts. It is proposed, therefore, to examine the behaviour of rent and wages in a community developing in modern times from a primitive settlement to a great town.

Let us imagine that a settler and his family come to a rich and fertile plain, far from any civilized community. Let them there mark out as much land as they will need and make their home. In such a setting they need not lack food, but they must grow it and hunt for it themselves; they need not want clothing, but they must be their own clothmakers and tailors; they need not be without shelter, but they must build it and maintain it when it is built. There life will be hard and, with all their effort, rude and solitary. They will be hindered by trees they cannot fell, rocks or boulders they cannot move. Wild creatures will devour their crops, perhaps even attack their persons. If they want a joint of beef they must kill a bullock. Their lot will be poor, but want and anxiety need not harass them.

Obviously, as landowners, they will not be in a position to claim any wealth at all. What they possess will come from their own effort and will be wages.

Suppose now, that after a lapse of time another settler arrives with his family. There is no doubt where he will settle. He will mark out his plot next to that of the first settler. The newcomers will bring an element of human companionship which will be welcomed. With united strength, the settlers may accomplish tasks beyond the individual powers of either. More important, each will have his own peculiar knowledge, aptitude and skill, the sharing of which will render many things easier which before had been difficult. Much waste will be eliminated. If both families want joints of beef they need kill but one bullock. There can be no doubt that henceforward the wealth produced by the first settler will be greatly enhanced, while the second will gain great benefit from coming upon the first.

Still neither, in his capacity as landowner, may claim any part of the wealth produced. Equally good land still abounds. Both families still rely on their own labour for their livelihood. This increased wealth will be wages. The effect of the new settlement, then, has been to increase wages very considerably.

So long as land of equal quality remained free, the arrival of each new settler would have the same effect upon the fortunes of all. The production of wealth per head would rise rapidly. None would be in a position to demand a share of the wealth produced in return for the use of land; there would be no rent. The ever-increasing product would be wages. Small refinements would be introduced into the lives of all. Knowledge, probably of a very practical character, would be accumulated to the benefit of all.

Soon, however, a new element enters into the community. With the growth of numbers, one who showed a particular aptitude in the fashioning and repair of tools would find it profitable to establish himself as, say, a smith. Clearly he would not transfer to this calling unless he could earn as least as much as upon his settlement. Indeed, he would expect to earn more. What he could obtain on the best land available to use would set a minimum below which he would not be willing to work. For a smithy, however, the fertility of the land on which it was sited would be of no consequence. Quite a different consideration would arise. Clearly a tradesman of this kind would do a far better trade if his workshop were built in the centre of the community where he would be easily accessible from all parts. He would, therefore, gain a considerable advantage from having one situation rather than another. Again, to earn his living he would not require as large an area of land as a farmer. He would produce as much wealth on a much smaller acreage.

Thus wealth which owed its origin not to any individual effort but to the existence of a community would begin to be attracted to land in a central position. Clearly a smith's trade requires that there should be a sufficient number of people who wish to have the advantage of his skill. Equally a small community could gain from having such a specialist in its midst. All the farmers would be saved considerable trouble by having a man to look after their machines for them. What is more, they would get better machines. The result would be that the work of all would be more productive. Most of the farmers would be glad to pay the smith for work done by him, unless it involved too much trouble. If the smithy were well situated, all the farmers would come to it and trade would be brisk. Thus the benefit of the co-operative effort would concentrate in a given spot, that is, would attach to a given piece of land. The smith would, therefore, be willing to pay part of the proceeds to the owner of a central plot, provided always that the amount demanded did not leave him with less than he could have obtained on a settlement of his own. What is more, he would require but a small area of land. So it would come about that although there was still an abundance of land of equal natural fertility to that which was occupied, yet men could acquire more wealth by working on particular pieces of land, because they were in the centre of the community, where co-operative effort could readily be cultivated.

This would enable the owner of the central plots to demand a share of the wealth obtained upon them in return for the use of them. Even if he used them himself he would be gaining this share of the wealth because he owned the land, for, if he had not owned it he would have been forced to pay rent for it. This rent which he would obtain would find its origin in the co-operative work of the community as a whole and would affix itself to his land because it happened to be in the centre of the community where the benefits of this co-operation were felt.

In the same way, the arrival of a storekeeper, always a popular man in a primitive settlement, would further increase the co-operation between the settlers. The storekeeper's business is to establish regular trading connections with the outside world. To him site is of first importance, for he must be in the centre of the community to gain the greatest advantage from his trade. His work would redound to the benefit of all. Wages would rise, for what a man could earn on the best land open to use would increase. At the same time the benefit to be obtained from carrying on a specialized calling in the centre of the community would increase also and the owner of the central land would be in a position to demand yet more rent.

Another comer to this young community, of a very different kind, will be the missionary. He is not concerned, as are the smith and the storekeeper, with the production of wealth, he does not work to make things from the land for the enjoyment of men, but he works directly for the men themselves. He comes among people, who, by necessity, are rough and ready, who have little scholarship and where the cultivated manners which do so much to make life in society smooth and efficient will probably be unknown. Laws will be rudimentary; too often a gun will be the final arbiter in disputes. Yet for all this, the settlers will need, perhaps more keenly than men in established countries, advice and direction in the daily problems of the soul. To them the missionary will be teacher, judge and friend. It will be his task to school them in those deep principles which will set them upon paths leading to the fulfilment of man's life upon earth. If the missionary knows and loves his work there can be no doubt that his entry into the community will add greatly to the sum total of human happiness. Under his influence, if it be strong, the community must gain in wisdom and grow more peaceful; without any doubt, if he succeeds in any measure with his appointed task, his work will lead to greater efficiency in the purely material sphere. It must be observed, however, that it is more than ever important that missionary should keep his place of worship and teaching in a good situation in the community. He will find it difficult enough to obtain that attention to his work which is most to be desired. Thus, though his work is concerned with no earthly things it effectively increases the rent of land.

As the community grows, new needs arise and give new opportunities to the diversified skill of men. Behind the smith and the cartwright come the joiner, the turner, the sawmill, the factory, the coalmine and the ironworks. Upon the storekeeper attends the merchant, the railway, the shipper and the warehouseman. After the missionary follow the teacher, the scientist, the philosopher, the lawyer, the judge, the actor, the painter and the musician. These and many more take up their tasks as the community grows. Were it not for the growing community and for the co-operation of its members, these callings would have had no following; but with each new advance in specialization, production becomes more concentrated in smaller areas. First the scattered houses move together until they stand shoulder to shoulder, then floor is raised on floor and foundations are dug deep into the earth. Where once a few farmers met to gossip with the storekeeper, teeming millions work at their various tasks.

The best examples of this development within living memory have been in America and have been described in detail by authors who observed the facts around them quite apart from economic analysis. It was thus that the great city of Chicago and the other main centres of population in the more distant parts of America developed in recent years. As step by step these communities grew, the advantage from operating from a central site became greater and the rents which could be obtained from the favoured pieces of land increased accordingly. The original settlers made fortunes almost overnight from the mere ownership of land.

In these circumstances, what more natural than that observing the fortunes which were made from the ownership of land, men should seek to acquire as much of it as possible? It was no longer a question of marking off as much land as could conveniently be used, but of obtaining titles to as vast an area as possible. These areas would not be used, but held against the growing demands of the community. Soon round each growing centre of population, a great belt of unused land was claimed. New immigrants could no longer settle on the borders of the community to the great advantage of themselves and of the earlier settlers, but were forced to trudge through miles of idle land before they found a vacant plot. Obviously, they could, in a year, procure far less for themselves in these distant places than they could have obtained on the borders of the growing settlement.

The effect on wages throughout the community was immediate. The upward trend was arrested and wages were forced down to the level set by the new settlements. Men could gain a greater advantage from working on the enclosed land than on the distant open plains, and were ready and willing to pay for the opportunity. Rents went up. This further increase in rent, over and above its natural rise, only gave fresh stimulus to the enclosure, which went on apace until new immigrants had to travel hundreds of miles to make settlements of their own.

This opening of new colonies remote from the existing communities, was an exacting task, calling for physical strength and determination above the average. By this time, however, the stories of the easy wealth to be obtained in the American colonies were attracting large numbers of men and women from depressed Europe who were of a milder kind than those hardy adventurers who set out to unknown lands. Inevitably, many found the life too hard and, being forced to abandon their distant plots, trekked back to the growing towns to look for work. Their appearance brought a new factor into play. The struggle for work began in real earnest and jobs went to the lowest bidder - wages fell sharply. Under such conditions access to land near the centres of population gave yet greater advantage than before and rents went up. All this time production per head of the population had been increasing. Had men settled close to each other, as normally they would have done, this increased power of production would have increased what they could have earned on the best land open to use. Wages would have risen steadily. True, rents in the centres of the community would have risen much faster, for the greater the co-operation between the people the more advantage was to be had from working in the towns. Wages as an amount would have risen, though as a proportion of the whole wealth produced they must have fallen. As it was, by the enclosure of land, men were forced to work where the advantages of community were less to be felt and where the produce of their work must consequently have been smaller. This caused wages to drop not merely as a proportion of the whole wealth produced but as an amount.

On the other hand, rents not merely increased, as they naturally would have done, but increased at the expense of wages. In the end, the whole of the vast American continent now comprising the United States of America was enclosed, and nowhere across that three thousand miles could land be had for nothing. Thereafter, new immigrants, increases in population, led only to an increased struggle for work, further driving down wages and further increasing rents. It is well known how this immigration was encouraged with the intention of breaking the wage level which, until this enclosure was nearly completed, remained relatively high.

In America this change took place in two generations. In England it has taken centuries. The story, however, is exactly parallel. The first large-scale enclosure of land in England took place in the reign of Henry VIII under cover of the reformation of the Church. Wages were brought tumbling down and very great trouble was stored up for governments to come. The first Poor Law Act was passed in 1601. However, during the reign of the Stuarts, under royal protection the dispossessed yeomen, of whom Bishop Latimer spoke so eloquently, settled on the vacant land attached to the still-existing commons which covered the greater part of England. This gave a stiffening to wages and working conditions so that by 1750 the industrial working week was only four days. Then came a century of the most terrible enclosures carried through by the unreformed Parliament under alien kings who could not even speak the native tongue. Then all the commons, save but one or two, were parcelled out amongst the most influential members of Parliament. The effect was disastrous. In 1850 an Act of Parliament had to be passed to make it illegal to employ children under the age of twelve for more than twelve hours a day, six days a week. Man, wife and children from the age of five upwards, were all working to secure a miserable livelihood. It was these enclosures which created the body of unemployed, which drove down wages, first in the fields and then, with the coming of the industrial revolution, in the towns. It is well to recollect, however, that before the date of the spinning-jenny, husband, wife and children were working in the fields chained to each other lest the children should run away. It should be remembered too, that a major part of the labour for the factories was procured by the compulsory carrying of unemployed people from the country workhouses so that the rates might be relieved. The general impression people have now that the dreadful unemployment of the industrial town, the ghastly poverty and cruel working conditions were the products of the machine is wholly untrue. These conditions already existed in the country before the towns were built. Had this not been so, the industrialization of England would have taken a very different shape.

To increase production on some land is to increase production on all. Men live in the modern world by the exchange of goods, and improvements in production in one sphere increase the reward to people in all spheres. There is no doubt that had the land of England which was idle and enclosed been available for use, the increased productive power granted by the machine would have enabled men to live far better on the best vacant land available for use than was possible before the machine came. This would have set a minimum for wages below which they would not fall. As the development of industry grew, wages would consequently have risen as an amount.

Where, however, the people had been expropriated and all idle land enclosed, the struggle for work would prevent the rise in wages. Work would go to the lowest bidder and wages would fall to the least which a man would accept in return for his labour. In the first horror of the destruction of homes, in the breaking up of families which followed the enclosures, the men, bewildered and hopeless, would set a very poor standard for their life. When they grew more settled, however, their minimum demands would rise. They would refuse to work under such slavish conditions if they had any manliness in them. So it was in England. When they recovered from their dismay, the men banded together and began to demand improved condition and better wages. They met terrible opposition from a powerful government and from the stupid workmen in their midst, but, in the end, they succeeded in slowly raising the minimum level of wages. They accomplished this just so far as they persuaded men in general that it was not worth working for less than a certain amount, for longer than certain hours in worse than certain conditions. Anything which tends to cause men to raise their minimum demands must increase wages. Against this raising of demand in the conditions we are examining, however, must be set the constant fear of unemployment and all that that entails. It will be a slow and hard struggle this raising of demand and an industrial depression may set the clock back twenty years in as many weeks. Still, the fact remains that wages are fixed not by employers but by the men themselves.

On the other hand, every new improvement in production, every fall in wages results in an increase in rent. The enclosures were carried out for the very purpose of increasing rent, and each enclosure very effectively increased it. The terrible story of the enclosures and the fortunes made from them is told by Mr and Mrs Hammond in their book The Village Labourer. Compared with the slow, laborious increase in wages and working conditions resulting from long agitation and the slow workings of education, the rapid increase in production is startling. This increase must go in rent.

Men everywhere observing how rent and land prices continue to increase, not unnaturally seek to gain advantage from it. Looking no further than their own immediate interests they acquire land, not for the purpose of using it, but for the purpose of holding it against an increase in its value. The estate columns of the newspapers regularly recommend their clients to buy particular lands and to hold them.

As has been seen, it is an elementary principle of human life that all wealth comes from land. Employment begins by the extraction from the earth of the materials necessary for industry. Every occupation involves the use of a part of the earth's surface. Clearly, if land which is needed for use is withheld from use, then industry must be checked and unemployment must result. In the modern commercial world a thing which is not needed has no market price. Clearly, there would be no point in enclosing and holding valueless land; the greater the value and the more rapidly its value is rising, the greater the temptation to buy and to hold. This market price, however, is the expression of the need which men have for the land. The higher the price the greater the need; the faster it is rising the more rapidly the need is growing. When such land is withheld from use, then men are thrown out of work. The unemployment so caused intensifies the struggle between labourers for work and drives down wages.

That this is the condition which now prevails may be observed by anyone who has eyes to see. All around the cities of the civilized world are areas of land lying idle, but advertised as highly valuable land for sale. If it is highly valuable, which is undoubtedly the case, it has no business to be idle. This belt of land held by speculators has a double effect which is most dangerous to communal life, quite apart from its vicious effects on employment. It cramps the centre of the town where overcrowding prevails. It forces those who seek to escape from the crowding of the cities to travel great distances to find a place to live and results in the spoliation of areas which were much better left as country districts instead of being turned into lifeless dormitories with no natural communal life of their own.

In the same way, but to a lesser extent, land which is inadequately used has the same result. In all towns throughout the civilized world are large areas of land carrying antiquated and inadequate buildings. Land developed in this way will not yield the rent which it would yield if properly used. Under the vicious leasehold system, tenants do not see the object of improving the property for the benefit of the landowner. On the other hand, the landowner holds a rising asset. Developed even as it is, the value of his land is rapidly increasing, for it is in the centre of towns that the greatest benefit is to be felt from improved methods of production. Recently, in the Bloomsbury area of London, rents have been increased by 50 per cent after the determination of only fourteen year leases. Obviously this increase is not accounted for by the buildings which are hundreds of years old. It is entirely to be accounted for by the increasing rent of land. What is more, sooner or later a more adventurous spirit will develop the land to its full and pay the land owner a full rent for doing so. So it comes about that large areas of land in the heart of great towns, where its use is of the greatest importance to the whole community, are but inadequately developed. This must limit production and must cause unemployment. This must cause overcrowding and lead to ill-health. It is to be noticed how this very overcrowding and the resultant ill-health cause people to pay more for access to land to the loss of their wages. It is always thus. The withholding of land racks its value, and men, by struggling for access to it, reduce their wages to a bare minimum for existence - that is, to the least which they are willing to accept.

This practice of withholding land is not peculiar to those men who live by the bare ownership of land - the men who are normally called land speculators. The industrialists have not been slow to learn a lesson from them. For example, between the wars of 1914 and 1939, the richer coalmining companies pursued a policy of buying up pits, not to work them, but in order to prevent others from working them. It may seem strange at first that coalowners should seek to limit their own production, but on second thoughts it is seen that they gain great benefit from it.

If men speculate in articles of wealth they invite disaster. Should a speculator succeed in raising the price of some commodity above the natural level so that it becomes very profitable to sell this commodity in the market, then, if men were free to do so, they would immediately take to producing this commodity in order to capture the high price being paid for it. This was the story that lay behind the famous pepper and shellac scandal. One adventurer conceived a notion of gaining a corner in pepper. The idea was simple. If he could buy up the world's supply, even though he paid handsomely for it, he would be able to sell the pepper at any price he chose and secure himself a handsome profit. So with the assistance of others who provided the funds, he began to buy up pepper crops throughout the world. As soon as he started operations and began to take some of the supply off the market, pepper prices began to rise so that for his next operation he had to pay more. The more he continued to buy, the higher the price went. The pepper producers throughout the world, observing the rising price of pepper, turned production on as fast as they could to capture the easy profit. A flood of pepper came on the market and broke the ruling price. The adventurer had a stock of pepper on hand which he could only sell at a great loss and he finished up, very properly, at the Old Bailey.

So it is in speculation in articles of wealth. Such speculation is limited by man's power to produce more of the commodity and, as soon as the profit from production rises above the general level, more production must ensue until the profit returns to the same level as that obtained in any other industry.

With land, however, the position is quite different, the quantity of land being strictly limited and man unable to produce more. For particular industries the land available is even more drastically curtailed. Oil deposits and coal seams are very limited. Many industries can only function in towns, some of them only in very big towns. Therefore, because land is essential to industry, when it is withheld from use, production must stop. Men depend upon production to live, and this withholding of land will cause them to pay higher rents, which is the speculator's objective.

When the coalowners shut down pits, they restricted the flow of coal to the market and the price of coal rose. The profits to be gained from coal mining consequently rose. Normally this increased profit would have led to more coal mining, but because the profiteers had gained control of the coal seams this additional mining could not take place. That increased profit, therefore, came to them not because of their coalmining, but because of the coalmining they prevented, not because of the work they did, but because of their control of land. In short, it was inflated rent and was paid by the consumers of coal in the high prices they had to pay.

Meantime, what of the miners? The closing of the pits caused terrible distress in the coal fields. Years passed by and the young men growing into manhood could get no work at all. The struggle for work was furious. Money wages in the pits did not rise with the cost of living as they did in other industries; in short, real wages fell. So when war was declared in 1939 the coal miners, whose work is perhaps the most dangerous of any and undoubtedly requires great skill, were amongst the worst paid workers in the land. The coal areas were full of unrest and production of this vital commodity of war was seriously affected. The young men who left the mining villages to travel over the world in the navy, army and airforce soon decided that they would not work for so little or under such conditions as had prevailed in their home industry. They therefore seized the opportunities presented to them, following the war, to move into other occupations, so that coal production steadily fell.

This practice was not peculiar to the coal industry. It is now to be found in nearly every one of the basic industries. The oil monopoly is a prominent example. By controlling the oil deposits throughout the world, the owners can control the supply of oil to the market. The increased profits gained in this way are undoubtedly the result of the control of land and are rent. The landowner in whose land oil is discovered, makes a fortune overnight, for people will pay right richly for access to it.

There is, however, a limit beyond which rent cannot be pushed. It cannot exceed the amount which will leave to the labourers the minimum they require in wages. Any attempt to do so must result in a stoppage of production.

In the light of the discussion in this chapter it is possible to illustrate the economic truths that have emerged, by an adaption of the diagrams used in the last chapter.

There an island was imagined upon which a man came and worked with a given amount of skill producing wealth. This wealth was represented by a funnel and called 100 (here, we will call it 10).


Fig.10

Then the next man came upon the island and settled beside the first, his land being inferior to that already occupied by "A". Now clearly as the result of "B's" entry, the wealth produced by the firstcomer, "A", would be increased - let us say to 15. "B", however, working with an equal effort on inferior land could not produce 15. Let it be assumed that he could produce 14. The result would be that wages, as a result of "B's" entry upon the land, would have increased from 10 to 14; that is, wages would have increased as an amount. On the other hand, before "B" came, no part of the produce was rent. One hundred per cent of it was wages. Under the new conditions, 1 on "A's" site would be rent. In short, though wages had increased as an amount they would be reduced as a proportion of the whole wealth produced, reduced from the whole to 28/29ths. This is demonstrated on the diagram, Figure 11.


Fig.11

The arrival of "C" would have a similar effect. We will assume that as a result, production on "A's" site increases to 20 and on "B's" site to 18 and that "C" can produce 16. Thus:


Fig.12

In this new state of affairs, wages have increased still more as an amount, from 14 to 16, but have dropped as a proportion of the whole, rent increasing not merely as an amount but as a proportion. Let us assume now that the next arrival "D" represents the first specialist, the smith of our first illustration. He will settle in the centre of the community which is represented by "B's" land. Now, though "B's" land is inferior in its natural quality to "A's", this will not concern "D". Position is of primary importance to him. His trade will attract to the centre of the community wealth produced by all members of the community, whilst his operations in a specialized trade will increase the productivity of the work of all. Let this be represented by the increased productivity on site "B" rising to 30, on site "A" to 25 and on site "C" to 20. In this new condition wages will have risen to 20 on each site, that is to 60 in all and rent will have risen to 15, that is one-fifth of the total production.


Fig.13

From this it will be seen that the natural wages level is 20, and the natural rent level will vary from site to site according to the amount of wealth which may be obtained upon that site. Rent would, therefore, be the amounts by which production in the various sites exceeds 20.

Imagine now that observing the profit to be obtained from the bare ownership of land, "B" encloses land sufficient for three new settlers, on which land the power of production would be, respectively, 18, 16 and 14. On the best free land open to use the power to produce wealth would be represented by 12. Now let the next settler come upon the land, settler "E". If "B" invited "E" to work upon his land, "E" would ask how much "B" will pay him. "B" will have to offer him at least 12. Had "B" not enclosed the three sites mentioned he would have had to offer "E" 18. Thus, the result of his enclosure would be to reduce wages from 18 to 12. Thus:


Fig.14

Lastly, let us suppose that "B" encloses the whole of the land and "E" and "F" come to look for work. Now if "B" asks "E" or "F" to work for him they will have no bargaining powers. If there were work only for one, and "B" owning the land, can control how much work there is, then they would compete with each other for employment, and wages would fall very low. Thereafter, as population increased, the power of producing wealth on every site would increase vastly, but the share taken in wages would always be governed by competition for work. The growth in population would intensify this, for it would encourage "B" to continue to withhold land from use. Let us represent this new condition by putting wages at 5, the greatly enhanced production ranging from 50 on the centre sites to 10 on the outermost sites. Thus:


Fig.15

It will be observed that the proportion of wealth below the line 5 is wages and above the line rent. This diagram represents the facts. In the earlier conditions, where wages took their full share of production, those employed in industry would generally own the capital they used. There would be no point to their being in debt to others when they could supply their own capital. Where, however, wages are driven down to the least which a man can accept, which under the threat of unemployment must be little more than a bare living, it will be beyond the means of the ordinary labourer to own any capital at all, let alone the vast amounts which are being used in the developing industry. The rent receivers will, therefore, lend their surplus funds to those engaged in industry and gain complete control of industry. Labour will maintain their capital for them and the rent they receive will increase their power.

Finally, it may be observed that under this new condition, rent is made up of two parts, firstly, the natural rent above the amount labour could obtain on the best land not being used and secondly, the inflated rent, or, in other words, the loss to wages caused by the enclosures of land. Thus:


Fig.16


Fig.17

To sum up, the facts which have been examined in this chapter are of universal application. They apply to every country in the world and to every time in history. They are of the very essence of things and are the result of the operation of natural forces which it is useless to gainsay. People talk of stabilizing rent or even of abolishing it. Government Committees have been instructed to make recommendations for the standardization of rent. They might as well talk about abolishing the moon or of standardizing the size of oak trees. These forces which are at work are not of man's devising but belong to the nature of things. If man would order his society well, he must order it in harmony with these forces. To ignore them is to invite disaster.

In a later chapter careful consideration will be given to the deep principles which, by the law of the Universe, sometimes called "natural law", govern the relations between men in society and which give the key to the proper ordering of social life. Before that, however, the conclusions reached so far must be put to sterner tests. Throughout the modern world industry progresses through a terrible cycle, common to all lands however much they may differ in their institutions and traditions. This cycle, which takes about ten years to run its course, unless interrupted by major war, is known as the industrial cycle of boom and slump.

If the conclusions which have been reached in the enquiry so far as it has been taken are correct they must not conflict with the facts of this phenomenon.

Note: The diagrams in this chapter have been amended slightly from the originals for the sake of clarity.

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