CHAPTER 11

THE EFFECT OF MATERIAL PROGRESS
ON THE DISTRIBUTION OF WEALTH

To say that wages remain low because rent advances is like saying that a steam-boat moves because its wheels turn round. The further question is, what causes rent to advance? What is the force or necessity that, as productive power increases, distributes a greater and greater proportion of the produce as rent?

The only cause pointed out by Ricardo as advancing rent is the increase of population, which by requiring larger supplies of food necessitates the extension of cultivation to inferior lands, or to points of inferior production on the same lands. Now while it is unquestionably true that the increasing pressure of population, which compels a resort to inferior points of production, will raise rents and does raise rents, I do not think that it fully accounts for the increase of rent as material progress goes on. There are evidently other causes which conspire to raise rent but which seem to have been wholly or partially hidden by erroneous views as to the functions of capital and genesis of wages. To see what these are, and how they operate, let us trace the effect of material progress upon the distribution of wealth.

The changes that constitute or contribute to material progress are three: (i) increase in population; (2) improvements in the arts of production and exchange; and (3) improvements in knowledge, education, government, manners and morals, so far as they increase the power of producing wealth. Material progress, as commonly understood, consists of those three elements or directions of progression, in all of which the progressive nations have for some time past been advancing, though in different degrees.

Considered in the light of material forces or economies, the increase of knowledge, the betterment of government, etc., have the same effect as improvement in the arts. It will therefor not be necessary in this view to consider them separately. What bearing intellectual or moral progress, merely as such, has upon our problem we may hereafter consider. We are at present dealing with material progress, to which these things contribute only as they increase wealth-producing power, and we shall see their effects when we see the effects of improvements in the arts.

Effect of Increases in Population

The manner in which increasing population enhances rent, as it is generally explained and illustrated, is that the increased demand for subsistence forces production to inferior soils or to inferior productive points. Thus if, with a given population, the margin of cultivation is at 30, all lands of productive power over 30 will pay rent. If the population be doubled, an additional supply of land is required and that can be obtained only by an extension of cultivation, causing other lands to yields rent that before yielded none. If the extension be to 20, then all the land between 20 and 30 will yield rent and have a value, and all land over 30 will yield increased rent and have increased value.

But a misapprehension arises which it is necessary to clear up for a proper understanding of the effect of increase of population upon the distribution of wealth. It is the presumption that the recourse to lower points of production involves a smaller aggregate produce in proportion to the labour expended.

Increased population, of itself, and without any advance in the arts, implies an increase in the productive power of labour. The labour of 100 men, other things being equal, will produce more than 100 times as much as the labour of one man, and the labour of 1,000 men much more than ten times as much as the labour of 100 men; and so, with every additional pair of hands which increasing population brings, there is a more than proportionate addition to the productive power of labour. Thus with an increasing population there may be a recourse to lower natural powers of production, not only without any diminution in the average production of wealth, but without any diminution at the lowest point. If population be doubled, land of but 20 productiveness may yield to the same amount of labour as much as land Of 30 productiveness could before yield. For it must not be forgotten (what often is forgotten) that the productiveness either of land or of labour is not to be measured in any one thing, but in all desired things. A settler and his family may raise as much corn on land a hundred miles away from the nearest habitation as they could raise were their land in the centre of a populous district. But in the populous district they could obtain with the same labour as good a living from much poorer land, or they could make as good a living from land of equal quality after paying a high rent, because in the midst of a large population their labour would have become more effective; not, perhaps, in the production of corn, but in the production of wealth generally-or the obtaining of all the commodities and services that are the real object of their labour.

Wages as a Quantity and as a Proportion

Let us suppose land of diminishing qualities. The best would naturally be settled first, and as population increased production would take in the next lower quality, and so on. But as the increase of population, by permitting greater economies, adds to the effectiveness of labour, the cause which brought each quality of land successively into cultivation would at the same time increase the amount of wealth that the same quantity of labour could produce from that land. But it would also do more than this - it would increase the power of producing wealth on all the superior lands already in cultivation. If the relations of quantity and quality were such that increasing population added to the effectiveness of labour faster than it compelled a resort to less productive qualities of land, though the margin of cultivation would fall and rent would rise, the minimum return to labour would increase. That is to say though wages as a proportion would fall, wages as a quantity would rise. The average production of wealth would increase.

If the relations were such that the increasing effectiveness of labour just compensated for the diminishing productiveness of the land as it was called into use, the effect of increasing population would be to increase rent by lowering the margin of cultivation without reducing wages as a quantity, and to increase the average production.

If we now suppose population still increasing but that the difference between the poorest land in use and the land next below that in quality is so great that it cannot be compensated by the increased power of labour that comes with the increased population - the minimum return to labour will be reduced, and with the rise of rents wages will fall, not only as a proportion, but as a quantity. But unless the descent in the quality of land is far more precipitous than we can well imagine, or than, I think, ever exists, the average production will still be increased. The increased effectiveness which comes by reason of the increased population attaches to all labour, and the gain on the superior qualities of land will more than compensate for the diminished production on the quality last brought in. The aggregate wealth production, as compared with the aggregate expenditure of labour, will be greater, though its distribution will be more unequal.

Thus increase of population, as it operates to extend production to lower natural levels, operates to increase rent and reduce wages as a proportion, and may or may not reduce wages as a quantity; increase of population seldom can, and probably never does, reduce the aggregate production of wealth as compared with the aggregate expenditure of labour; on the contrary it increases and frequently largely increases the aggregate production.

The Effect of Inventions and Improvements

As invention and improvement go on, constantly
adding to the efficiency of labor, the margin of
production will be pushed lower and lower, and rent
constantly increased.

The effect of inventions and improvements in the productive arts is to save labour-that is, to enable the same result to be secured with less labour, or a greater result with the same labour.

In a state of society in which the existing power of labour served to satisfy all material desires, and there was no possibility of new desires being called forth by the opportunity of gratifying them, the effect of labour-saving improvements would be simply to reduce the amount of labour expended.

In the state of society called civilized, with which in this inquiry we are concerned, the very reverse is the case. Demand is not a fixed quantity, which increases only as population increases. In each individual it rises with his power of getting the things demanded. The amount of wealth produced is nowhere commensurate with the desire for wealth, and desire mounts with every additional opportunity for gratification. This being the case, the effect of labour-saving improvements will be to increase the production of wealth.

Let me ask the reader to bear in mind that the possession or production of any form of wealth is virtually the possession or production of any other form of wealth for which it will exchange. The object of labour on the part of any individual is not the obtainment of wealth in one particular form, but the obtainment of wealth in afl the forms that consort with his desires. Hence an improvement which effects a saving in the labour required to produce one of the things desired is tantamount to an increase in the power of producing all the other things.

If it take half a man's labour to keep him in food, and the other half to provide him clothing and shelter, an improvement which would increase his power of producing food would also increase his power of providing clothing and shelter. If his desires for more or better food, and for more or better clothing and shelter, were equal, an improvement in one department of labour would be precisely equivalent to a like improvement in the other. If the improvement consisted in a doubling of the power of his labour in producing food, he would give one-third less labour to the production of food, and one-third more to the providing of clothing and shelter. If the improvement doubled his power to provide clothing and shelter, he would give one-third less labour to the production of those things, and one-third more to the production of food. In either case, the result would be the same-he would be enabled with the same labour to get one-third more in quantity or quality of all the things he desired.

And so, where production is carried on by the division of labour between individuals, an increase in the power of producing one of the things sought by production in t-he aggregate adds to the power of obtaining others. It wi]I increase the production of the other things to an extent determined by the proportion that the saving of labour bears to the total amount of labour expended, and by the relative strength of desires.

Increased Effectiveness Absorbed in Increased Rent

To illustrate this effect of labour-saving machinery and improvements, let us suppose a country where, as in all the countries of the civilized world, the land is in the possession of but a portion of the people. Let us suppose a permanent barrier fixed to prevent further increase of population. Let the margin of cultivation, or production, be represented by 20. Thus land with its natural opportunities which, from the application of labour and capital, will yield a return of 20, will just give the ordinary rate of wages and interest, without yielding any rent; while all lands yielding more than 20 to equal applications of labour and capital will yield the excess as rent.

Population remaining fixed, let there be made inventions and improvements which will reduce by one-tenth the expenditure of labour and capital necessary to produce the same amount of wealth. Now, either one-tenth of the labour and capital may be freed, and production remain the same as before; or the same amount of labour and capital may be employed, and production be correspondingly increased. But the industrial organization, as in all civilized countries, is such that any reduction in the application of labour to production will, at first at least, take the form, not of giving each labourer the same amount of produce for less work, but of throwing some of the labourers out of work and giving them none of the produce. Now, owing to the increased efficiency of labour secured by the new improvements, as great a return can be secured at the point of natural productiveness represented by 18, as before at 20. Thus the effect of the unsatisfied desire for wealth and the competition of labour and capital for employment would be to extend the margin of production, we will say to 18. Accordingly, rent would be increased by the difference between 18 and 20, while wages and interest, in quantity, would be no more than before and, in proportion to the whole produce, would be less.

If invention and improvement still go on, the efficiency of labour will be still further increased, and the amount of labour and capital necessary to produce a given result will be further diminished. The same causes will lead to the utilization of this new gain in productive power for the production of more wealth; the margin of cultivation will be again extended, and rent will increase, both in proportion and amount.

In what has preceded, I have, of course, spoken of inventions and improvements when generally diffused. It is hardly necessary to say that as long as an invention or an improvement is used by so few that they derive a special advantage from it, it does not, to the extent of this special advantage, affect the general distribution of wealth. So, in regard to the limited monopolies created by patent laws. Although generally mistaken for profits of capital, the special profits thus arising are really the returns of monopoly and, to the extent that they subtract from the benefits of an improvement, they do not primarily affect general distribution. For instance, the benefits of a railway or similar improvement in cheapening transportation are diffused or monopolized, according as its charges are reduced to a rate which will yield ordinary interest on the capital invested, or as its charges are kept up to a point which will yield an extraordinary return. And, as is well known, the rise in land values corresponds with the reduction in the charges.

As has been said before, there are to be included in the improvements which increase the value of land not only the improvements which directly increase productive power, but also such improvements in government, manners and morals as indirectly increase it. Considered as material forces, the effect of all these is to increase productive power and, like improvements in the productive arts, their benefit is ultimately monopolized by the possessors of the land.

CHAPTER 12

THE UNBOUNDED SAVANNAH

While the increase of population increases rent by lowering the margin of cultivation, it is a mistake to look upon this as the only mode by which rent advances as population grows.

Increasing population increases rent without reference to the natural qualities of land, for the increased powers of cooperation and exchange which come with increased population give an increased capacity to land.

The increased power that comes with increased population brings out a superior power in labour which is localized on land-which attaches not to labour generally but only to labour exerted on particular land and which thus inheres in the land as much as any qualities of soil, climate, mineral deposit, or natural situation, and passes, as they do, with the possession of the land.

An improvement in the method of cultivation which, with the same outlay, will give two crops a year in place of one, or an improvement in tools and machinery which will double the result of labour on a particular piece of ground, manifestly will have the same effect on the produce as a doubling of the fertility of the land.

Here, let us imagine, is an unbounded savannah, stretching off in unbroken sameness of grass and flower, tree and rill, till the traveller tires of the monotony. Along comes the waggon of the first immigrant. Where to settle he cannot tell - every acre seems as good as every other acre. As to wood, as to water, as to fertility, as to situation, there is absolutely no choice, and he is perplexed by the embarrassment of richness. Tired out with the search for one place that is better than another, he stops somewhere, anywhere - and starts to make himself a home. The soil is virgin and rich, game is abundant, the streams flash with the finest trout. Nature is at her very best. He has what, were he in a populous district, would make him rich; but he is very poor. To say nothing of the mental craving which would lead him to welcome the sorriest stranger, he labours under all the material disadvantages of solitude. He can get no temporary assistance for any work that requires a greater union of strength than that afforded by his own family or by such help as he can permanently keep. Though he has cattle, he cannot often have fresh meat, for to get a beefsteak he must kill a bullock. He must be his own blacksmith, waggonmaker, carpenter, and cobbler - in short, a "jack of all trades and master of none." He cannot have his children schooled; to do so, he must himself pay and maintain a teacher. Such things as he cannot produce himself, he must buy in quantities and keep on hand, or else go without, for he cannot be constantly leaving his work and making a long journey to the verge of civilization; and when forced to do so, the getting of a vial of medicine or the replacement of a broken auger may cost him the labour of himself and horses for days. Under such circumstances, though nature is prolific, the man is poor. It is an easy matter for him to get enough to eat, but beyond that his labour will only suffice to satisfy the simplest wants in the rudest way.

Soon there comes another immigrant. Although every quarter section of the boundless plain is as good as every other quarter section, he is not beset by any embarrassment as to where to settle. Though the land is the same, there is one place that is clearly better for him than any other place, and that is where there is already a settler and he may have a neighbour. He settles by the side of the first comer, whose condition is at once greatly improved, and to whom many things are now possible that were before impossible, for two men may help each other to do things that one man could never do.

The Benefits of Association

Another immigrant comes and, guided by the same attraction, settles where there are already two. Another, and another, until around our first comer there are a score of neighbours. Labour has now an effectiveness which, in the solitary state, it could not approach. If heavy work is to be done, the settlers have a log-rolling, and together accomplish in a day what singly would require years. When one kills a bullock the others take part of it, returning when they kill, and thus they have fresh meat all the time. Together they hire a schoolmaster, and the children of each are taught for a fractional part of what similar teaching would have cost the first settler. It becomes a comparatively easy matter to send to the nearest town, for some one is always going. But there is less need for such journeys. A blacksmith and a wheelwright scion set up shops, and our settler can have his tools repaired for a small part of the labour they formerly cost him. A store is opened, and he can get what he wants as he wants it; a post-office, soon added, gives him regular communication with the rest of the world. Then come a cobbler, a carpenter, a harness-maker, a doctor; and a little church soon arises. Satisfactions become possible that in the solitary state were impossible. There are gratifications for the social and the intellectual nature-for that part of the man that rises above the animal. The power of sympathy, the sense of companionship, the emulation of comparison and contrast, open a wider, and fuller, and more varied life.

Go to our settler now, and say to him: " You have so many fruit trees which you planted; so much fencing, such a well, a barn, a house - in short, you have by your labour added so much value to this farm. Your land itself is not quite so good. You have been cropping it, and by and by it will need manure. I will give you the full value of all your improvements if you will give it to me and go again with your family beyond the verge of settlement." He would laugh at you. His land yields no more wheat or potatoes than before, but it does yield far more of all the necessaries and comforts of life. His labour upon it will bring no heavier crops, and, we will suppose, no more valuable crops, but it will bring far more of all the other things for which men work. The presence of other settlers-the increase of population-has added to the productiveness, in these things, of labour bestowed upon it, and this added productiveness gives it a superiority over land of equal natural quality where as yet there are no settlers.

The Settlement Grows to a City

Population still continues to increase, and as it increases so do the economies which its increase permits and which in effect add to the productiveness of the land. Our first settler's land being the centre of population, the store, the blacksmith's forge, the wheelwright's shop, are set up on it, or on its margin, where soon arises a village, which rapidly grows into a town, the centre of exchanges for the people of the whole district. With no greater agricultural productiveness than it had at first, this land now begins to develop a productiveness of a higher kind. To labour expended in raising corn, or wheat, or potatoes, it will yield no more of those things than at first. But to labour expended in the subdivided branches of production that require proximity to other producers and especially to labour expended in that final part of production which consists in distribution, it will yield much larger returns. The wheatgrower may go further on and find land on which his labour will produce as much wheat, and nearly as much wealth. But the artisan, the manufacturer, the storekeeper, the professional man, find that their labour expended here, at the centre of exchanges, will yield them much more than if expended even at a little distance away from it; and this excess of productiveness for such purposes the landowner can claim, just as he could an excess in its wheat-producing power. And so our settler is able to sell in building lots a few of his acres for prices which it would not bring for wheat-growing if its fertility had been multiplied many times. With the proceeds, he builds himself a fine house and furnishes it handsomely. That is to say, to reduce the transaction to its lowest terms, the people who wish to use the land build and furnish the house for him, on condition that he will let them avail themselves of the superior productiveness which the increase of population has given to that land.

Population still keeps on increasing, giving greater and greater utility to the land, and more and more wealth to its owner. The town has grown into a city - a St. Louis, a Chicago or a San Francisco - and still it grows. Production is here carried on upon a great scale, with the best machinery and the most favourable facilities; the division of labour becomes extremely minute, wonderfully multiplying efficiency; exchanges are of such volume and rapidity that they are made with the minimum of friction and loss. Here is the heart, the brain, of the vast social organism that has grown up from the germ of the first settlement; here has developed one of the great ganglions of the human world. Hither run all roads, hither set all currents, through all the vast regions round about. Here, if you have anything to sell, is the market; here, if you have anything to buy, is the largest and the choicest stock. Here intellectual activity is gathered into a focus, and here springs that stimulus which is born of the collision of mind with mind. Here are the great libraries, the storehouse and granaries of knowledge, the learned professors, the famous specialists. Here are museums and art galleries, and all things rare and valuable, the best of their kind. Here come great actors, and orators, and singers, from all over the world. Here, in short, is a centre of human life, in all its varied manifestations.

So enormous are the advantages which this land now offers for the application of labour that instead of one man with a span of horses scratching over acres, you may count in places thousands of workers to the acre, working tier on tier, on floors raised one above the other, five, six, seven, and eight storeys from the ground, while underneath the surface of the earth engines are throbbing with pulsations that exert the force of thousands of horses.

Immense increase in Land Values

All those advantages adhere to the land; it is on this land and no other that they can be utilized, for here is the centre of population-the focus of exchanges, the market place and workshop of the highest forms of industry. The productive powers that density of population has attached to this land are equivalent to the multiplication of its original fertility by the hundredfold and the thousandfold. And rent, which measures the difference between this added productiveness and that of the least productive land in use, has increased accordingly. Our settler, or whoever has succeeded to his right to the land, is now a millionaire. Like another Rip Van Winkle, he may have lain down and slept; still he is rich-not from anything he has done, but from the increase of population. There are lots from which for every foot of frontage the owner may draw more than an average mechanic can earn; there are lots that will sell for more than would suffice to pave them with gold. In the principal streets are towering buildings, of granite, marble, iron, and plate glass, finished in the most expensive style, replete with every convenience. Yet they are not worth as much as the land upon which they rest-the same land, in nothing changed, which when our first settler came upon it had no value at all.

That this is the way in which the increase of population powerfully acts in increasing rent, whoever, in a progressive country, will look around him may see for himself. The process is going on under his eyes.

The increasing difference in the productiveness of the land in use, which causes an increasing rise in rent, results not so much from the necessities of increased population compelling the resort to inferior land as from the increased productiveness which increased population gives to the lands already in use.

The most valuable lands on the globe, the lands that yield the highest rent, are not lands of surpassing natural fertility but lands to which a surpassing utility has been given by the increase of population.

To recapitulate: The effect of increasing population upon the distribution of wealth is to increase rent and consequently to diminish the Proportion of the produce that goes to capital and labour, in two ways:

First: by lowering the margin of cultivation.

Second: by bringing out in land special capabilities otherwise latent and by attaching special capabilities to particular lands.

I am disposed to think that the latter mode, to which little attention has been given by political economists, is really the more important.


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