PREFACE

Five of the nine members of the late Federal Commission on Industrial Relations united in the declaration that the first cause of industrial unrest is, "unjust distribution of wealth and income." In all probability this judgment is shared by the majority of the American people. Regarding the precise nature and extent of the injustice, however, there is no such preponderance of opinion. Even the makers of ethical and economic treatises fail to give us anything like uniform or definite pronouncements concerning the moral defects of the present distribution. While the Socialists and the Single Taxers are sufficiently positive in their statements, they form only a small portion of the total population, and include only an insignificant fraction of the recognised authorities on either ethics or economics.

The volume in hand represents an attempt to discuss systematically and comprehensively the justice of the processes by which the product of industry is distributed. Inasmuch as the product is actually apportioned among landowners, capitalists, business men, and labourers, the moral aspects of the distribution are studied with reference to these four classes. While their rights and obligations form the main subject of the book, the effort is also made to propose reforms that would remove the principal defects of the present system and bring about a larger measure of justice.

Many treatises have been written concerning the morality of one or other element or section of the distributive process; for example, wages, interest, monopoly, the land question; but, so far as the author knows, no attempt has hitherto been made to discuss the moral aspects of the entire process in all its parts. At least, no such task has been undertaken by any one who believes that the existing economic system is not inherently unjust. That the present essay in this field falls far short of adequate achievement the author fully realises, but he is sustained by the hope that it will provoke discussion, and move some more competent person to till the same field in a more thorough and fruitful way.

John A. Ryan.

The Catholic University of America, Washington, D. C., June 14, 1916.

CONTENTS

Preface vii

Introductory Chapter: The Elements and Scope of the Problem xiii

General References xvii

SECTION I THE MORALITY OF PRIVATE LANDOWNERSHIP AND RENT

CHAPTER PAGE

I The Landowner's Share of the National Product 3

Economic Rent Always Goes to the Landowner 4

Economic Rent and Commercial Rent 5

The Cause of Economic Rent 6

II Landownership in History 8

No Private Ownership in Pre-Agricultural Conditions 10

How the Change Probably Took Place 12

Limited Character of Primitive Common Ownership 14

Private Ownership General in Historical Times 15

Conclusions from History 17

III The Arguments Against Private Landownership 19

Arguments by Socialists 19

Henry George's Attack on the Title of First Occupancy 21

His Defence of the Title of Labour 24

The Right of all Men to the Bounty of the Earth 30

The Alleged Right of the Community to Land Values 39

IV Private Ownership the Best System of Land Tenure 48

The Socialist Proposals Impracticable 48

Inferiority of the Single Tax System 51

V Private Landownership a Natural Right 56

Three Principal Kinds of Natural Rights 57

Private Landownership Indirectly Necessary for Individual Welfare 59

Excessive Interpretations of the Right of Private Landownership 61

The Doctrine of the Fathers and the Theologians 62

The Teaching of Pope Leo XIII 64

VI Limitations of the Landowner's Right to Rent 67

The Tenant's Right to a Decent Livelihood 69

The Labourer's Claim Upon the Rent 71

VII Defects of the Existing Land System 74

Landownership and Monopoly 75

Excessive Gains from Private Landownership 80

Exclusion from the Land 90

VIII Methods of Reforming Our Land System 94

The Leasing System 95

Public Agricultural Lands 97

Public Ownership of Urban Land 98

Appropriating Future Increases of Land Value 100

Some Objections to the Increment Tax 102

The Morality of the Proposal 108

The German and British Increment Taxes 114

Transferring Other Taxes to Land 117

The Morality of the Plan 120

Amount of Taxes Practically Transferable 122

The Social Benefits of the Plan 127

A Supertax on Large Holdings 130

References on Section I 133

SECTION II THE MORALITY OF PRIVATE CAPITAL AND INTEREST

IX The Nature and the Rate of Interest 137

Meaning of Capital and Capitalist 137

Meaning of Interest 138

The Rate of Interest 141

X The Alleged Right of Labour to the Entire Product Of Industry 145

The Labour Theory of Value 146

The Right of Productivity 149

XI The Socialist Scheme of Industry 152

Socialist Inconsistency 152

Expropriating the Capitalists 154

Inefficient Industrial Leadership 158

Inefficient Labour 162

Attempted Replies to Objections 162

Restricting Individual Liberty 168

XII Alleged Intrinsic Justifications of Interest 171

Attitude of the Church Toward Interest on Loans 172

Interest on Productive Capital 175

The Claims of Productivity 177

The Claims of Service 181

The Claims of Abstinence 182

XIII Social and Presumptive Justifications of Interest 187

Limitations of the Sacrifice Principle 187

The Value of Capital in a No-Interest Régime 188

Whether the Present Rate of Interest is Necessary 191

Whether at Least two Per Cent. is Necessary 193

Whether any Interest is Necessary 196

The State is Justified in Permitting Interest 199

Civil Authorisation not Sufficient for Individual Justification 201

How the Interest-Taker is Justified 204

XIV Co-operation a Partial Solvent of Capitalism 210

Reducing the Rate of Interest 211

Need for a Wider Distribution of Capital 213

The Essence of Co-operative Enterprise 214

Co-operative Credit Societies 216

Co-operative Agricultural Societies 217

Co-operative Mercantile Societies 220

Co-operation in Production 222

Advantages and Prospects of Co-operation 228

References on Section II 233

SECTION III THE MORAL ASPECT OF PROFITS

XV The Nature of Profits 237

The Functions and Rewards of the Business Man 237

The Amount of Profits 239

Profits in a Joint-Stock Company 241

XVI The Principal Canons of Distributive Justice 243

The Canon of Equality 243

The Canon of Needs 244

The Canon of Efforts and Sacrifice 246

The Canon of Productivity 247

The Canon of Scarcity 250

The Canon of Human Welfare 252

XVII Just Profits in Conditions of Competition 254

The Question of Indefinitely Large Profits 255

The Question of Minimum Profits 258

The Question of Superfluous Business Men 260

XVIII The Moral Aspect of Monopoly 262

Surplus and Excessive Profits 263

The Question of Monopolistic Efficiency 265

Discriminative Underselling 267

Exclusive-Sales Contracts 270

Discriminative Transportation Arrangements 272

Natural Monopolies 273

Methods of Preventing Monopolistic Injustice 275

Legalised Price Agreements 277

XIX The Moral Aspects of Stockwatering 279

Injurious Effects of Stockwatering 281

The Moral Wrong 284

The "Innocent" Investor 286

Magnitude of Overcapitalisation 288

XX The Legal Limitation of Fortunes 291

The Method of Direct Limitation 292

Limitation Through Progressive Taxation 296

The Proper Rate of Income and Inheritance Taxes 299

Effectiveness of Such Taxation 300

XXI The Duty of Distributing Superfluous Wealth 303

The Question of Distributing Some 303

The Question of Distributing All 308

Some Objections 311

A False Conception of Welfare and Superfluous Goods 314

The True Conception of Welfare 316

References on Section III 318

SECTION IV THE MORAL ASPECTS OF WAGES

XXII Some Unacceptable Theories of Wage-Justice 323

I The Prevailing-Rate Theory 323

Not in Harmony with Justice 325

II Exchange-Equivalence Theories 326

The Rule of Equal Gains 326

The Rule of Free Contract 328

The Rule of Market Value 330

The Mediæval Theory 332

A Modern Variation of the Mediæval Theory 337

III Productivity Theories 340

Labour's Right to the Whole Product 341

Clark's Theory of Specific Productivity 347

Carver's Modified Version of Productivity 351

XXIII The Minimum of Justice; a Living Wage 356

The Principle of Needs 356

Three Fundamental Principles 358

The Right to a Decent Livelihood 360

The Claim to a Decent Livelihood from a Present Occupation 362

The Labourer's Right to a Living Wage 363

When the Employer is Unable to Pay a Living Wage 366

An Objection and Some Difficulties 370

The Family Living Wage 373

Other Arguments in Favour of a Living Wage 376

The Money Measure of a Living Wage 378

XXIV The Problem of Complete Wage Justice 381

Comparative Claims of Different Labour Groups 381

Wages Versus Profits 388

Wages Versus Interest 390

Wages Versus Prices 393

Concluding Remarks 398

XXV Methods of Increasing Wages 400

The Minimum Wage in Operation 400

The Question of Constitutionality 405

The Ethical and Political Aspects 407

The Economic Aspect 408

Opinions of Economists 412

Other Legislative Proposals 416

Labour Unions 417

Organisation Versus Legislation 420

Participation in Capital Ownership 423

References on Section IV 425

XXVI Summary and Conclusion 426

The Landowner and Rent 426

The Capitalist and Interest 427

The Business Man and Profits 428

The Labourer and Wages 430

Concluding Observations 431

Index 435