Economics and Ethics Scripturally Commanded
K. P. Alexander
[Reprinted from Single Tax Review, Vol. XIX,
No.1, January-February 1919]
VIOLATIONS PRODUCE BASIC WAR-CAUSES
It was due much more to intelligent design than to mere chance that
after the paramount injunction providing for perpetuation of life, the
scriptural account of the first duty-command ascribed to the Creator
involving performance of sociological obligation, had to do purely
with the economics qf production: "Replenish the earth and subdue
it" (Gen. 1:28). And, while third in consecutive order of the
first three primary commands looking to the permanent and increasing
well-being of the human race, it is also significant that the second
of the duty-commands had to do purely with the ethics of distribution:
In the sweat of thy face shalt thou eat bread." (Gen. 3:19)
In the light of modern political economy, transposed into
twentieth-century phraseology affirmatively expressed, these commands
clearly mean, "Use the land; consume your own products." A
true negation of these economic commands, carried to their present day
dangerous but logical conclusion, would be the special-privilege power
peculiarly inherent exclusively in public-produced land values, which
by title originally based upon conquest or force have thus legalized
their private retention, "Withhold the land from use ;
appropriate the product of the expended energies of others."*
These earliest and infinitely important, scientific as well as
scriptural, laws relating to the primary right of production and the
equitable distribution of wealth, constitute essential prerequisites
to the fundamentally just and righteous relations which must prevail
generally between men and between nations, before domestic and
international prosperity, happiness and peace can become permanently
possible. These deductions accurately accord with the highest type of
the most practically altruistic thought of a rapidly increasing
proportion of the world's most far-seeing teachers, economists, and
PRODUCTIVE POWER AND RETURNS TO LABOR
In all civilized countries there is glaring and increasing
disproportion between the known immense increase in productive power,
and of net returns to labor and productively employed capital. During
the past fifty years especially, due to the enormously increased
productive power of labor consequent on its much greater subdivision,
and marvelous improvements in agricultural, mechanical, electrical and
chemical operations and processes, productive power in general has
increased ten, and in many instances to one thousand fold. And
notwithstanding the enormous gross gains, there has been little, if
any, appreciable increase in net returns to the active agencies
engaged in the various processes of production and distribution.
If the great increase in productive power, incident to labor-saving
inventions, to conservation of products, and to the immense economies
due to the greater subdivision of labor made possible by increasingly
denser populations, has increased per unit of human effort, which is
manifestly true, then, obviously, there has been enormous gross gain.
Accordingly, there should therefore be, under natural economic
conditions, corresponding general decrease in living costs, and
increase in net returns to labor and productively invested capital.
If, on the contrary, with increasing density of population the
reverse is true, then there necessarily is an economic leak through
which, in proportion as population becomes denser and land values
higher, there appears to be subtly drained all, and frequently more
than all, of the economic gains to which the productive agencies of
the world are clearly entitled. Economically considered such insidious
absorption of unearned wealth is impossible except through private
appropriation of "economic rent" - ground rent exclusive of
The economic disproportion of net returns to the only active factors
of production, varies always and everywhere in direct proportion to
the relative density of population per square mile. It decreases with
sparseness of population and unrestricted or extensive use of land,
and invariably increases with density of population and naturally
restricted or intensive use of land.
THE REAL EXPLANATION
Herein, therefore, seems to lie the basic cause of the unjustifiably
low net purchasing power of the masses, the ever increasing high cost
of living and of conducting business, the periodic "hard times"
or business depression, and the consequent unnecessarily low net
returns to productively invested capital. That non-participants in
production and distribution absorb in the United States alone with
absolutely no return therefore, over ten billion dollars annually, is
but a mere incidental effect of the economic maladjustment that
seriously and increasingly affects every useful occupation and
business in every country.
It is quite generally known that the invariable economic effect of
increasing the density of population per square mile is to
correspondingly increase land values, or "economic rent,"
the only population-produced product. But, except to those whose
dominant interests are much greater as land owners than as land users,
it is not yet seriously nor generally realized that in the end land
values, or "unearned increment," in direct proportion to
increase in density of population, absorb all economic gains.
Increasingly greater proportions of wealth absorbed by land values
are also the result of all increase in productive powers. This applies
to labor saving inventions, to increase in working hours and greater
efficiency of labor, to more intensified use of land, to cheaper fuel
and lights, to lower freight rates, to co-operative societies or
stores, to general decrease in living costs due to the practice of
economies, to improvement in sanitation and health, to higher mental
and moral levels, and, to any lower costs of conducting business and
manufactures temporarily gained by increased output and wider markets.
For complete confirmation of these positive effects of the operation
of economic laws, see Adam Smith's
Wealth of Nations, ("Five foot book case edition,"
pages 216 to 218). But, had the Wealth of Nations never been
written, careful observation and unbiased reflection would be forced
to recognize the facts.
PRIVATE APPROPRIATION OF ECONOMIC RENT THE REAL EVIL
Abnormally high and privately appropriated land values are,
therefore, the primary and wholly efficient common cause of many
inequitable and pernicious economic and sociological effects. Some of
the principal effects consist in the continuous tendency of wages and
interest to a minimum, resulting in industrial unrest and decreased
purchasing power of the masses. This reduces the volume of domestic
consumption and trade, and, with the steadily increasing overhead cost
of conducting business consequent on advancing ground rent, all
agricultural, commercial and manufacturing interests unnecessarily
In their blind and unavailing efforts to overcome, or outrun, the
increasing costs of production and distribution, the leading captains
of industry and the large business interests in all countries, have
resorted to several expedients. And every expedient has not only
signally failed to accomplish hoped-for results, but has intensified
the unnatural economic struggle.
Following what is superficially considered the path of least
resistance, the first expedient usually is to force general reductions
of wages, the accomplishment of which adversely reacts on both the net
margins and the gross volume of business. The second is to effect
greater labor-saving methods, to compel an increased efficiency, and,
by "scientific" management, require the speeding up of men
and machines. The third is to install higher speed tools and improved
machinery with a view of reducing production costs. The fourth has
been the seeking of wider domestic, and then of foreign markets, while
at the same time the actual home needs could not be met, due to lack
of purchasing power on the part of the actual producers of the
products exported to other countries. Any temporary gains thus
obtained have always been absorbed by the ever-increasing overhead
costs consequent on advancing ground rents. The fifth has been, by
diplomacy and intrigue, and then by cannon, the forming of colonies in
countries where population was less dense and land values lower.
WAR THE LAST EXPEDIENT
The sixth expedient, when the others failed and the natural basic
rights of men and nations was held in still more flagrant disregard
and contempt, has been wars of territorial conquest. Here the
transformation from individual to collective pelf begins; the military
taking outrightly of that which previously only a little at a time had
been commercially taken. Such wars, impelled wholly by economic
stress, have been instigated under various guises by the ruling
classes, for the actual dual purpose of preventing industrial
revolutions at home, and for anticipated special advantages in
permanent control of wider and more remunerative markets abroad.
These wars, with their "Hymns of Hate", have always
originated in nations where population was dense, land used
intensively, and land values abnormally high, and they have been
directed against countries where the reversed conditions obtained.
That the effects of such inexcusable maladjustments as have been
described eventually result in blunting, debasing, and even
temporarily dehumanizing the human mind, is seen in the audacious
purpose and in the brutal methods practiced by Prusianism, which the
civilized world, at awful cost, is today in self-defense obliged to
crush into impotency.
But, Prussianism is mentally, morally, and economically only the
fully ripened fruit of the unnatural withholding from use, in whole or
in part, of the land, the waters, the air and the sunlight, which the
Creator provided solely for the highest use of all mankind.
THE ECONOMIC CAUSES OF WAR MUST BE STUDIED
If the present cataclysm of force and destruction is the inevitable
final consequence of the disregard of both economic and scriptural
laws, as appears certain, then, unless society shall, through its
teachers, preachers, and statesmen, become generally and ungrudgingly
willing to submit to the orderliness and equity of the natural laws of
righteousness, war-causes must again grow, and again produce their
hated fruit. Serious individual consideration of economic laws is
therefore becoming increasingly important.
In the eternal struggle for higher degrees of existence, the biologic
laws of heredity, natural selection, etc., have been the inevitably
operating natural laws through which have been wrought out continuous
evolution of the most desirable types of life. The fitter of the
superior types, altruistically actuated, have in a helpful and just
manner impressed their superior economic and social constitution upon
the less fit of the human family. Inferior types, by brutal force
alone, seek to impose both their possible excellences and their
selfishly conceived economic, social and military supremacy upon the
less powerful, or to destroy their potentiality for further growth.
The one is the peaceable though relentlessly operating natural law of
the survival of the fittest while assisting the less fit to higher
levels of life. The other is the properly despised pitiless view of
life known as "Kultur".
THE ECONOMIC ORIGIN OF "KULTUR"
"Kultur," in its essence, must necessarily be gradually
superinduced by maladjusted fundamental economic causes that can
hardly be considered wholly peculiar solely to German soil or to the
natural instincts and free choice of the great mass of German people.
Generic "Kultur" would therefore appear to be an essential
effect of conditions which have long been more true of Germany than of
less densely populated nations. For it is significant that "Kultur,"
of the Prussian type, has never appeared, and, for economic reasons,
cannot possibly appear, in sparsely populated countries where land
values, and therefore living costs, are comparatively low.
It must not be forgotten that, fundamentally considered, "Kultur"
is but the natural climax of a gradual but unnatural economic-impelled
growth. Though needlessly so, incipient stages of "Kultur,"
the culminating effect of private absorption of "unearned
increment," are present in degrees, varying with density and with
servility of population, in all civilized nations.
To forcibly overcome the ever-dwindling net returns to all productive
effort, and to escape anticipated internal industrial revolutions
which unjust economic conditions invite, the final and the superlative
expedient vainly re- sorted to, is "Kultur." Reverting to
the first paragraph, this cannot be in accord with the Creative will,
nor with the real essence of all invocations: "Thy will be done
on earth, as it is in heaven."
Primarily, wages is the gross product of labor resulting from the
expenditure of individual strength and skill applied to land or to the
products of. land. The saved-up wages of labor is wealth. That portion
of wealth devoted to increasing labor-efficiency in wealth-production,
is capital. Interest, as return for capital loaned, and profits, as
return for capital used, are therefore purely forms of primary wages.
Secondary forms of wages consist of the net returns from the sale of
sea, soil, and manufactured products, the transportation of persons
and articles from one locality to another, the teaching and
transmitting of intelligence, and the superintendence and management
of banks, factories, farms, mines, and other productive or
distributive business. These, together with fees for professional
service rendered, are all primarily dependent upon the average net
returns to labor, and, secondarily, upon the extent to which all labor
products and capital-returns may be unabsorbed by non-producers.
Diminishing, through absorption by non-producers, the natural gross
wages of labor in any of its forms (due allowance being made for the
use of the capital), and particularly in its essentially primary form,
necessarily is to proportionately reduce, at their very source, the
natural flow of net returns to all productively used capital. This
would diminish general purchasing power, and thus, unnaturally
restrict production, consumption, and distribution, and, with the
consequent increase in both production costs and living costs, would
therefore be the fundamental cause of "poverty," of "hard
times," and of "business depression."
The economic maladjustment, whose most unnatural and inhuman
sociological effects, with increasing density of population
necessarily tends toward, or culminates in, "Kultur,"
happily may be easily corrected. Were this not true, then would the
Creative fiat, "Increase and multiply," be the world's
perpetual and ever-increasing curse. Except for man's stupid cupidity,
such as has brought on the World War, this command would have long
since proved to be, as under natural conditions it yet will be, the
crowning economic blessing of all nations.
The only genuinely constructive basic remedy yet conceived by
political economists, appears to lie solely in each subdivision of
government collecting and using its own public-produced earnings,
thereby preventing dangerous concentrations of "unearned"
increment, and, concurrently, obtaining its necessary revenue for
public purposes. The essential need lies in simply changing the
incidence of such taxation as tends to multiply cost, to that which
the greater it may be taxed the more it justly subtracts from all
productive costs. This is true of nothing save land values.
This change may best be accomplished by taxation levied directly
against the privilege of land ownership, the amount to be apportioned
according to the purely socially-produced annual rental value of land
exclusive of improvements. The essential change may be gradually
completed in a five year period, by increasing the present tax on land
values 17 per cent, per annum; corresponding annual reductions (except
of graduated inheritance taxes) to be made in taxes now imposed either
directly or indirectly on other objects of taxation.
Thus, leaving land titles undisturbed, the land owners' remuneration
for the specially qualified service they would render in collecting
and turning over to the public its socially-produced earnings, would
finally be reduced to IS per cent, of the total annual rental value of
land. Revenue so obtained constitutes society's natural general fund
for supplying governmental needs. This simple, but all-important,
fiscal change in the incidence of taxation, may thus be
constitutionally made, by any nation or subdivision of government,
with no resulting disturbance of legitimate business or industry. On
the contrary, all business and industry would immediately be
By no other just method can natural economic and desirable
sociological conditions become possible. Nor can the true basic right
of both public and private property be otherwise obtained and made
permanently safe, in any country or under any form of government.