Economy as Viewed by an Anarchist

C. L. James

[A critique of Henry George's presentation on political economy,
reprinted from Mother Earth, March 1911]

There was also a dispute between two great Fathers of the orthodox economic church, Ricardo and Malthus as to whether Rent cuts into Profit and Wages. Malthus denied that it affected either. Ricardo, by asserting that it reduced both, supplied the premises of an important Socialistic school whose best known representative is Henry George. The fallacies which make these controversies possible appear to me very largely founded in confusion of thought and language between such terms as (aggregate) rent and rent (per acre), interest (aggregate) and (per cent.), even real wages and nominal, though that is acknowledged to be a vulgar error. But they have a deeper root. The orthodox economists, having contracted the habit of generalizing from the capitalist's standpoint, are rarely able to see any other part of an universal truth than what concerns the capitalist, as such. And the Socialistic writers have not been able to correct them, because they, too, generalized from a special standpoint. Endeavoring myself to set both right by taking the Standpoint of Universal Man, or the Consumer, I shall most cheerfully acknowledge every anticipation I can find: for it will give me an opportunity to show that a view too limited and partial was what kept from the truth men who often got so very near it.

14. Rent, Profit, and Wages, are commonly assumed to be the shares in Distribution, falling respectively to landlords, capitalists, and laborers.13 But surely there are others. The share which falls to thieves is much too important to be justifiably ignored, if among thieves we include bad governments, corrupt monopolies, pestilent sinecurists, warriors employed in anything else than defense of their own countries, and these are, most deservedly, so classed by the orthodox Economy, which was the precursor and almost became the phoenix progenitor of Anarchism. This share is not like that of children, nursing mothers, beggars, unproductive laborers, who can get only what the producers or the producer's exploiters have had first. If conquerors and their creatures be thieves, as orthodox Economy teaches, the thief gets his share before the producer. There is also an impersonal sharer, Waste, which devours not what the producers choose to give it, for that would be nothing, but all it -can take against their will. Floods, flames, moths, rust, mice, kings, nobles, and pirates, must have their undivided share first. The producer gets only what they leave. The Socialistic writers are not insensible to part of this truth. Before Saint Simon gave them anything like a scientific method , they perceived that existing institutions were founded by barbarians whose, only trade was war, and that the taint of origin pervades them all. Adam Smith partly saw this, too." The reason neither he nor they have adequately reasoned from this historical premise, is that both the main economic schools were in a hurry to begin generalizing either from the capitalist's standpoint or the laborer's. Waste and Plunder, so important to the Consumer, i. e., to man, as man, were dismissed with the remark that they took only from the gross product, and that the laws of the net could be ascertained without considering them. But if, as Adam Smith, all Socialists, and all Historic Economists, perceive, the landlords and capitalists derive peculiar powers from government, an institution whose original purposes were war and Plunder, it evidently is not correct to say that we can get at the law of their share in Distribution without first considering the laws of Plunder.

15. This error, springing direct from the Original Sin of Political Economy, has been the fruitful parent of others. The definition of Capital as wealth employed to produce more wealth, is incorrect. The wealth consumed in war is not employed to produce wealth but to destroy it; and a bond given by the government to those who lend it money during war is not wealth at all. But to say, as Henry George does actually say, that the bonds of a government are not Capital, is to deny that Rothschild is a capitalist-a palpable reductio ad absurdum; for he is a typical capitalist-a capitalist who is nothing else than a capitalist, whereas most capitalists are also landowners and laborers; which embarrasses us when we wish to class them, while he is classable at once and forever as a capitalist. And, as all Capital is not wealth employed to produce wealth, so much wealth employed to produce more wealth-for example, the tools belonging to a man who lets out the work he does with them-are capital in no ordinary tenable sense. For a correct definition of Capital we are indebted to Karl Marx. Capital is that which acquires Surplus Value, or a share in Distribution not due to labor. It may be wealth employed to produce wealth, but is not necessarily. It includes, therefore, slaves, accounts bearing interest, and Land, though this is a peculiar kind, needing, frequently, to be distinguished with much care from (other) Capital." This definition certainly has the disadvantage of leaving us without a short term for wealth employed to produce wealth, After considerable embarrassment from this lack, I determined to employ the symbol W. P. W.; and I find it very convenient. I shall maintain that W. P. W., as such, works, though it may be Capital, in quite the opposite way to Capital, as such. Capital is, in Wall street phrase, a "bear": W. P. W. is a "bull." W. P. W. raises the value of labor: Capital, as such, always tends to beat it down. "Orthodox" economy, having thus committed a non distributis medii, in identifying with Capital what is only sometimes a part of Capital, and fallen into the ambiguity of using the word Capital in two inconsistent senses, proceeds to give an incorrect account of the process by which both W. P. W. and Capital are brought into being. Because under the existing "bourgeois" methods of production and trade, most Capital is W. P. W., and because the individual capitalist often becomes one by saving money, this theory, still failing to distribute the middle term, asserts that Capital is created by saving money. But in whichever sense the word Capital is to be understood, Capital existed long before there was any money to save. Does Capital mean W. P. W.? Then the forked stick of the Digger; the bow of a more advanced barbarian; a tame horse, dog, cow; a boat, a net, is Capital. What had saving money to do with making these? They were made not by "adding parsimony to production," but wholly by production, of that peculiar kind which is called Invention. Now, it is a truth of the first importance that the economic functions are always essentially the same-that they advance, not by creation but only evolution,-a "simple indefinite homogeneity" becoming a "complex definite heterogeneity." All W. P. W., from a raft to a Great Eastern, an Esquimaux sled to a Union Pacific R. R.; a bow to a quick-firing rifled cannon, is produced by Invention, and by nothing but Invention. All the processes of trade-the opening of new markets, the use of bills, notes, banks, stocks, clearing houses, were brought into existence by invention, and by nothing else. Money owes its existence to Invention and its use has very largely given way to that of credit, a somewhat later invention which is admitted to serve all the same purposes. An imperfect system of credit-exchanges still makes cash payments periodically necessary, and the great cash accumulations of bankers very useful; but of these accumulations only a very small part is due to saving; which, moreover, to give it all the praise it has, can accumulate nothing but money, could not do that if all the people tried to save, and would be useless but for that series of exchanges whose end is always unproductive consumption. To suppose an extreme casea favorite device in economic reasoning,-we have seen what not only would happen if all tried to save money-they could not do it, and they would all be poor-but what actually does happen where this process is approached, as in "Jewtown"-they all are desperately poor. Now suppose, then, that nobody saved money -- that every one bought whatever he fancied-what would happen? Since it is evident that if a man who starts with nothing proposes to build or buy a house he must meanwhile abstain from gratifying many desires of a more evanescent character, there might be less substantial comfort than there is. But this does not seem to me quite certain, for the number of such men who build or buy houses has never been great; and, if we inquired into their antecedents we should be apt to find they differed from less provident neighbors rather in their natural tastes than their acquired habits. At any rate, there would then, as now, be productive labor, without which no man starting poor in a pacific society could gratify his desires at all; trade, without which only the simplest desires can be gratified; and invention, which is what improves all the means of gratifying desire. In short, the effect of parsimony even in assisting production of W. P. W. is much exaggerated.