PART I
STANDARDS OF WELFARE
CHAPTER I
THE HUMANIST APPROACH TO ECONOMIC LIFE
§ 1. The conception of an economic system bringing into orderly relations the activities of large populations, or even of humanity as a whole, is entirely modern. Though many special problems of an economic nature troubled the minds of thinkers from the early times of Egyptian, Babylonian, and Chinese civilisation, effective social contacts for any purpose were in general so narrowly localised, and economic so implicated with other motives and activities, as to render impracticable any clear abstraction of industry or business from the complex of interests and activities that make up human life. When under ancient despotisms labour was sometimes organised upon a large scale for the construction of public buildings, temples, palaces, roads, fortresses, or for the private households of the great, the conditions of such services, as well as their technique and uses, rendered them intractable to any distinctively economic analysis. As for the ordinary life of the people in any country, while most of their active energies were undoubtedly engaged in occupations readily recognisable as economic, in the sense that they were directed to secure the material requisites of life, they were so intricately interwoven with other interests and activities of the home and the family, so insusceptible of any measured valuation of cost or utility, as to preclude them from separate consideration in group behaviour. Not until barter became a regular and considerable practice, involving specialisation for a market, did the beginnings of an economic system arise. But so long as the cultivation of some patch of earth for a livelihood remained the lot of the vast majority of the population of every country, the primitive communism of the family as a mainly self-contained system, satisfying most of its requirements by the voluntary or customary services of its members, gave a very limited importance to the market as a connective tissue of an economic organism. The rudimentary commerce of a society where nearly all the population grew virtually all their food, made nearly all their clothes, most of their housing, furniture, and tools within the circle of the family, renders all our modern economic concepts and laws inapplicable. Even when town life with its organised trades and markets put considerable sections of the population upon a closer basis of inter-dependence by division of labour, while regular employment on monetary terms extended the area of economic order, the family, never a distinctively economic unit, retained within its communistic circle many of the productive activities which later fell under the economic system, as we now know it. Not until, first in Great Britain, then in other Western countries, the transformation of means of transport and communication under steam-power had expanded, quickened, and cheapened the movement of goods, persons, and information, while the new machinery, utilising the same power increased enormously the output of manufactured goods, did the modern economic system take clear shape as a distinguishable objective being, and as an intellectual image in the mind of man. No more impressive evidence of this modernity can be obtained than that presented in Adam Smith's Wealth of Nations, where we confront a singularly powerful and wide-ranging mind in the act of assembling intellectually the hitherto detached pieces of economic observation and reflection, and welding them into some unity that stood out as an economic system. Even then modern economists recognised how imperfectly those analyses, principles, laws, which figure in their theory as distinctively economic, had been able to separate themselves from the entanglements of custom, law, politics, and morals, which still hampered the play of the business activities of the age, limiting mobility of labor, growth of joint stock enterprise, and freedom of commerce.
§ 2. Not until the nineteenth century was well advanced, was the widespread reticulation of rapid, regular, reliable markets for commerce and finance extended through the civilised world sufficiently to bring the majority of its population within the compass of a single regulative economic system. That is, before the Industrial Revolution, economic were not sufficiently differentiated from other interests and activities to form the subject matter for a separate science.
The rapid transformation of material and social conditions both of work and life produced by the new machine and power economy, with its great increase in the productivity of labour, had two important influences upon the thought of the age. On the one hand, it gave substance and sustenance alike to the ardent rationalism of the Utilitarians who, under the leadership of Bentham and James Mill, sought to regimentalise all departments of private and public life by doctrines of enlightened self-interest for the achievement of âthe greatest happiness of the greatest numberâ, and to the more exuberant schemes and visions of Robert Owen and a considerable band of enthusiasts for socialism and âa new moral world.â The most distinctive fruit of this utilitarianism in the realm of thought was the rapid rise of an authoritative science of Political Economy, which subjected the new industrial order to a rigorous analysis and professed to discover a body of laws and principles regulating the production, distribution, and consumption of wealth, as natural, necessary, and immutable, in their operation, as the laws of chemistry and physics. Although, as will appear from the fuller treatment of the rise of this Political Economy given in later chapters, these early economists commonly, and doubtless with sincerity, disclaimed the intention of furnishing a defence or approval of the system which they expounded, their ranking of economic laws with the laws of physical science, in an age which prided itself upon the belief in the progress, or even the perfectibility, of human institutions, did actually serve to give a moral support to the new industrialism, its commerce and finance.
Thus it came about that the stream of criticism and denunciation, which poured forth during the nineteenth century, alike from the ranks of humanism and culture, and from the thinkers and agitators of the working classes, was directed equally against the wrongs and miseries of the new industrialism itself, and the science which seemed to be its intellectual champion. Although in more recent times economists have, as we shall see, been more careful to guard themselves against the imputation of favouring the processes they describe, or approving the laws they discover, we shall show reason for holding it true that the authoritative economic science of our day continues in the main to give intellectual support to the dominant economic practices, and to the system in which they are incorporated.
§ 3. If this be so, it follows that our task has a double aspect. On the one hand, it essays to study the relations of industry to life; on the other, the relations of Economics to Ethics, regarded as the science and art of human welfare. As we proceed, it will transpire that these are not really separate or separable issues. For in every inquiry into actual operations of industry, commerce, and finance, we necessarily encounter the theories, hypotheses, and laws which economists have formulated, either from facts or figures, or from a priori reasoning. If, therefore, we seek to assess any order of economic activity in the light of a wider human valuation, we bring the operation of some economic law to the test of ethics.
In the controversies of the nineteenth century waged around the new economic system the two issues were virtually fused. The diatribes of Carlyle, Ruskin, William Morris, Kingsley, Maurice, as in the next generation of Tolstoy and Edward Carpenter, were equally directed against the barbarities of the capitalist machine and factory economy, and the intellectual âimpostureâ which in the name of science furnished support to this economy. The intellectual assault upon Capitalism, led by Marx, Engels, Lassalle, and other âsocialistâ assailants, largely with weapons selected from the âclassicalâ armoury, was equally directed against the system and the science, the latter being regarded as a creed expressly invented in order to safeguard and promote the interests of the âcapitalistsâ.
§ 4. Seeing that this controversy in its more modern and developed shape must largely occupy us in this work, it may be convenient here to set out, as simply as possible, the counts of the indictment which nineteenth century humanists and socialists brought against the âcapitalist systemâ as they saw it.
(1) The distribution of wealth, and of the opportunities of acquiring it, such as education, choice of work, access to land and capital, was unequal and unfair. Each nation was visibly divided into two classes, rich and poor, toilers and idlers, masters and serfs. The bargains and contracts by which goods and services were bought and sold were loaded with inequality.
(2) Selfishness was not merely the dominant practice but the accepted principle for all economic conduct. Each was to devote his mind and body to the attainment of his personal gain, in pursuit of which he was to get as much and give as little as possible.
(3) Industrialism built upon an ever finer subdivision of labour meant the degradation of the man. âIt is not the labour that is divided â but the man â divided into mere segments of man, broken into small fragments and crumbs of life.â âIt is a sad account of a man to give of himself that he has spent his life in opening a valve and never made anything but the eighteenth part of a pin.â Free men were converted into servants of the machine.
(4) Competition was condemned as a wasteful and irrational process. No clear conscious order existed outside the limit of the separate business. The relations of businesses competing in a single trade or market, the relations of different trades in drawing on the general supply of capital and labour, were determined by blind fumblings, involving continual errors of over and under production. Where âfreeâ competition was obstructed, as by tariffs or combinations, the impediments were equally irrational and wasteful.
(5) Not only was man degraded in his work by the mechanical division of labour. Factory towns, mean, ugly, and unhealthy, poisoning the air and the water with the fumes of their chimneys and the refuse of their mills, were destroying the beauties of nature and removing the bulk of our people from wholesome contact with uncontaminated nature.
§ 5. For the most part industrialists went their way in complete indifference to these criticisms from literary men, moralists, aesthetes, and philanthropists. They were ânot in trade for their healthâ, âBusiness is not philanthropyâ, âBusiness is businessâ. But defenders of Capitalist industrialism were not lacking. Though industry was best operated by intelligent self-interest, it was none the less the servant of the community. Its increase of wealth was not held by a small greedy capitalist class, but enriched the whole community. The cooperative spirit was implicit in the whole process. Capitalist production brought a constant enlargement of effective community, binding distant peoples in friendly advantageous intercourse. It was a liberal education in industry, responsibility, honesty, and thrift. Breaking up the remnants of feudal serfdom, it enlarged the liberty of man, gave him increased mobility and choice of work. The willing flow of labour into the factory towns proved that the mechanic and the mill hand were better off and freer than the farmworker. Machinery even found its aesthetic advocates. It was not base or ugly ; as an expression of human skill and ingenuity, it was often beautiful and interesting in its appeal. Waste no doubt was found in the operations of the business system. But the new business organisation reduced waste. Nature, and human work conducted in more ânaturalâ conditions, were far more wasteful.
These were the chief heads of a controversy so multiform and so entangled in its issues that no settlement has yet been reached. It has indeed shifted its character with the more recent developments of the technique and organisation of industry. The size of the business unit is continually growing in the main branches of production and commerce: combination is everywhere displacing or qualifying competition ; employers and employed are organised for negotiation or hostility: class-consciousness among the workers is accompanied and mitigated by a new consideration of what is termed the Human Factor in Industry, and by sporadic attempts to harmonise the interests of capital and labour: the intervention of the State, or municipality, either as entrepreneur, or as controller of the conditions of industry, is in every country a potent factor in industrial life. But in its essential character modern capitalism is not changed. The government and conduct of business remains for the most part in the hands of the owners of accumulated wealth or their appointed representatives, who acquire the premises, plant, and material appropriate to a manufacturing or other business, and hire for wages the labour necessary to utilise this âcapitalâ in order to produce profit. While then the economic system comprises many types of business and many sorts of activity which lie outside this definition of capitalism, the latter still remains so dominant as to make it the central feature in any attempt to assess economic activities and values in terms of human welfare.
CHAPTER II
THE MEANING OF WELFARE
§ 1. The gravest preliminary difficulty that confronts us in this task of relating economic activities and thought to ethical arises from a failure to get a sufficiently clear agreement as to the meaning of the term, human welfare. Alike by professional economists and by enlightened business men much has recently been said and written about the steps needed to bring the aims, methods, and results of human enterprise into closer accord with some ideals of human service, and the term âwelfareâ has been freely used as the criterion of a sound economy.
But welfare may mean anything, from the most elevated conception of human character and destiny to the baths, refectories, and recreation grounds that figure so prominently in what is known as âwelfare workâ. Now although all large terms in common use defy exact definition, it is none the less desirable to fasten some agreed and consistent connotation upon the key word to our enquiry.1 We sometimes gain a little ground at the start by shifting from one term on to another that has acquired some conventional connexion with it. In any discussion of welfare a term that is bound to come up soon is value. And this term is evidently useful, even essential, to our purpose, because of the central place it occupies both in Economics and in Ethics. Our subject, indeed, may appropriately be expressed as that of the relations between economic and ethical, or human, values. And we may start upon our enquiry by premising that welfare consists of ordered, organised values. This, it may be complained, does not carry us far, for value seems an even vaguer and more attenuated concept than welfare. Yet we cannot clarify our conception of human welfare without some classification and assessment of those distinguishable elements to which the word âvalueâ is commonly applied. Indeed, it is not possible to avoid this path in attempting to relate ethics to economics. For Ethics is the science and art of human values, as Economics is of economic values.
This statement no doubt requires defence. For in the minds of many, perhaps of most, ethics is attached to a special class of values, designated moral, related to rights and obligations. âThe distinctive character of Ethics,â writes Maciver, âis that it is concerned with the question of ought, the question of right and wrong, good and evil.â
1 But this Hebraic note, this limitation of âoughtâ and ârightâ, has never been accepted fully by the ordinary man. âYou ought to have done the sum this wayâ, âYou ought to keep your body still in playing the strokeâ, âYou ought not to wear this hat with that blouseâ. Not only popular parlance, but popular thought and feeling, have always broken down the barrier between âmoralâ and other criteria of conduct. Indeed, ordi-dinary speech, even in its origins, attests a preference for aesthetics rather than morals as the principal criterion of value. âRightâ itself is of strictly aesthetic origin. 'straightâ and âcrookedâ conduct have a stronger purchase on most minds than âgoodâ or âbadâ. No higher âmoralâ approval is
conveyed than by the term âa white manâ â whiteness having here a fuller connotation than mere innocence. Beauty of character, the
schöne Seele, is more than goodness. Greek thinking, especially as given in its master, Plato, saw the good life in terms of beauty, harmony, and grace.
1 As modern thought turns more away from the distinctively Hebraic conception of goodness, the same preference is discernible. Characteristic expression is given to this tendency in a recent essay of Professor J. S. Mackenzie who, discussing the conception of âintrinsic valueâ in the ethical scheme, says, âfurther reflection has convinced me that, if any single term is to be used to characterise it, Beauty (at least in the sense in which the Greeks used the term
) is less inadequate than any other.â
2 But in point of fact neither Beauty, Truth, nor Goodness can claim a suzerainty over values. For, in the first place, they are distinguishable more as stresses than as objects, and, secondly, they do not among them exhaust the categories of human values. âGoodâ admittedly has other than a âmoralâ...