John Bates Clark

“ If it is barely worth while to go without something now in order to have a dollar and five cents in the future, it is more than worth while to do it in order to have a dollar and a quarter at the same future date. If a man is induced to save only a dollar, for the sake of having a dollar and five cents at the end of the year, why should he not save two dollars, in order to have two dollars and a half at that time? Why should not the amount of his present privation increase, when the surplus of benefit he can gain by it at a future date grows greater? ”

“ Develop in these economic contests the sense of justice—let both parties seek to follow a rule of right—and men’s hearts, at least, will not need to be embittered. You will then see a contest, which, when it is waged with bombs and bludgeons, looks like a Sheol, so changed that it shall open the way to a transformed world and make the hope of a future Eden no daydream, but a scientific deduction from cosmic law. We may build a new earth out of the difficult material we have to work with, and cause justice and kindness to rule in the very place where strife now holds sway. ”

“ Under a normal condition, multiplying capital means in itself higher wages. Higher wages mean that laborers, in the end, begin to get boats of their own, or shares in boats, and that the laboring-class and the capitalist class are more and more merged. Invention—that is, devising and introducing canoes—and accumulation of capital—that is, active canoe-building—mean for laborers higher pay and a chance to save capital.
Do you tell me that this is a primitive State, an Eden of the past and hopelessly vanished from the present earth; that it is a lost Paradise whose gates are forever barred? ”

“ Capital is this permanent fund of productive goods, the identity of whose component elements is forever changing. Capital goods are the shifting component parts of this permanent aggregate. They are the particular instruments that, each during its own brief economic lifetime, take their places in the endless procession of things which in its entirety is an abiding productive agent—the co-worker of labor and its perpetual assistant in creating consumers' wealth. ”

“ Every one knows that we must invoke the aid of the State in order to make industry what it should be. The rule that would bid the State keep its hands off the entire field of business, the extreme laissez-faire policy once dominant in literature and thought, now finds few persons bold enough to advocate it or foolish enough to believe in it. In a very chastened form, however, the spirit that would put a reasonable limit on what the State shall be asked to do happily does survive and is powerful. It seeks a golden mean between letting the State do nothing and asking it to do everything. ”

“ Profits Nil in a Static Society.—We shall see that if labor and capital can move about in the system of groups so freely that each agent is as productive in one place as it is in another, there will be no product anywhere in excess of wages and interest. Labor and capital then create and claim for themselves the whole output of their industries. When the entrepreneur has given them their shares, by paying wages and interest, and has paid for raw materials, he has nothing left. ”

“ Whatever there is, be it large or small, may be divided rightly or wrongly; but I am not able to see that the mere division of it exhausts the application of the principle of justice. While it is clearly wrong for one party to plunder another, it is almost as clearly wrong for one party to reduce the general income and so, in a sense, rob everybody. A party that should systematically hinder production and reduce its fruits would rob a myriad of honest laborers who are ill prepared to stand this loss and have a perfect right to be protected from it. ”

“ Monopoly may do it, or bad government, or extensive wars, or anarchy growing out of a struggle of classes; but every one of these things, not excepting monopoly, would naturally be temporary, and even in spite of them, the upward trend in the earning power of labor should assert itself. Instead of being hopelessly sunk by a weight that it cannot throw off, the labor of the future bids fair to be buoyed up by an influence that is irrepressible. ”

“ There is no danger whatever that the public will justify cutting down the wages now received by men in the employment of a monopoly to a much lower level. That in itself would not right the wrongs of the poorly paid workers or those of the public itself. The employer would go on getting high prices for his products and would pocket the new gain which the reduction of wages gave him. If a great corporation is now taxing the public, even those who suffer would rather see the proceeds of the grab shared with the men than see it all held by the employing corporation. ”

“ Of all conditions of human happiness, the one which is most underestimated is progress in power to produce. Hardly any of those who would revolutionize the industrial State, and not all of those who would reform it, have any conception of the importance of this progress. It is the sine qua non of any hopeful outlook for the future of mankind.
I am to speak, however, of justice in the business relations of life, and it might seem that this shut out the mere question of general prosperity. The most obvious issue between different social classes concerns the division of whatever income exists. ”

“ Enlarging the product of labor has caused the standard of pay to go steadily upward and the actual rate to follow it; and the prospect of a future and perpetual rise in the laborers' standard of living depends almost entirely on a continuance of this product-multiplying process. A single man maintaining himself in isolation would gain by everything that made his efforts fruitful, and society, as a whole, is like such an isolated man. It gains by means of every effective tool that is devised and by every bit of added efficiency in the hands that wield it. ”

“ For six months we have been living under what may be called “triumphant democracy,” not because the Democratic Party has beaten its rivals and come into control of the Government, but for a much deeper reason, namely, that a democracy carried into industrial life is the dominating principle of every political body that can hope for success. Every party must show by its action that it values the man more than the dollar. To this extent we are all democrats and wish the Government to act for the people as well as to be controlled by the people. ”

“ What the employer-capitalist gets for capital the employer, pure and simple, pays. As the furnisher of instruments the man is a vender of the product of these instruments, while as an entrepreneur proper he is the buyer. He must purchase the product of his own capital just as he purchased the product of his own labor. In paying, therefore, wages for all labor, including what he performs himself, interest on all capital, including his own, and the price of raw materials, he gets something which, if competition does a perfect work, he has to sell for what he gives for it. ”

“ I am prepared to claim that it is in this spirit that we demand that private initiative, which has given us the amount of prosperity that we have thus far obtained, shall be enabled to continue its work without being supplanted by monopoly. In a general way I should include public monopoly as well as private among the things which would put a damper on the progress of improvement and lessen the income on which the comfort of laborers in the near future will be dependent. Monopoly of any sort is hostile to improvement, and in this chiefly lies the menace which it holds for mankind. ”

“ How is it when a tribunal of arbitration has studied the case and announced a decision? Though the workmen may be as free to strike as ever, such an action would put them at a fatal disadvantage. The arbitration has given to the public a basis for a judgment as to the equities of the dispute. If the tribunal is one which commands respect, a refusal to abide by its decision puts the men prima facie in the wrong. If they strike now, they reject a rate which is authoritatively pronounced just. ”

“ It tends in the direction of a fair division of products between employers and employed, and if it could work entirely without hindrances, would actually give to every laborer substantially what he produces. In the midst of all prevalent abuses this basic law asserts itself like a law of gravitation, and so long as monopoly is excluded and competition is free,—so long as both labor and capital can move without hindrance to the points at which they can create the largest products and get the largest rewards—its action cannot be stopped, while that of the forces that disturb it can be so. ”

“ While there is some excuse for abandoning a purpose when long and determined effort to execute it has failed, there is no possible excuse for concluding, in advance of such effort, that a systematic policy which gives a promise of saving us from an intolerable outcome is impracticable. All the props of monopoly should be taken away and not one merely, and before this shall be tried radical measures will not be in order. Socialism will not be fairly before the people's parliament till it shall come as the only escape from a condition of private monopoly. ”

“ Business men know that this is not the case; and that something puts a check on their action. They can make their prices higher than they should be—higher than it is for the interest of the country to have them; but they cannot make them as high as they would be under a real and secure monopoly. The point I am making is that we can destroy such monopolistic power as they have. We can liberate competition, which has, in the main, afforded reasonable prices, and has also guaranteed that progress which is indispensable for maintaining a human life that is worth living. ”

“ Capital.—It might seem that we have already described the nature of capital, but we have not. We have described the kinds of goods of which it consists. A sharp distinction is to be drawn between two ways of treating capital goods, and only one of these ways affords a treatment of capital properly so called. To attain that concept we must think of goods as in some way constituting a stock which abides as long as the business continues. And yet the things themselves separately considered do not abide. Goods are perishable things; no one lasts forever, and some last only a very short time. ”

“ If, after paying wages, there is any more left in the entrepreneur's hands than competition compels him to pay out as interest, he is realizing a net profit; he is selling his goods for more than they cost him, and this, as we saw at the outset, is a condition that under perfect competition cannot continue. The natural price of goods is the cost price. If the market price of anything is in excess of cost, entrepreneurs receive a profit, and in order to do more business and make a larger aggregate of such profit they bring new labor and capital into their industry. ”