Economic problem

“ For these many reasons economic thinking has been weak and futile in the problems of conservation, of haphazard invention, of unrestricted advertising, of anti-social production, of the inadequacy of income, of criminality. These are problems within the zone of the intimate life of the population. They are economic problems, and determine efficiencies within the whole economic life. ”

“ Political economy requires farther expansion in order to include all the elements of this great social problem.
It is a true doctrine that demand and supply regulate the price of all things, labour included. ”

“ The common run of political economists confuse these together, under the designation of economic laws, which they deem incapable of being defeated or modified by human effort; ascribing the same necessity to things dependent on the unchangeable conditions of our earthly existence, and to those which, being but the necessary consequences of particular social arrangements, are merely co-extensive with these: given certain institutions and customs, wages, profits, and rent will be determined by certain causes ”

“ These problems of job control, of wealth and income distribution, of industrial inter-relations and of the relation between the state and industry are pressing for solution in every important centre of modern economic life. Each constitutes a disturbing element and contributes its mite to the aggregate of social instability and unrest that are racking the economic world. ”

“ The question whether these evils are destined to increase or to diminish we [Pg 558] have answered conditionally on the basis of past experience and present tendencies. If competition continues and labor retains its mobility, the evils will naturally grow less. The grand resultant of all the forces of progress is an upward movement in the standard of economic life gained, not without cost, but at a diminishing cost. ”

“ Demand for commodities stimulates and regulates the machinery of production.
Those in control of the modern economic system have no choice but to produce surplus, and once having produced it, they have no choice except to dispose of it. An inexorable fate drives them onward—augmenting their burdens as it multiplies their labors.
Investment opportunities, of necessity, are eagerly sought by the plutocracy, since the law of their system is "Invest or perish"! ”

“ With natural opportunities thus set free to labour, with capital and improvements exempt from tax and exchange released from restrictions, the spectacle of willing men unable to turn their labour into the things they want would become impossible; the recurring paroxysms which paralyse industry would cease; every wheel of production would be set in motion; trade would increase in every direction and wealth augment on every hand. ”

“ But if, on the other hand, growth in the supply of money does not keep pace with the economy's current production, then prices will fall, the nations's labor force, factories, and other production facilities will not be fully employed, or both. ”

“ The consequent shifting of the incidence of industrial returns may be ascertained by enumerating the respective beneficiaries and exploitees of the profit-taking process—the trade advantages of the one class measure the economic disability of the other class; and the attenuation of the incomes of the less favored, as a means to augment the profits of the more favored, is a significant attribute of changing social costs. ”

“ Once society discovers that it depends on the economy, the economy in fact depends on the society. When the subterranean power of the economy grew to the point of visible domination, it lost its power. ”

“ Has the progress of wealth and industry no effect in regard to cost of production, but to diminish it? Are no causes of an opposite character brought into operation by the same progress, sufficient in some cases not only to neutralize, but to overcome the former, and convert the descending movement of cost of production into an ascending movement? ”

“ Nothing can be more chimerical than the fear that the accumulation of capital should produce poverty and not wealth, or that it will ever take place too fast for its own end. Nothing is more true than that it is produce which constitutes the market for produce, and that every increase of production, if distributed without miscalculation among all kinds of produce in the proportion which private interest would dictate, creates, or rather constitutes, its own demand. ”

“ Every feature of the competitive system of production and distribution was appropriately illustrated, together with the inevitable consequences to the people; wealth beyond the dreams of avarice for a favored few and hopeless poverty and degradation for the many. ”

“ When you hear talk about a tough trade bill, remember that being tough on trade and commerce, the lifeblood of the economy, will have the worst possible consequences for the consumer and the American worker. ”

“ Although the story of these economic changes necessarily involved some account of the quantitative relations between the volume of production and of consumption in the social industries and in the economic system as a whole (thus compelling a restatement of my “heresy” of over-saving) , I did not yet fully explore the saving and the spending processes so as to make over-saving a necessary implication of capitalism. ”

“ Economy without industry will barely appear in a whole coat; industry without economy will appear in rags. The first is detrimental to the community, by preventing the circulation of property; the last is detrimental to itself. It is a singular remark, that even industry is sometimes the way to poverty. ”

“ For, it is only with the produce of its labor and capital that one country can demand, or can obtain, in exchange, the produce of the labor and capital of another. The idea that the lowering of wages can increase, or the increase of wages can diminish, the trade of a country, is as baseless as the idea that the prosperity of a country can be increased by taxes on imports, or diminished by the removal of restrictions on trade. ”

“ The inevitable result was to check production, and this check to production propagated itself in a cessation of demand, which checked production to the furthest verge of the wide circle of exchanges, operating with accumulated force in the centers of the great industrial commonwealth into which commerce links the civilized world. ”

“ Of such cases, the argument to show that Demand for Commodities is not Demand for Labor, the Doctrine of International Values, and the Effect of the Progress of Society on wages, profits, and rent, are examples. ”

“ The labourer may obtain greater comforts; wages in kind real wages may rise. Or the progress of population may force down cultivation to inferior soils, and more costly processes; thus raising the cost of production, the value, and the price, of the chief articles of the labourer's consumption. On either of these suppositions, the rate of profit will fall. ”

“ That the continued and increasing depression of the manufacturing, commercial, and agricultural interests of this country, and the wide-spreading distress of the working classes, are most alarming:—manufacturers without a market, and shipping without freight; capital without investment, trade without profit; and farmers struggling under a system of high rents, with prices falling, as the means of consumption by the people fail; a working population rapidly increasing, and a daily decreasing demand for its labour ”

“ Having fully acknowledged the temporary effects which, in particular employments of capital, may be produced on the prices of commodities, as well as on the wages of labour, and the profits of stock, by accidental causes, without influencing the general price of commodities, wages, or profits, since these effects are equally operative in all stages of society, we may be permitted to leave them entirely out of our consideration, whilst we are treating of the laws which regulate natural prices, natural wages, and natural profits, effects totally independent of these accidental causes. ”

“ People will get this increase in proportion as their labour, services, talents, or acquirements are more or less indispensable to the society; and the price of other things will diminish, as the cost of producing and bringing them to market diminishes, with improvements in manufactures, and in the facilities of transport. ”

“ Thus, where the value of land is low, there may be a small production of wealth, and yet a high rate of wages and interest, as we see in new countries. And, where the value of land is high, there may be a very large production of wealth, and yet a low rate of wages and interest, as we see in old countries. And, where productive power increases, as it is increasing in all progressive countries, wages and interest will be affected, not by the increase, but by the manner in which rent is affected. ”

“ But as soon as it becomes a question of obtaining, instead of a certain mass of products, the production at any cost of surplus-value, the incessant multiplication of money, the possessor of the means of production strives relentlessly to make those means of production absorb the greatest possible quantity of surplus-labor. ”

“ Those whose degree of providence is below the usual standard, become impoverished, their capital perishes, and makes room for the savings of those whose effective desire of accumulation exceeds the average. These become the natural purchasers of the lands, manufactories, and other instruments of production owned by their less provident countrymen. ”

“ A reduction of prices and wages. That point has a significance to which I will return.
The second cause is the distorted balance which grows up in every boom between different branches of industrial activity. When trade is good, we invariably build ships, produce machinery, erect factories, make every variety of what are termed “constructional goods” upon a scale which is altogether disproportionate to the scale upon which we are making “consumable goods” like food and clothes. ”

“ Lastly, the wider fluctuations of general trade seem to impose a character of irregularity upon trade, so that the modern System of industry will not work without some unemployed margin, some reserve of labour. ”

“ Let it practice true and conscientious economy, not only in the expenditure and application of public moneys, but also in the method of levying them, so as to be equally just to all classes and all economical interests. ”

“ The other phenomenon from which the notion of a general excess of wealth and superfluity of accumulation seems to derive countenance, is one of a more permanent nature, namely, the fall of profits and interest which naturally takes place with the progress of population and production. The cause of this decline of profit is the increased cost of maintaining labour, which results from an increase of population and of the demand for food, outstripping the advance of agricultural improvement. ”

“ Its chief weight falls on letters of business, and increases the expense of mercantile relations between distant places. It is like an attempt to raise a large revenue by heavy tolls: it obstructs all operations by which goods are conveyed from place to place, and discourages the production of commodities in one place for consumption in another; which is not only in itself one of the greatest sources of economy of labour, but is a necessary condition of almost all improvements in production, and one of the strongest stimulants to industry, and promoters of civilization. ”

“ And if to this cause we add the others we have already enumerated, first among which must be ranked the inordinate increase of the population, we shall be compelled to recognize the impoverishment of the mass of the consumers as a direct consequence of competition.
"But, on the other hand, this very competition which tends to dry up the sources of demand, urges production to over-supply. The confusion produced by the universal struggle prevents each producer from knowing the state of the market. He must work in the dark, and trust to chance for a sale. ”

“ Who would lend at 5 per cent. per annum to agriculture, to manufacturers, and to commerce, when a borrower may be found ready to pay an interest of 7 or 8 per cent.? That sort of income, which is called profit of stock, would rise then at the expense of the consumer. Consumption would be reduced by the rise in the price of produce; and the other productive services would be less in demand, less well paid. The whole nation, capitalists excepted, would be the sufferers from such a state of things. ”

“ Saving, you would say, would first lead to great production, then to low prices, which would necessarily be followed by low profits. With very low profits the motives for saving would cease, and therefore the motives for increased production would also cease. Do you not then say that increased production is often attended with evil consequences to mankind because it destroys the motives to industry, and to the keeping up of the increased production? ”

“ Old work-places are closed, production is regulated and organised, profits are guaranteed when works are idle, economies in management are effected, processes of manufacture are specialised and differentiated. The waste involved in competitive industry is enormous, and the sheer force of circumstances is tending to eliminate it.
4. Waste of Labour.
One further consideration must be noted. We have seen that the private ownership of land and capital is a serious drain upon national wealth and a heavy burden upon national production. ”