Wealth distribution

“ Presumably, then, as Production of Wealth has two Basic factors—in technical terms Labor and Land, in other terms Man and Natural Resources—so Distribution of Wealth has two basic apportionments, one corresponding to the Labor or Man factor in Production, the other to the Land or Natural Resource factor—Wages for Labor, Rent for permission to use Land.
That there can be neither Wages for Labor nor Rent for Land unless Wealth has been produced, is a manifest law of nature. The nonexistent being naturally indivisible, Production of Wealth must precede Distribution of Wealth. ”

“ No Wealth is finally produced until, finished for ultimate consumption, it has been produced to ultimate consumers by final delivery.
Quite another thing is Distribution in the technical Economic sense. In this sense Distribution is the apportionment of Labor-produced Wealth in appropriate categories with reference to the Economic relationship of Labor to Land—of Man to Natural Resources. ”

“ That is to say, land, labor, capital and managerial ability have contributed in varying degrees to the production of a certain amount of current wealth, and the problem of functional distribution is to ascertain how the net product resulting from these joint efforts is divided. How much goes to rent, how much to wages, how much to interest and how much to profits? The second kind of distribution is the division of the wealth of society among individuals or families ”

“ Wages, profits, interest and rent take the product.—It is common to consider distribution as made in the forms of wages for labor given without risk as to the product, profits to the one whose labor is associated with risk of loss as well as gain, interest to the one who furnishes capital in any form and waits for his compensation, and rent to the landlord, or owner of estate, whose property is used for a definite time and returned. ”

“ As a matter of fact, a portion of the wealth produced is constantly going to the replacement of capital, which is constantly consumed and constantly replaced. But it is not necessary to take this into account, since it is eliminated by considering capital as continuous, which, in speaking or thinking of it, we habitually do. When we speak of the produce, we mean therefore the wealth that is produced over and above what is necessary to replace the capital consumed in production ”

“ Of more practical interest are questions connected with the personal distribution of wealth. In this connection arise such problems as the increase of large fortunes, the causes of poverty, and similar questions. The boast of our Republic has long been that here opportunity was open to all, that wealth was widely diffused, and that such inequalities of fortune as characterized the nations of the Old World were happily lacking. In the fifty-five years, 1850-1904, the per capita value of all property in the United States exactly quadrupled; how has this increase been distributed? ”

“ Profits under Modern Conditions," and "The Natural Rate of Wages." They are studies of the new conditions of the distribution of wealth resulting from the interference with competition caused by pools, trusts, labor unions, etc., and aim to show how much of the Ricardian theory of distribution persists in this new stage of economic evolution. ”

“ Land, labour and capital are the factors of production. The term land includes all natural opportunities and forces; the term labour, all human exertion; and the term capital, all wealth used to produce more wealth. In returns to these three factors is the whole produce distributed. The part that goes to landowners as payment for the use of natural opportunities is called rent; the part that constitutes the reward of human exertion is called wages; and the part that constitutes the return for the use of capital is called interest. ”

“ How else can you produce a more equal distribution of wealth than by making the rich and idle pay more and the workers receive more? "The workers would have to pay more, too, for everything they bought!" ”

“ Into the distribution between individuals and classes there enter other and variable factors, governed by no fundamental economic law; and here, the conclusion should at once suggest itself, is the field for action designed to alter the distribution of wealth. ”

“ Certain forces assign certain rewards to different functions which are involved in the creating of wealth, and the science of distribution tells us how these forces work—tells us, in short, how wages, interest, and true profits are, in and of themselves, determined. If any man works and gets wages, that part of his income will be determined by the wages law. If he furnishes capital, a second part of his income will be determined by the interest law. If he also coördinates labor and capital, whatever he may thus gain is determined by the law of profit. ”

“ There are even indications of great changes going on in the matter of distribution which will correct the loss and waste involved in the old methods of distribution long before any of the fancy plans for correcting them can be realized, and which are setting free both labor and capital in that department. Now if we can economize labor and capital in manufacturing, transportation, and distribution, and turn this labor and capital back upon the soil, we must vastly increase wealth, for that movement would enlarge the stream of wealth from its very source. ”

“ For, as the distribution of wealth is a division, in ascertaining what fixes the share of the produce which goes as rent, we also ascertain what fixes the share which is left for wages, where there is no co-operation of capital; and what fixes the joint share left for wages and interest, where capital does co-operate in production. ”

“ These factors are the vendible items that men handle in these processes of production and distribution; and economic laws come, therefore, to be expressions of the algebraic relations subsisting between the various elements of wealth and investment,—capital, labor, land, supply and demand of one and the other, profits, interest, wages. Even such items as credit and population become dissociated from the personal factor, and figure in the computation as elemental factors acting and reacting though a permutation of values over the heads of the good people whose welfare they are working out. ”

“ Production does not merely mean the making of things, but includes the increase of value gained by transporting or exchanging things. There is a produce of wealth in a purely commercial community, as there is in a purely agricultural or manufacturing community; and in the one case as in the others, some part of this produce will go to capital, some part to labour and some part, if land has any value, to the owners of land. ”

“ The distribution of provisions, money, and merchandise in just proportions, according to times and places, is the true secret of finance and the source of wealth, provided those who administer it have foresight enough to suffer a present apparent loss, in order really to obtain immense profits in the future. ”

“ Combining with these facts of outward nature other truths relating to human nature, it attempts to trace the secondary or derivative laws, by which the production of wealth is determined; in which must lie the explanation of the diversities of riches and poverty in the present and past, and the ground of whatever increase in wealth is reserved for the future.
Unlike the laws of Production, those of Distribution are partly of human institution: since the manner in which wealth is distributed in any given society, depends on the statutes or usages therein obtaining. ”

“ The arrangement is altogether a most improvident one for society, whose interest it is to produce the greatest amount of wealth of the best qualities; while the existing system of distribution is not only to withdraw great numbers from producing to become distributers, but to add to the cost of the consumer all the expense of a most wasteful and extravagant distribution; the distribution costing to the consumer many times the price of the original cost of the wealth purchased. ”

“ The increased effectiveness which comes by reason of the increased population attaches to all labour, and the gain on the superior qualities of land will more than compensate for the diminished production on the quality last brought in. The aggregate wealth production, as compared with the aggregate expenditure of labour, will be greater, though its distribution will be more unequal. ”

“ The amount of wealth which any man receives should depend on the ratio between the demand which exists for his services and the supply of those able to render like service. Farther than these statements of the ideal principles governing the economical production and equitable distribution of wealth we need not go at present. ”

“ Functional distribution is the attribution of value to agents or classes of producers, to land, machinery, and labor considered impersonally as groups of productive agents. Personal distribution is the actual apportioning of income to living persons. This theme now to be dealt with is the more important practically, for the abstract discussion of rent and interest is of use only as it helps to an understanding of this vital human problem. It is well to recall also the distinction between wealth income, money income, and psychic income. ”

“ When paper is substituted in the room of gold and silver money, the quantity of the materials, tools, and maintenance, which the whole circulating capital can supply, may be increased by the whole value of gold and silver which used to be employed in purchasing them. The whole value of the great wheel of circulation and distribution is added to the goods which are circulated and distributed by means of it. ”

“ If the capital were supplied, as it might conceivably be, collectively by the community, the interest would accrue to the community, and all would be well. But as things are, the capital is supplied mainly by the savings of individuals, and largely by individuals confined to a relatively narrow class. The profits of Capital have thus a vital influence on the very serious matter of the distribution of wealth between social classes. ”

“ Inasmuch as all material wealth was created by labor, and distributed by being bought and sold, it followed as a logical sequence, that there was but one way by which every useful worker could secure a just share in the distribution, and that was to take charge of the business of exchange (buying and selling) and divide the benefits equally among all who united their efforts to establish the largest possible round of exchange between producers and consumers. ”

“ Although generally mistaken for profits of capital, the special profits thus arising are really the returns of monopoly and, to the extent that they subtract from the benefits of an improvement, they do not primarily affect general distribution. For instance, the benefits of a railway or similar improvement in cheapening transportation are diffused or monopolized, according as its charges are reduced to a rate which will yield ordinary interest on the capital invested, or as its charges are kept up to a point which will yield an extraordinary return. ”

“ In discussing these problems, however, we must remember that wealth production and distribution takes place in modern society under conditions imposed by the social order in which we live; these were defined as competition, private property and personal liberty. If any modifications of the processes of distribution were desired, it would undoubtedly be necessary to alter these fundamental institutions. ”

“ These terms mutually exclude each other. The income of any individual may be made up from any one, two, or all three of these sources; but in the effort to discover the laws of distribution we must keep them separate. ”

“ It means a gain, an amount received in excess of an amount expended, and frequently includes receipts that are properly rent while it nearly always includes receipts that are properly wages, as well as compensations for the risk peculiar to the various uses of capital. Unless extreme violence is done to the meaning of the word, it cannot therefore be used in Political Economy to signify that share of the produce which goes to capital, in contradistinction to those parts which go to labour and to landowners. ”

“ in this manner returning their surplus wealth to the mass of their fellows in the forms best calculated to do them lasting good.
Thus is the problem of rich and poor to be solved. The laws of accumulation will be left free; the laws of distribution free. Individualism will continue, but the millionaire will be but a trustee for the poor; ”

“ A study of the distribution of wealth in the United States will surely be complicated and probably more or less uncertain in its results. A method that immediately suggests itself is an analysis of the inventory of the national wealth. ”

“ For, since wealth is power, the leading class is necessarily dominated by those who profit or imagine they profit by injustice in the distribution of wealth. ”

“ The gross revenue of all the inhabitants of a great country comprehends the whole annual produce of their land and labor; the net revenue, what remains free to them after deducting the expense of maintaining; first, their fixed; and, secondly, their circulating capital; or what, without encroaching upon their capital, they can place in their stock reserved for immediate consumption, or spend upon their subsistence, conveniences, and amusements. Their real wealth, too, is in proportion, not to their gross, but to their net revenue. ”