31 DECEMBER 1921, Page 11

LETTERS TO THE EDITOR.

tLetters of the length of one of our leading paragraphs are often more read.and therefore more effective, than those which fill treble the space.] SOME ELEMENTARY ECONOMICS.

tTo sus EDITOR 07 THE " SPECTLTOH."3 Sra,—If the subject has not lost its interest by the time this reaches you, I hope you will permit me to com- ment on the letter from Mr. Hecht in an issue which I have just :received. His theory of elementary economics leads him to such

paradoxical results as must surely throw grave doubt on the premises from which, or the logic by which, he deduces them.

Take, for example, his conclusion that "wealth being measur- able its exchange cannot increase its total value, but merely results in its transfer." If Mr. Hecht's logic is good, surely his method of measuring wealth must be bad, or why is com-

merce carried on at all? Again, he gives an example of an exchange of commodities, and asks, Which benefits? His theory would seem to preclude the answer, Both; but does he therefore hold that every commercial transaction consists in one fellow " doing the other in the eye "?

Tho fact seems to be that Mr. Hecht has based his theory on the Marston fallacy that the value of a commodity consists in the labour which has been put into it, whereas I suggest that it is far better measured by the labour which can bo got out of it. For exchange value or money value is essentially the power to make men do things; it is thus intimately connected with labour, a fact which Marx recognized, but it depends not on past labour, but on labour to come. Of course, commodities may have a use-value quite apart from this, as has the air we breathe, but unless it is necessary to get men to do things in order to obtain air, or it is possible to get men to do things in return for supplying them with air, the air has no exchange value; it is not bought or sold.

The significance of this way of looking at exchange value only appears, however, when we consider precisely where the power to make men do things comes from. It is no mere metaphor or verbal fiction. It is very real, actual physical force which compels men to do things for money, namely, in the last resort, the force of policemen and handcuffs. Of course, this actual violence is kept in the background, and we are not ordinarily conscious of the ultimate sanction on which the principles of private property and the sanctity of contracts depend. When a man gives a thing to another he commonly thinks only of the thing as having been changed from " mine " to "thine." And this, whether the thing is actually trans- ferred from one pocket to another, as a shilling may be, or remains exactly as it was before, and where it was before, as, for example, if the thing is a piece of land. But the real thing transferred is the power to call in the police if anybody violates the right of property in the thing. If there were no police, or no equivalent physical force to protect the "rights" of property, things would have no exchange value at all. For " A " to give a piece of land to " B " would be meaningless unless there were some power to enforce the rights of property; " B " would not give anything in exchange, or do anything in return, for the gift, not even if he himself had power to hold what was given when once he had got it, unless we assume that he had not got this power before, in which case it is obvious that "A's" gift of land was in reality the transfer of power over that land. If nobody else wanted that land, or had any use for it, except "B," then we should all admit that "As" gift was valueless except to "B," for no transfer of power had taken place, no force being required to sanction the possession of the property.

It follows, of course, from this way of measuring wealth that it can be increased by the transfer of property from a person who values it loss to one who values it more, or from a place or country where it is commonly valued less to one where it is commonly valued more. You can get more labour for a ton of coal in Jamaica than you can in Wales; therefore the wealth of the world is increased by transferring a ton of coal from Cardiff to. Kingston. So, also, you can get more done with a ton of sugar in London than with the same ton while it was still at the sugar factory here. Therefore, by exchanging Welsh coal for Jamaica sugar not only the wealth of the world, but the wealths both of Jamaica and of England are increased, and the amount of this increase has no direct con- nexion with the labour of shipping the coal or the sugar; it is presumably enough to command this labour, but it may bo large enough to command a much greater amount of labour in addition.

Let me point out one more conclusion to be drawn from this theory of wealth. It is that if for any reason the power of the law to maintain the principles of private property and sanctity of contracts falls into abeyance, then wealth or the exchange value of commodities will cease to exist. This is exactly what has happened in Russia, to the precise extent that these prin- ciples have been suppressed by Lenin. He has now, however, found out that these principles are not made by greedy capi- talists merely in order to "exploit" the workers. They are simply the apparatus by which the division of labour is organized; through them each worker is provided with just that motive which is required to induce him to do his par- ticular bit of work for the common weal. In theory, of course, it might be possible for this sordid motive to substitute motives of pure altruism or else motives of direct force such as the lash. I do not know whether Lenin ever tried the former

before trying the latter, but he has now had to admit that direct force has failed, and he has had to resort, partially at all events, to the stimulus of private property, that is to capitalism. He has, to some extent at any rate, reinstated the principle of private property in order to get power to make men do things, for even if he has force at his command without this principle, he has been unable to devise another method of organizing that force so that each man of a hundred million Russians shall receive just the stimulus required to make him