THE DISTRIBUTION OF INCOME.*
ALL students of political economy will welcome a new edition of Professor William Smart's remarkable work, The Distri- bution of Income, first published by him in 1899 and now brought up to date. In the short but nevertheless very striking preface to the second edition Professor Smart tells us that since 1899 be has gone over the subject with his students once a year, criticising his former results and finding each time that the subject of Distribution was " more fascinating in itself and more serious in its issues." He points out also that the three busy years he spent on the Poor Law Commission and the ultimate acquaintance he then made with the machinery of industry and with employers, employed, trade-union leaders, officials, and economists were of the greatest help to his studies.
"If now, in this second edition, I make no change in the sub- stance of the argument—I call it an argument,' for it is one long chain from end to end—it is some testimony that age and experi- ence have only confirmed me in my conviction of its soundness. If I had any hesitation a dozen years ago, when I worked out the thesis that the principle which rules and explains the distribu- tion of wealth is that of payment according to the economic worth' of the factors which produce the wealth, I have none now."
But though he is convinced that his theory was sound, he is, he goes on to say, less satisfied than he was with the issues of our system :—
" In the enthusiasm of comparative youth, I thought it a fine thing to have demonstrated that the existing distribution was not unjust,' inasmuch as, on the whole, the several incomes which made up the National Income were not arbitrary sums, but pay- ments for goods produced and services rendered to society, and that the equivalence between payment and service was, in the main, secured by perpetual competition to produce the goods and services. But a distribution may justify itself on purely economic grounds, and may yet leave much to be desired. For the very reason that our employers exact equivalence between service rendered and payment, they will not give work and wage to the human factor unless it is at least as profitable as the capital factor ; and, in the competition of the two, the human factor, as a whole, may not be keeping its place. The' survival of the fittest' may be an admirable thing in Nature, when the organisms which cannot hold their own die and are done with. If is not so admir- able in Society where. they must be kept alive, and where the survivors have to drag an increasing burden of the failures. If I may use once again a parallel which has done good service : The great Duke's army in the Peninsula could in time ' go anywhere and do anything,' but it was only after the raw levies had been reduced by privation and disease, and every soldier left was like toughened steel. So nowadays, in the course of strenuous evolution, the army of industry has become exceed- ingly efficient, very much because the standard of man is rising, and admittance refused to any but those who are able to do the work required. The result, so far as it is seen in an ever- increasing income of wealth, is all that need he desired. But -what of those who are ' not good enough' for the ranks P The growth of science, and the greet rewards attaching to its applica- tion, have made industry a highly organized machine. It is abundantly evident that ability to work and willingness to work —which, once a-day, may have secured a man in bread and butter at least—will not by themselves now give any man a wage unless he can find his place in that machine. And, to fill such a place, great numbers may be unfit."
Professor Smart next tells us that though be holds that the majority of the unemployed are unemployable by their own fault, still the conviction has been forcing itself upon him that others were unfitted, by the environment in which they had grown up, and by the intellectual poverty of their early life, for anything better than casual labour. He refuses, how- ever, to despair or to think that the solution is to be found in going back, or " overturning the fine fabric of efficient industry which time and science have built up." Here is the remedy he suggests
" The way of escape is, of course, to fit every man to take the place where industry, with all its mechanical perfection, requires, and will always require, the brain, and initiative, and resources of the responsible human being. But this involves adding years to the compulsory education of the young generation, lotting the in- efficient die out. Whether the nation is prepared to face the • The Distribution of Incense. By William Smart. Second Edition. London Macmillan and Co. L3s. Od, net.] huge organization and inevitable expense of this or not, I do not know. I have at any rate done my beet to show that it is the only way."
With this plea for better education we are entirely in agree- meat. One of the great advantages of education is that ill creates dissatisfaction with bad economic surroundings. and raises the standard of living. The hopeless case is the man who is content with a slum and a low standard of living. Of course we are well aware that practically no one will profess to be so content therewith, but, as. a matter of fact, there are thousands of men who are, and will make no real effort to raise their condition. Their ideal is to grumble and get bread and circuses; at the expense of the State or of somebody else, and not to achieve either material or mental independence. But while we hold with Professor Smart that a very great deal is to be done by education, and the consequent improvement of the individual, eten more is to be done by getting our law makers and administrators to stop diminishing the wealth of the country by their recklessness and fatuity in overtaxing the nation, and so preventing the due accumulation of capital. On the economic side the great, thing to be aimed at is the lowering of the rate of interest, i.e., the rent at which capital can be hired, But there is only one progressive way of doing this, that is, by increasing the amount of hireable wealth, i.e., capital. No one could wish to see the rate of interest go down because there was no demand for capital. That must mean that there was no desire for development, and that enterprise and energy were dead.
But though Professor Smart may not have thought it his business on this occasion to dwell upon these elementary truths, we have little doubt that in the main he would agree with our statement in regard to them. At any rate, he, will not be found among those who think that the way to. create that abundance out of which alone a better share of the good things of this world can be obtained by the worker is through any form of scarcity. One can never escape from. the truth which Swift set forth in a moment of inspiration:. " The greatest benefactor of mankind is be who makes two blades of corn grow where one grew before." That is aPplic- able to all forms of production. To have a better distribution we must have more to distribute.
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