Tuesday, September 2, 2014

Happy Capital Day!, II: The Capital Question


In the late 1860s, the English political economist William Thomas Thornton published On Labour: Its Wrongful Claims and Rightful Dues, Its Actual Present and Possible Future, which he revised in 1870.  In the book, Thornton recognized that both workers and owners of capital have rights.  The problem was how to sort them out and deal with everyone justly.

The problem, as more than one authority has pointed out, is that the effect of advancing technology is to replace human labor in the production process.  After all, why else would someone use a machine instead of human labor if there were no benefit to doing so?

A "Clodhopper" (no, really!)
There is no problem with advancing technology if you are replacing your own labor.  You can dig up a quarter acre of land a day if you work really hard.  You can plow an entire field in a day with an ox.  You can plow several fields a day with a tractor.

The problem is when an owner replaces human workers with machinery.  This not only displaces some human beings from production, and thus from their source(s) of income, but lowers the value of all human labor as a factor of production relative to capital.

Louis O. Kelso
The solution, of course (at least as Thornton and, later, Louis O. Kelso and Mortimer J. Adler saw it), is not to take away what rightfully belongs to the owner of capital, . . . but to make the propertyless worker into a capital owner!  Yes, advancing technology is a great benefit to you . . . but only if you own the advancing technology!

This is why ownership of capital is as important to human dignity as recognizing the inherent dignity of human labor.  That is, in fact, one reason why we got “Labor Day” in the late 19th century.  People were fully aware that capital owners had dignity.  Their rights were respected; the natural right to be an owner, and the bundle of socially defined rights limiting what an owner could do with what was owned were part and parcel of what it meant to be an American.

The problem was that, as the “free land” under the Homestead Act came to an effective end in the 1890s — something that was apparent by 1887 when Labor Day became a holiday — more and more people were being forced into the wage system.  Without the option to go west and take land, it became essential to stress the fact that wage workers were equal in dignity to capital owners, and to begin protecting and maintaining that dignity with the same force of law that protected capital owners.

Judge Peter S. Grosscup
Protecting the dignity of labor with the power of the State, however, was (and could only be) a stopgap, an expedient on the way to a society in which propertyless workers could become capital owners, and protect their own dignity with the power that “naturally and necessarily follows property.”  This is why authorities as diverse as Judge Peter S. Grosscup and Pope Leo XIII advocated developing some plan that would assist propertyless workers becoming property owners.  As the pope declared in § 46 of Rerum Novarum,

We have seen that this great labor question cannot be solved save by assuming as a principle that private ownership must be held sacred and inviolable. The law, therefore, should favor ownership, and its policy should be to induce as many as possible of the people to become owners.”

#30#

2 comments:

nail-in-the-wall said...

Leo XIII

nail-in-the-wall said...

Own or be Owned!
§47 of Rerum Novarum: “Many excellent results will follow from this; and, first of all, property will certainly become more equitably divided. For, the result of civil change and revolution has been to divide cities into two classes separated by a wide chasm. On the one side there is the party which holds power because it holds wealth; which has in its grasp the whole of labor and trade; which manipulates for its own benefit and its own purposes all the sources of supply, and which is not without influence even in the administration of the commonwealth. On the other side there is the needy and powerless multitude, sick and sore in spirit and ever ready for disturbance. If working people can be encouraged to look forward to obtaining a share in the land, the consequence will be that the gulf between vast wealth and sheer poverty will be bridged over, and the respective classes will be brought nearer to one another. A further consequence will result in the great abundance of the fruits of the earth. Men always work harder and more readily when they work on that which belongs to them...”