The Principles of Political Economy

Henry Sidgwick

Book III

Chapter VII

ECONOMIC DISTRIBUTION.

§2. In the first place it is conceivable that a greater equality in the distribution of produce would lead ultimately to a reduction in the total amount to be distributed, in consequence of a general preference of leisure to the results of labour on the part of the classes whose shares of produce had increased. It may be said that we should have no ground for supposing, in this case a diminution in average happiness corresponding to the diminution in wealth; since, by supposition, the increase of leisure would be chosen as likely to give more happiness than the increase of wealth. There are, however, two considerations of some weight which may lead us to doubt the soundness of this primâ facie view. In the first place there is a wide-spread opinion among observant persons that human beings generally have a tendency to overvalue leisure as a source of happiness. All those who maintain that riches frequently fail to bring an increase of happiness to their possessors commonly lay great stress on this tendency; they argue that the rich miss happiness largely through an undue pursuit of passive pleasures and amusements, to the neglect of those that may be derived from strenuous activity for a serious end. I am myself disposed to take this view: and I should regard it as highly probable that a sudden and large increase of the income of the poorer classes might cause them to fall extensively into similar imprudence: while the removal of the stimulating examples which the lives of the rich now offer of the varied satisfactions to be derived from abundant wealth would probably tend still further to promote general sloth. But again, even supposing that the diminution in their labour led immediately to a real increase of happiness through increased leisure, there would still remain the objection that it might diminish the provision against social calamities causing great and sudden loss of wealth, which is now supplied by the superfluous consumption of the rich. Such calamities---whether due to natural causes, or to war,---may now be met by a restriction of the luxurious expenditure of the richer classes generally---through voluntary contributions and increased taxation combined---by which the extreme distress that they would otherwise cause to the poorer classes may be mitigated. But a community that had exchanged its superfluous wealth for greater leisure would have lost this resource; and its additional power of increasing its labour would be an inadequate substitute, owing to the difficulty of making it promptly effective.

But again, even supposing that the equalization of shares did not diminish the average activity of the workers of the community, it might still diminish the efficiency of labour through its effect on the accumulation of capital. At present, the greatest part of the saving, by which the stock of instruments in the country is continually increased and the benefits of invention realized, is made from the larger incomes of the rich: and consequently there is a considerable danger that an equalization of incomes would lead to a decrease in the proportion of the aggregate income of the community thus converted into capital.

This argument, as just stated, assumes the continuance of the present individualistic organization of industry: since under a socialistic system the accumulation of capital would be controlled by the government and would be independent of the savings of individuals. But governments have hitherto shewn themselves timid and unenterprising in availing themselves of the results of invention; and there seems no reason to suppose that a socialistic government would be specially bold in trying expensive experiments.

Again, as we have already seen, experience would lead us to conclude that, even supposing the aggregate of accumulation not to be diminished by a more equal distribution of produce, still a quantum of capital made up of a number of small portions in different ownership is less likely to be productively administered than an equal quantum divided among a few wealthy owners. The small savings might no doubt be massed by association in amounts sufficiently large for the organization of businesses on any scale that might be found most economically expedient; but theory and experience combine to shew that the keenness of concern, and the power of prompt and unfettered action, that private ownership gives would still be wanting to the necessarily salaried and controlled managers of these businesses. Unless these advantages can be compensated, to a greater extent than they have hitherto been, either by some future development of the system of Cooperative Production or otherwise, a more equal distribution of capital must necessarily be attended with a decrease in its productive efficiency. And this conclusion holds equally whether we suppose the existing individualistic organization of society to continue as at present, or to be wholly or partially superseded by socialistic institutions; so far as we have no ground for regarding governmental management of capital as likely to be superior on the whole to average jointstock management in the points in which the latter is less efficient than management by private owners.

The objections above stated would apply with increased force, if the increase through equalization of the incomes of the poorer classes should cause the population to increase at a more rapid rate than at present; so that ultimately the increment of an average worker's share would be partly spent in supporting a larger number of children, and partly reduced through the decrease in the efficiency of the more crowded labour. It would be rash, indeed, to predict confidently that this would be the effect of equalization: but it would be still more rash to ignore the risk of it.

Finally we have to consider the importance of the social functions---over and above the economic function of employing capital---which the wealthier members of a community actually fulfil, however imperfectly and with whatever waste of resources, in their customary employment of their leisure and their luxurious expenditure. I do not now refer mainly to the function of governing---including that of giving suggestions and admonitions to government---since I take it to be a disputed question of Politics whether these functions in the present stage of social development may not be better fulfilled by salaried officials and professional journalists, &c. I refer rather to what may be comprehensively though vaguely designated as the function of maintaining and developing knowledge and culture. I distinguish knowledge from culture, though the latter notion would naturally include the former, because of the peculiar economic importance of the progress of science, as the source of inventions that increase the efficiency of labour. This progress in past ages has been largely due to the unremunerated intellectual activity, assisted by liberal expenditure, of rich and leisured persons. At the same time it is of course conceivable that the development of knowledge should be adequately carried on---as it is chiefly in Germany at the present time---by persons salaried and provided with instruments at the public expense. And the connexion between scientific discoveries and technical inventions is now so firmly established in the popular mind, that probably even a government controlled entirely by persons of small incomes would not refuse the funds requisite for the support of the study of physical science in universities, academies, &c. The case is different with such knowledge as has no obvious practical utility, and is therefore only likely to be valued by persons susceptible to the gratifications of disinterested curiosity. Such knowledge must be ranked, as a source of elevated and refined gratification, along with literature, art, intellectual conversation, and the contemplation of natural beauty. The capacities for deriving enjoyment from these sources constitute what we call culture; they are generally regarded by persons possessed of them as supplying a most important element in the happiness of life; while at the same time, so far as we can judge from past experience, it is only in a society of comparatively rich and leisured persons that these capacities---and, still more, the faculties of producing excellent works in literature and art are likely to be developed and transmitted in any high degree.

There seems therefore to be a serious danger that a thoroughgoing equalization of wealth among the members of a modern civilized community would have a tendency to check the growth of culture in the community. The amount of loss to human happiness that is to be apprehended from this effect is difficult to estimate; especially since those who estimate it most highly would probably refuse to allow the question to be decided by a mere consideration of the actual amount of happiness that culture has hitherto given. They have a conviction for which they could not give an empirical justification that a diffusion of culture may be expected in the future which has no parallel in the past: and that any social changes which cripple its development, however beneficent they may be in other respects, may involve a loss to humanity in the aggregate which, if we look sufficiently far forward, seems quite immeasurable in extent.

There are, in fact, several distinct practical questions suggested by the connexion which history shews between the development of culture and the existence of a rich and leisured class in a community of human beings. We may (1) balance the additional happiness gained to the lives of the few rich by culture against the additional happiness that might be enjoyed by the poor if wealth were more equally distributed; or (2) we may consider how far whatever happiness is derived from culture by the many poor depends at any given time on the maintenance of a higher kind of culture among the few rich; or (3) we may endeavour to forecast the prospective addition to happiness when culture shall have become more diffused, which would be endangered by any injury to its present development among the limited class who now have any considerable share in it. From each of these three distinct points of view arguments of a certain force may be drawn in favour of the present inequality in distribution of wealth.

Any estimate of the force of the considerations above given must necessarily be vague; but it seems clear that they apply far more strongly against any sudden sweeping equalization, than they do against a more slow and gradual movement towards this result,---accompanied (as it naturally would be) by an improvement in the average intellectual condition of the classes who would benefit pecuniarily by the equalization.

I have not yet mentioned one important point:---the loss of the specially keen stimulus to socially useful exertion which the prospect of obtaining ample wealth by business talent, mechanical invention, or professional or artistic skill, now gives to an important minority of persons. Almost any method of introducing greater equality of incomes would involve some loss of this kind: but the extent of such loss would depend greatly on the manner in which the equalization was carried out:---which we will now proceed to consider.

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