The Principles of Political Economy

Henry Sidgwick

Book III

Chapter VII


§6. Besides providing the necessaries of life to persons completely destitute, modern governments have intervened in various other ways, with the view of ameliorating the economic condition of the poorer classes at the expense, more or less, of the rest of the community. But such intervention has usually---and in my opinion rightly---aimed at improving production as well as distribution, or otherwise benefiting the community as a whole, and not one part only at the expense of the rest. Accordingly the chief examples of this kind of intervention have already called for our notice in a previous chapter (ch. iv.). Thus in some cases its object has been to provide commodities specially conducive to the moral or intellectual improvement of the classes benefited, and which at the same time hardly form an element of that `standard of comfort' which supplies the chief ordinary motive to labour and thrift; in other cases it has aimed at making such a change in the circumstances of the persons assisted as would tend to strengthen on the whole, rather than weaken, habits of energetic industry, thrift, and self-help in the individuals assisted. Under the first head would come, for instance, the pecuniary aid, before discussed, which modern states have largely given to education---including the diffusion of culture by means of libraries, museums, &c.: under the second head I should place assistance to emigration, and also most interferences with the tenure of land, especially those of which the object has been to place the actual cultivators of the soil in a position more favourable to effective industry. As an example of this latter class we may notice the important assistance given in recent times by the Governments of Prussia and Hesse Darmstadt to facilitate the transition of their peasantry from feudal semi-servitude to the condition of independent proprietors. This assistance did not involve any direct pecuniary sacrifice on the part of the community; but it was nevertheless a distinctly distributional interference, since it gave the peasants the advantage of the superior credit enjoyed by the community---and also of the advantage in efficiency and cheapness which the governmental collection of rents was found to possess, compared with the collection by private individuals. From these two sources a margin was obtained enabling the cultivator to refund to the State, within a not very long period, the capital with which his landlord's rent-charge had been brought up, without any increase of his rent.

The intervention just described was for a special and temporary object. But experience has shewn that peasant cultivators are liable to become loaded with debt to money lenders who, either through the absence of effective competition---partly in consequence of a certain discredit that often attaches to their business---or perhaps sometimes through unavowed combination, are enabled to exact very onerous interest. This condition of debt tends to paralyse the productive energies as well as to cause distress: accordingly, under these circumstances governments may operate for the benefit of production no less than of distribution, by encouraging with special privileges the formation of commercial companies for the purpose of lending money on easier terms. Indeed, as was before said, the business of lending on the security of land seems to be of a kind that might even be undertaken by government itself under certain conditions, without the kind of risk that is involved in ordinary banking business. So too, where the pawnbroker is the normal resort in an emergency of poor labourers who have not saved or have exhausted their savings, governments, by undertaking the business of lending money at a moderate interest, may give sensible relief without offering any material encouragement to unthrift.

Another important case of interference primarily distributional, but which also admits of being defended as beneficial to the community, is that of measures for protecting the health of the poor, so far as the cost of these is defrayed by taxation falling on the rich. Thus the provision in certain cases of wholly or partially gratuitous medical advice and attendance both tends to benefit production by increasing the average physical vigour of the labourers, and also affords those who are taxed to pay for it a certain protection against infectious or epidemic diseases: and the same may be said of other sanitary measures primarily affecting the poorer classes, of which the cost has been, wholly or partly, borne by the community on economic grounds.

How far the State ought, on economic grounds, to intervene in the matters above-mentioned, and others to which similar principles may be applied, is a question which involves a very difficult and complex comparison of various kinds of social utility. And I do not think that it admits of a precise general answer; as the balance of advantage in any case must depend very largely on particular circumstances and varying social conditions. One important consideration by which the answer must partly be determined is the extent to which provision has been made, or may be expected to be made, for the ends in view, either through the spontaneous association of the persons primarily concerned, or the philanthropic efforts of other individuals, or both combined. Thus experience has shewn that in important cases where mere competition among producers fails to lower sufficiently the price of certain commodities to the poorer consumers, the latter may successfully relieve themselves of the resulting disadvantages by spontaneous association---as in the case of the (artisans') `cooperative stores' of England, and the `cooperative banks' of Germany;---and where this remedy can be successfully applied it is doubtless preferable, both for its direct and its indirect effects, to governmental intervention. Again, the promotion of education and culture, and the cure of diseases, have been largely provided for in modern civilized communities by the voluntary contributions of individuals; partly by the donations of the living, partly by bequests. Over the gifts (or loans) of the living the State can exercise but very slight control---except by offering, to receive and administer them---without vexatious and dangerous interference with liberty; but the same danger does not attend interference with funds bequeathed for public objects: governments have always claimed the right of invalidating testamentary dispositions that are held to be contrary to public policy, and this principle might reasonably be applied to prevent bequests of which the economic consequences are clearly seen to be disadvantageous. Further, as the administration of such funds is generally removed from the influence of the ordinary economic motives prompting to the most useful employment of wealth, it is important that it should be carefully supervised by the State, in order to carry out the real wishes of the testators; and also that the schemes of the latter should be subject to thorough revision when a certain period has elapsed; since human foresight is very limited, and the fitness of any detailed regulations---even if originally well contrived---for effecting any purpose of social utility, is pretty sure to decrease as time goes on. Interference of this latter kind, however, should be controlled by a careful regard for the testators' main aims and wishes, for fear of seriously checking the disposition to make such bequests: since it is an important gain to society that such expenditure as is desirable for the purpose of ameliorating the condition of the poor should be defrayed by this means of supply so far as possible, rather than by taxation.

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