Progress and Poverty, Volumes I and II: An Inquiry into the Cause of Industrial Depressions and of Increase of Want with Increase of WealthGeorge, Henry
General
Progress and Poverty, Volumes I and II: An Inquiry into the Cause of Industrial Depressions and of Increase of Want with Increase of Wealth
George, Henry
Economics; Single tax
We are, of course, not speaking of particular wages and particular
interest, but of the general rate of wages and the general rate of
interest, meaning always by interest the return which capital can
secure, less insurance and wages of superintendence. In a particular
case, or a particular employment, the tendency of wages and interest to
an equilibrium may be impeded; but between the general rate of wages
and the general rate of interest, this tendency must be prompt to act.
For though in a particular branch of production the line may be clearly
drawn between those who furnish labor and those who furnish capital,
yet even in communities where there is the sharpest distinction
between the general class laborers and the general class capitalists,
these two classes shade off into each other by imperceptible
gradations, and on the extremes where the two classes meet in the same
persons, the interaction which restores equilibrium, or rather prevents
its disturbance, can go on without obstruction, whatever obstacles may
exist where the separation is complete. And, furthermore, it must be
remembered, as has before been stated, that capital is but a portion
of wealth, distinguished from wealth generally only by the purpose to
which it is applied, and, hence, the whole body of wealth has upon
the relations of capital and labor the same equalizing effect that a
fly-wheel has upon the motion of machinery, taking up capital when
it is in excess and giving it out again when there is a deficiency,
just as a jeweler may give his wife diamonds to wear when he has a
superabundant stock, and put them in his showcase again when his stock
becomes reduced. Thus any tendency on the part of interest to rise
above the equilibrium with wages must immediately beget not only a
tendency to direct labor to the production of capital, but also the
application of wealth to the uses of capital; while any tendency of
wages to rise above the equilibrium with interest must in like manner
beget not only a tendency to turn labor from the production of capital,
but also to lessen the proportion of capital by diverting from a
productive to a non-productive use some of the articles of wealth of
which capital is composed.
To recapitulate: There is a certain relation or ratio between wages and
interest, fixed by causes, which, if not absolutely permanent, slowly
change, at which enough labor will be turned into capital to supply the
capital which, in the degree of knowledge, state of the arts, density
of population, character of occupations, variety, extent and rapidity
of exchanges, will be demanded for production, and this relation or
ratio the interaction of labor and capital constantly maintains; hence
interest must rise and fall with the rise and fall of wages.
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