Popular Science Monthly/Volume 30/January 1887/What Makes the Rich Richer and the Poor Poorer
KARL MARX says, "An accumulation of wealth at one pole of society indicates an accumulation of misery and overwork at the other." In this assertion, Marx avoids the very common and mischievous fallacy of confusing causes, consequences, and symptoms. He suggests that what is found at one pole indicates, or is a symptom of what may be found at the other. In the development of his criticisms on political economy and the existing organization of society, however, Marx proceeds as if there were a relation of cause and effect in the proposition just quoted, and his followers and popularizers have assumed as an indisputable postulate that the wealth of some is a cause of the poverty of others. The question of priority or originality as between Marx, Rodbertus, and others is at best one of vanity between them and their disciples, but it is of great interest and importance to notice that the doctrine that wealth at one pole makes misery at the other is the correct logical form of the notion that progress and poverty are correlative. This doctrine rests upon another and still more fundamental one, which is not often formulated, but which can be detected in most of the current socialistic discussions, viz., that all the capital which is here now would be here under any laws or institutions about property, as if it were due to some independent cause; and that some have got ahead of others and seized upon the most of it, so that those who came later have not been able to get any. If this notion about the source of capital is not true, then wealth at one pole cannot cause poverty at the other. If it is true, then we can make any regulations we like about the distribution of wealth, without fear lest the measures which we adopt may prevent any wealth from being produced.
In Rome, under the empire, wealth at one pole was a symptom of misery at the other, because Rome was not an industrial state. Its income came from plunder. The wealth had a source independent of the production of the society of Rome. That part of the booty which some got, others could not have. No such thing is true of an industrial society. The wealth of the commercial cities of Italy and southern Germany, in the Middle Ages, was largely in the hands of merchant-princes. If one were told that some of these merchants were very rich, he would have no ground of inference that others in those cities must have been poor. The rich were those who developed the opportunities of commerce which were, in the first instance, open to all. What they gained came out of nothing which anybody else ever had or would have had. The fact that there are wealthy men in England, France, and the United States to-day is no evidence that there must be poor men here. The riches of the rich are perfectly consistent with the high condition of wealth of all, down to the last. In fact, the aggregations of wealth, both while being made and after realization, develop and sustain the prosperity of all. The forward movement of a strong population, with abundance of land and highly developed command by machinery over the forces of nature, must produce a state of society in which, misfortune and vice being left out of account, average and minimum comfort are high, while special aggregations may be enormous.
Whatever nexus there is between wealth at one pole and poverty at the other can be found only by turning the proposition into its converse—misery at one pole makes wealth at the other. If the mass at one pole should, through any form of industrial vice, fall into misery, they would offer to the few wise an opportunity to become rich by taking advantage of them. They would offer a large supply of labor at low wages, a high demand for capital at high rates of interest, and a fierce demand for land at high rent.
It is often affirmed, and it is true, that competition tends to disperse society over a wide range of unequal conditions. Competition develops all powers that exist according to their measure and degree. The more intense competition is, the more thoroughly are all the forces developed. If, then, there is liberty, the results can not be equal; they must correspond to the forces. Liberty of development and equality of result are therefore diametrically opposed to each other. If a group of men start on equal conditions, and compete in a common enterprise, the results which they attain must differ according to inherited powers, early advantages of training, personal courage, energy, enterprise, perseverance, good sense, etc., etc. Since these things differ through a wide range, and since their combinations may vary through a wide range, it is possible that the results may vary through a wide scale of degrees. Moreover, the more intense the competition, the greater are the prizes of success and the heavier are the penalties of failure. This is illustrated in the competition of a large city as compared with that of a small one. Competition can no more be done away with than gravitation. Its incidence can be changed. We can adopt as a social policy, "Woe to the successful!" We can take the prizes away from the successful and give them to the unsuccessful. It seems clear that there would soon be no prizes at all, but that inference is not universally accepted. In any event, it is plain that we have not got rid of competition—i.e., of the struggle for existence and the competition of life. We have only decided that, if we cannot all have equally, we will all have nothing.
Competition does not guarantee results corresponding with merit, because hereditary conditions and good and bad fortune are always intermingled with merit, but competition secures to merit all the chances it can enjoy under circumstances for which none of one's fellow-men are to blame.
Now it seems to be believed that although competition produces wide grades of inequality, yet almsgiving, or forcible repartition of wealth, would not do so. Here we come to the real, great, and mischievous fallacy of the social philosophy which is in vogue. Whether there are great extremes of rich and poor in a society is a matter of very little significance; there is no ground for the importance which is attached to that fact in current discussion. It is constantly affirmed in one form or another that, although one man has in half a lifetime greatly improved his own position, and can put his children in a far better condition than that in which he started, nevertheless he has not got his fair share in the gains of civilization, because his neighbor, who started where he did, has become a millionaire. John, who is eating a beefsteak off iron-stone china, finds that the taste of it is spoiled because he knows that James is eating pheasants off gold. William, who would have to walk anyway, finds that his feet ache a great deal worse because he learns that Peter has got a horse. Henry, whose yacht is twenty feet long, is sure that there is something wrong in society because Jacob has one a hundred feet long. These are weaknesses of human nature which have always been the fair game of the satirists, but in our day they are made the basis of a new philosophy and of a redistribution of rights and of property. If the laws and institutions of the society hinder any one from fighting out the battle of life on his or her own behalf to the best of one's ability, especially if they so hinder one to the advantage of another, the field of effort for intelligent and fruitful reform is at once marked out; but if examination should reveal no such operation of laws and institutions, then the inequality of achievements is no indication of any social disease, but the contrary. The indication of social health or disease is to be sought in quite another fact. The question whether the society is formed of only two classes, the rich and the poor, the strong and the weak, or whether all the intervening grades are represented in a sound and healthy proportion, is a question which has importance because it furnishes indications of the state and prospects of the society. No society which consists of the two extreme classes only is in a sound and healthy condition.
If we regard the society of a new country, with little government regulation, free institutions, low taxes, and insignificant military duty, as furnishing us with the nearest example of a normal development of human society under civilization, then we must infer that such a society would not consist of two well-defined classes widely separated from each other, but that there would be no well-defined classes at all, although its members might, in their extremest range, be far apart in wealth, education, talent, and virtue. Such a society might, as it grew older, and its population became more dense, develop, under high competition, great extremes of economic power and social condition, but there is no reason to suppose that the whole middle range would not be filled up by the great mass of the population.
I have now cleared the ground for the proposition which it is my special purpose, in this paper, to offer:
It is the tendency of all social burdens to crush out the middle class, and to force the society into an organization of only two classes, one at each social extreme.
It is in the nature of the case impracticable to adjust social burdens proportionately to the power of individuals to support them. If this could be done, it is possible that the burdens might become great, even excessive, without producing the effect which I have stated. Since, however, it is impossible to so adjust them, and they must be laid on "equally" with reference to the unit of service, and not with reference to some unit of capacity to endure them, it follows that the effect must be as stated. So soon as the burden becomes so great that it surpasses the power of some part of the society, a division takes place between those who can and those who cannot endure it. At first, those who are close to this line, but just above it, are not far removed from those who are close to it, but just below it; but, as time goes on, and the pressure continues to operate, they are constantly separated from each other by a wider and wider interval.
Let us look at some of the historical facts which show us this law.
If we take early Roman history as Mommsen relates it to us, we observe the constant recurrence of the difficulty which arose from the tendency of the society toward two extreme classes. It was plainly the pressure of military duty and taxes which was constantly developing two classes, debtors and creditors. The demands of the state fell upon different men in very different severity according to circumstances. One found himself just so well established that he could endure without being crushed. Another found that the time demanded, or the wound received, or the loss sustained by an inroad, or by being on an unsuccessful expedition, threw him back so that he fell into debt. The former, securing a foothold and gaining a little, bought a slave and established himself with a greater margin of security. Slavery, of course, mightily helped on the tendency. Twenty years later the second man was the bankrupt debtor and bondman of the first.
All insecurity of property has the same effect, above all, however, when the insecurity is produced by abuse of state power. In the later history of Rome, the Roman power, having conquered the world and dragged thousands born elsewhere into Italy as slaves, set to work to plunder its conquest. The booty taken by emperors, proconsuls, and freedmen-favorites, and by the sovereign city, was shared, through the largesses, with the proletariat of the city. The largesses and slavery worked together to divide the Romans into two classes. The plunder of the provinces intensified the wealth of the wealthy. The largesses pauperized and proletarianized the populace of the great city. They drew away citizens from the country and from honest industry, to swell the mob of the city. If a band of robbers should split into patricians and plebeians and divide the plunder unequally, it is plain that, as time went on, they must separate into two great factions, one immensely rich, the other miserably poor. As for the victims, although at first the severity and security of Roman law and order were not too dear even at the price which they cost, nevertheless the inevitable effect of robbery came out at last, and the whole Roman world was impoverished. Those only among the provincials could get or retain wealth who could gain favor with, or get on the side of the rulers. No satisfactory exposition of the political economy of the Roman commonwealth has yet been written. The effect of the Roman system on population, on the development of capital in the provinces, on the arts and sciences, on the distribution of the precious metals, on city population at Rome and Constantinople, on the development of talent and genius, offers lessons of profound importance, touching in many points on questions which now occupy us. The Roman Empire was a gigantic experiment in the way of a state which took from some to give to others. "At the beginning of the third century already the signs of a fatal loss of vitality manifested themselves with frightful distinctness, and spread with such rapidity that no sagacious observer could deceive himself any longer as to the beginning dissolution of the gigantic body." All violence has the same effect. In the fifth and sixth centuries of our era, the general disorder and violence which prevailed gradually brought about a division of society on a line which, of course, wavered for a long time. A man who was strong enough in his circumstances to just maintain himself in such times became a lord; another, who could not maintain himself, sought safety by becoming the lord's man. As time went on, every retainer whom the former obtained made him seem a better man to be selected as lord; and, as time went on, any man who was weak but independent found his position more and more untenable.
Taine's history shows distinctly that the middle class were the great sufferers by the French Revolution. Attention has always been arrested by the nobles who were robbed and guillotined. When, however, we get closer to the life of the period, we see that, taking the nation over for the years of the revolutionary disorder, the victims were those who had anything, from the peasant or small tradesman up to the well-to-do citizen. The rich bought their way through, and the nobles were replaced by a new gang of social parasites enriched by plunder and extortion. These last come nearer than any others whom history presents to the type of what the "committee" in a socialistic state may be expected to be.
All almsgiving has the same effect, especially if it is forced by state authority. The Christian Church of the fourth and fifth centuries, by its indiscriminate almsgiving on a large scale, helped on the degeneration of the Roman state. A poor-law is only another case. The poor-rates, as they become heavier, at last drive into the workhouses the poorest of those who have hitherto maintained independence and paid poor-rates. With this new burden the chance of the next section upward to maintain themselves is imperiled, and so on indefinitely.
All taxation has the same effect. It presses hardest on those who, under the conditions of their position in life and the demands which are made upon them, are trying to save capital and improve their circumstances. The heavier it becomes, the faster it crushes out this class of persons—that is, all the great middle class—and the greater the barrier it sets up against any efforts of persons of that class to begin accumulation. If the taxes have for their object to take from some and give to others, as is the case with all protective taxes, we have only a more intense and obvious action in the same direction, and one whose effects must be far greater and sooner realized. The effect of protective taxes in this country, to drive out the small men and to throw special lines of industry into the hands of a few large capitalists, has been noted often. It is only a case of the law which I am defining.
My generalization might even be made broader. It is the tendency of all the hardships of life to destroy the middle class. Capital, as it grows larger, takes on new increments with greater and greater ease. It acquires a kind of momentum. The rich man, therefore, can endure the shocks of material calamity and misfortune with less distress the richer he is. A bad season may throw a small farmer into debt from which he can never recover. It may not do more to a large farmer than lessen one year's income. A few years of hard times may drive into bankruptcy a great number of men of small capital, while a man of large capital may tide over the distress and put himself in a position to make great gains when prosperity comes again.
The hardships and calamities which are strictly social are such as come from disorder, violence, insecurity, covetousness, envy, etc. The state has for its function to repress all these. It appears from what I have said that it is hard to maintain a middle class on a high stage of civilization. If the state does not do its work properly, such classes, representing the wide distribution of comfort and well-being, will die out. If the state itself gives license to robbery and spoliation, or enforces almsgiving, it is working to destroy the whole middle class, and to divide society into two great classes, the rich who are growing richer, not by industry but by spoliation, and the poor who are growing poorer, not by industrial weakness but by oppression.
Now, a state which is in any degree socialistic is in that degree on the line of policy whose disastrous effects have here been described. The state, it cannot too often be repeated, has nothing, and can give nothing, which it does not take from somebody. Its victims must be those who have earned and saved, and they must be the broad, strong, middle classes, from whom alone any important contributions can be drawn. They must be impoverished. Its pets, whoever they may be, must be pauperized and proletarianized. Its agents alone—that is, those who, in the name of the state, perform the operation of taking from some to give to others—can become rich, and if ever such a state should be organized they may realize wealth beyond the dreams of a proconsul.
To people untrained in the study of social forces it may appear the most obvious thing in the world that, if we should confiscate the property of those who have more than a determined amount, and divide the proceeds among those who have less than a certain amount, we should strengthen the middle class, and do away with the two extremes. The effect would be exactly the opposite. We should diminish the middle classes and strengthen the extremes. The more we helped at the bottom, the more we should have to help, not only on account of the increase of the population and the influx of eager members of "the house of want," but also on account of the demoralization of the lowest sections of the middle class who were excluded. The more we confiscated at the top, the more craft and fraud would be brought into play to escape confiscation, and the wider must be the scope of taxation over the upper middle classes to obtain the necessary means.
The modern middle class has been developed with, and in, an industrial civilization. In turn they have taken control of this civilization and developed social and civil institutions to accord with it. The organization which they have made is now called, in the cant of a certain school, "capitalism" and a "capitalistic system." It is the first organization of human society that ever has existed based on rights. By virtue of its own institutions, it now puts itself on trial and stands open to revision and correction whenever, on sober and rational grounds, revision can be shown to be necessary to guarantee the rights of any one. It is the first organization of human society that has ever tolerated dissent or criticism of itself. Nobles and peasants have never made anything but Poland and Russia. The proletariat has never made anything but revolution. The socialistic state holds out no promise that it will ever tolerate dissent. It will never consider the question of reform. It stands already on the same footing as all the old states. It knows that it is right, and all right. Of course, therefore, there is no place in it for reform. With extreme reconstructions of society, however, it may not be worth while to trouble ourselves; what we need to perceive is, that all socialistic measures, whatever their degree, have the same tendency and effect. It is they which may be always described as tending to make the rich richer and the poor poorer, and to extinguish the intervening classes.
- "Das Capital," I, 671.
- On this question see Anton Menger, "Das Recht auf den vollen Arbeitaertrag," Stuttgart, 1886. This writer traces back for a century the fundamental socialistic notions. He aims to develop the jural as distinguished from the economic aspect of socialism.
- As to the heavy burdens of Roman citizenship, see Merivale, viii, 284.
- See Mommsen, book iii, chapters xi, xii; book v, chapter xi; Pöhlmann, "Die Uebervölkerung der antiken Gross-Städte," Leipsic, 1884.
- See especially Friedländer, "Sittengeschichte," i, 22: "In the enjoyment of the extravagant abundance of advantages, excitements, and spectacles, which the metropolis offered, the highest and lowest classes were best off. The great majority off the free male inhabitants were fed partly or entirely at public expense. The great found there an opportunity and means for a royal existence as nowhere else on earth. The middle classes were most exposed to the disadvantages of life at Rome."
- See Merivale, viii, 351; Gibbon, chapter xxxvi, at the end.
- Friedländer, i, preface. While reading the proof of this article, I have read Professor Boccardo's "Manuale di Storia del Comercio, delle Industrie e dell' Economia Politica" (Torino-Napoli, 1886), in which, pp. 74, 75, he expresses the same view as is above given more nearly than I have ever seen it elsewhere.
- See Gibbon, chapter xxxviii; Duruy, "Historie du Moyen Age," pp. 233, 234; Hallam's "Middle Ages," chapter i, part ii; Seebohm, "The English Village Community," chapter viii.
- See vol. iii, book iv, chapter i.
- See vol. iii, book iii, chapter iii.
- Pöhlmann, p. 62.