Popular Science Monthly/Volume 33/October 1888/Ethics and Economics

by Robert Mathews

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ETHICS AND ECONOMICS.

By ROBERT MATHEWS.

WHATEVER else the theory of evolution has done for human thought, it has at least added two phrases to our current literature that, by the frequency of their use, have done much to mold opinion into harmony with the ideas that are supposed to underlie them. Open any magazine or journal of the day, and one is almost sure to find on some of its pages "the struggle for existence" and "the survival of the fittest." The wide acceptance of the Darwinian hypothesis, of which these phrases are the embodiment, has naturally caused them to be applied to the predominant form of social conflict—industrial competition. In thus applying them, we have also brought with them ideas derived from the study of the way in which the struggle for existence has gone on in the past. The survival of the fittest seems to have always been the survival of the strongest, keenest, swiftest, or the shrewdest, sharpest, most cunning and crafty. Nature, in selecting, seems to have no pity for the weak. She crowds remorselessly to the wall all who are not capable of sustaining themselves.

The analogies between physical life and social life are so striking, that it is perhaps not wonderful that political economists have applied this law of selection to the struggles caused by industrial competition. And when teachers and thinkers have so applied it, it is still less strange that, in the actual conflicts of industrial life, many men have adopted it as a rule of conduct. Indeed, if it be maintained that the science of political economy rests upon self-interest, and that its predominant force is competition, it would seem to be only a logical deduction that the struggles of trade must go on in a similar manner, and with similar results, to those that have occurred among animals. Even if it be urged that enlightened self-interest teaches that in the long run the welfare of the individual and the welfare of his fellow-men coincide, yet it may be replied that this coincidence is not complete and universal; and that, when self-interest is subjected to the stress of competition, it is very apt to result in pure egoism. Shall we, then, conclude that the rivalries of business, being but another form of the struggle for existence, must be carried on in the same spirit, generating like qualities, and for similar ends, as those which have accompanied the development of physical life; that material progress can only be assured by the big fish eating the little fish? This is not a comforting conclusion to reach, but the important question for us is, is it true?

Accepting the law of the struggle for existence as applying to life in all its phases from low to high, we have first to note an important difference between physical and social life. The laws governing the first are inexorable; that is to say, the organism affected can do nothing to determine the result. But in the social life of men their volitions are part of the necessary conditions. Herein lies an important difference between the methods of the simpler and the more complex sciences. For, "as Comte acutely pointed out, in the simpler sciences our object is gained if we can foretell the course of phenomena so as to be able to regulate our actions by it; while in the more complex sciences our object is gained when we have generalized the conditions under which phenomena occur, so as to be able to make our volitions count for something in modifying them."^[1] In the physical sciences the method of study is to eliminate one by one the conflicting conditions, until the necessary condition is reached and the true cause discovered. In the social sciences the method consists in generalizing all the conditions until a more complete knowledge of them enables us to make our volitions count as a factor in determining the result. In other words, simplifying the problem in the latter case does not lead to true conceptions, as in the former, for the reason that in the social organism the interdependence of all the parts makes it essential that we study them in combination, as by the elimination of any that are important we get another organism, and not the one we are studying.

In the physical sciences, also, exact prevision is possible, because the forces considered are permanent and reliable, and never self-directing or animated by a conscious purpose. But, in the social sciences, some of the forces concerned are, within limits, self-directing and self-conditioned. Hence, exact prevision becomes impossible; but what we lose in this way is in part counterbalanced by our own ability to modify phenomena through volition and by an exact knowledge of other conditions, so as to bring about a desired result.

We have next to note a difference in the meaning we should ascribe to the "survival of the fittest" when we use the phrase in connection with social growth. It is apparent that what we should now have in mind is the survival of the socially fit. Adaptation of organism to environment means harmony with the conditions of life which surround it, and social growth is made possible only by the development of those qualities of mind and body which are both a cause and a consequence of living in society. It is obvious that such traits of character as are the outcome of a fierce struggle for individual existence would necessarily hinder, if not entirely prevent, social development, and that the fact that society is the prevailing form of human organization indicates that along with the fierceness, the intelligence, and the skill which past struggles have produced in man, there have also grown up certain moral traits which must have been even more powerful in determining the character of the social organism, than their opposites.

For the purpose in hand, we desire to call attention to the necessity of basing our political economy on moral rather than on selfish instincts. Powerful though the latter be, they are more or less anti-social in their nature, and therefore would not, of themselves, favor economic growth. That depends for its development on social growth, and it is only when the selfish instincts are held in due check and subordination to the higher impulses that the latter is possible. Strength, keenness, and shrewdness are important factors in determining the survival of the individual, and, in so far as they do this, they favor also the survival of the race. But of more importance still are those traits which, by enabling men to live together in peace, render possible the organization of labor in such a manner as to secure the greatest economic return. In a word, our political economy, which, has been unmoral, must be made moral, if it is to be the science which shall direct men into the proper paths for the production and distribution of wealth.

In determining the character of ethical economics, it is necessary that we should have some principle to guide us in directing its course. This has already been hinted at in the suggestion that it is by the survival of the socially fit that economic growth is furthered. Now, society is an organism made up of mutually dependent parts, and for its existence a certain social order is necessary, and all actions which militate against that order are more or less immoral, according to the degree in which they detrimentally affect it. Conduct which tends to lower social vitality we hold to be bad, that which tends to raise it we consider good; and every practical attempt at reform proceeds upon this basis. Such changes involve alterations in the social constitution, and the production of an organism whose relations to the conditions of its life will differ from that which preceded it, and our test of the morality of the change will be its utility, "in the sense in which utility means fitness for the conditions of life." Hence, our test of ethical economics is social well-being. Let us subject the working of the strongest economic force to this test.

Industrial competition does not engender a struggle for existence, but rather a struggle for subsistence, and generally a struggle for a subsistence of a particular kind. Where the standard of living is high and the wages of the workingmen correspond to it, it is obvious that, other things being equal, the laborer who is well fed and well clothed will produce more than if under-fed and scantily clothed. The human body, like the steam-engine, depends upon heat for its motive force, and food is its fuel. A certain amount of food is absolutely essential to life. A small increase renders man capable of doing a little work. If, now, we add twenty-five per cent more heat, we get much more than a quarter more work. We probably double the economic energies of man. Let us double his supply of food, give him "a liberal, generous diet, ample to supply all the waste of the tissues, and to keep the fires of the body burning briskly, generating force enough to allow the laborer to put forth great muscular exertions through long periods of time,"^[2] and we reach a high degree of economic efficiency.

There is, of course, a limit to this increase of food beyond which power is not increased proportionately, and, indeed, too great an increase may do harm rather than good; but it is a general rule that raising the standard of living in one direction tends to raise it in others, and eventually in all directions, and while this may not increase the individual's power of production directly, it may do so indirectly, by raising the scale of intelligence, and creating new desires, particularly for those immaterial products which it is the peculiarity of a high civilization to furnish in increased proportion as compared with the elementary and material utilities. We do not always class these as wealth, but they are, nevertheless, some of its highest forms, and are important factors in advancing civilization.

But let us now suppose that the standard of living is lowered, through a succession of bad harvests and bad years, or through the importation, in numbers large enough to seriously affect the labor market, of laborers from outside, with a much lower standard of living, and who can work for much lower wages, or from both causes combined, or from many others, such as bad laws, lack of sympathy for our fellow-men, etc., and what will be the result?

In the struggle for existence, the weaker go to the wall, and are killed and removed from further participation in the conflict. The fittest only survive, and the result of the conflict is to leave them more capable of taking care of themselves. But this is not a necessary outcome of the struggle for subsistence, unless it should be carried on long enough to become a veritable struggle for existence, which rarely occurs. On the contrary, men are not killed and thus got rid of as further competitors. They are made miserable, less fit to work, and incapable of that mobility which, if present, enables the social organism to so distribute the blows that fall upon it as to cause it the least trouble, and to render recuperation easier. "When the mobility of labor becomes in a high degree impaired, the reparative and restorative forces do not act at all." On the contrary, "industrial injuries, once suffered, tend to remain."^[3] The constitution of society becomes impaired. The standard of living for large masses of the people is lowered, but competition is not thereby destroyed; it is more frequently intensified. Unlike the struggle for existence among animals, the economically and socially fit do not kill off the unfit, and so have the field to themselves.

Do not understand me as condemning competition altogether. Its advantages are many and great. Material progress would have been impossible without it, and under certain conditions it works out a moral result which it would be difficult to bring about by any other social force. But, tried by the test of social well-being, competition is shown to have certain inherent limitations which we must ever keep in mind. It is only by studying economics in close relation to ethics that we can do this, and it is our purpose now to search, for the ethical laws or principles that should govern economic practice.

If there is any one thing that both theory and practice have shown to be of economic advantage to man, it is the existence of private property. So essential is property to social welfare that, as some one has said, "if it did not exist, it would be necessary to invent it." If effort were not rewarded with results, if men were deprived of the fruits of their labor, they would soon cease to work. No thriving society exists without personal property, and, no matter how selfish were the motives that induced its accumulation, the possessor can not amass or dispose of it without conferring some benefit on his fellow-men. Where property rights are not secure, you find lack of energy, rapacious usury, and deep misery. Where these rights are-recognized and protected, you have industrial activity in every direction. Men become alert, vigilant, and independent; watchful of their rights, and jealous of their freedom. In their desire to gratify their own wants, which the right of personal property secures to them, they study to supply the wants and desires of others. Thus it becomes the strongest stimulus to production, and the mass and variety of material goods now existing may be said to be the result of this stimulus. Surely no one will question its beneficence.

The earlier economists assumed that the right to private property was a natural right, or primary truth, which needed neither explanation nor defense. This was the general opinion, and, to a great extent, it is still the prevalent opinion. But the great increase in wealth that has occurred, and the lodgment of large masses of it in the hands of a few, coupled with the existence of vast numbers of poor who with difficulty manage to secure just enough to live upon, have brought up the question of the distribution of wealth. As a result, objection has been taken both to the right of private property and to the fact itself. This objection has not been confined to theorists, but large bodies of men, through various schemes of communism or socialism, are endeavoring to either get rid of private property altogether, by making it all common property, or through limiting the right of holding it, by making the state the only possessor of many of its forms.

Ability has not been lacking in the proclamation of these objections, and they have been of all degrees, from Proudhon's celebrated mot that "all property is theft," to George's eloquent plea that the cause of poverty is private ownership of land; but mots are not proofs and eloquence is not always truth. Yet there must be some other explanation for this phenomenon than is to be found in the envy and jealousy of some over the good fortune of others.

The sentiments and feelings of those who find fault with the existing economic order are in part accounted for by their disappointment with the results which the invention of labor-saving machinery promised to fulfill. "It was expected that labor-saving inventions would lighten the toil and improve the condition of the laborer; that the enormous increase in the power of producing wealth would make real poverty a thing of the past."^[4] For the first time in the history of the world the niggardliness of Nature seemed to have been overcome, and it appeared possible for man to produce enough to satisfy all his wants. The cry of "overproduction," now so generally heard, lends some color to this view. Yet it is susceptible of mathematical proof that if the whole production of the civilized world could be distributed equally among all the inhabitants thereof, it would not raise any of them to affluence or rid them of the necessity of close economy and of hard, continuous labor. This disappointment with Nature does not, however, wholly account for existing sentiment in regard to the distribution of wealth. There is still a residuum to be explained.

The fundamental principle upon which social intercourse rests is that of equal freedom, or the right of "every man to do all that he wills, provided he infringes not the equal freedom of any other man."^[5] Certain conditions are necessary to social well-being, and this equality of freedom is essential, so that men's characters may be wrought into harmony with these necessary conditions. It is upon this right to equal freedom that the right to property rests: indeed, the two rights are regarded as synonymous. "The legitimacy of private property has, since the time of Locke, been based by the greater number of political economists on the right inherent in every workman either to consume or to save the product of his labor,"^[6] that is to say, on the freedom to do as he wills with his own, provided he does not infringe upon the equal right of others to do the same. Furthermore, it is a logical deduction from the principle of freedom that every man is entitled to claim as his own the fruits of his labor and his savings, for this principle requires not that all shall share alike, but that each shall have like freedom to pursue and acquire the object of his desires.

Beyond the restraints which the law of equal freedom itself imposes, there are other secondary restraints which are necessary to right living. Men may in a variety of ways make themselves obnoxious to their fellows without breaking the law of equal freedom; hence the necessity of both negative and positive beneficence as supplementary principles to regulate human nature. These, however, belong to the sphere of ethics proper, and not to that part of it we are considering.

It seems to be an inevitable conclusion that, subject only to the limitations just mentioned, we are entitled to do what we please with our own, and this also seems to be in accord with the principles of justice, of which, indeed, the law of equal freedom is the embodiment. But does this cover the whole extent of our obligation? Every right has for its correlative a duty to be performed. Are all such duties included in the limitations upon rights that have been mentioned? Has society no just claims upon its members other than those of mutual forbearance? Clearly not, for rights are not the measure of duties. The latter occupy a much larger field of life, and, although their consideration is chiefly confined to ethics proper, yet in the study of economics a clearer recognition of social duties and an insistance upon their needfulness as factors in securing the greatest economic return for efforts expended will tend to put the science upon a surer foundation. Take, for instance, the great question of laissez-faire. As Prof. Sidgwick says: "We can not determine what government ought to do without considering what private persons may be expected to do; and what they may be expected to do will, to some extent at least, depend on what it is thought to be their duty to do; and, more generally, it was before observed that in the performance even of the ordinary industrial functions with which economic science is primarily concerned, men are not merely influenced by the motive of self-interest, as economists have sometimes assumed, but also extensively by moral considerations."^[7]

We have here reached also an explanation of the residuum of existing sentiment in regard to the distribution of wealth. The duties which its creation imposes upon all the men who produce it are not distinctly realized by the mass of mankind. On the contrary, individuals and classes are more often concerned with their own rights and the duties of others. Dissatisfaction naturally follows, as we are sure to find fault with others for the nonperformance of duty, while forgetting that our own neglect must produce the same dissatisfaction elsewhere. This applies as well to the laborer as the employer or capitalist. All owe it to society that they shall exercise their economic functions in such a manner as to enhance the social well-being. For, "it should not be forgotten here that, at least in the higher stages of the economy of nations, scarcely any work or saving is possible without the co-operation of society. And society must be conceived not only as the sum total of the now living individuals that compose it, but in its entire past, present, and future, and also as being led and borne onward by eternal ideas and wants."^[8]

This is not the only economic service which society renders to mankind. In addition to the security which, it gives to labor and to property, it increases their value as well. "Social growth creates a demand for a constantly increasing quantity of every sort of staple goods. The greater the quantity demanded and sold, the less is the cost of production per unit of product. Not that the mere multiplication of human beings is itself creative of wealth, but that the multiplication of utilities by the productive labor of additional human beings enhances the utility created by each one. It does this by creating the means for more perfectly utilizing all labor and all means of production."^[9]

Let us now apply the principle of social duty and the test of social well-being to some of the economic questions of the day. Does our social duty, or the social welfare, require of us that we shall surrender the right of private property, either in whole or in part, as demanded by the communist and socialist? We have already indicated some of the advantages which result to society from the individualistic idea of property. It now remains to point out the disadvantages which would be likely to follow from the adoption of the communistic or socialistic ideal. The first proposes to organize society "so as to distribute the annual produce of the labor and capital of the community either in equal shares or in shares varying not according to the deserts but according to the needs of the recipient."^[10]

The decisive objection to this theory is, that it violates the first principles of justice, in that it proposes to distribute rewards, not in accordance with efforts expended, but in accordance to need, no matter how that need was occasioned, whether through the fault or the misfortune of the recipient. The unequal results that are caused by equal freedom may be deplored and voluntarily alleviated; but it would neither be wise nor well forcibly to prevent these results by taking away from the more fortunate, and thus preventing the natural penalty to be visited upon the slothful and the idle. The inevitable result of such a policy would be to decrease the amount to be divided by removing the normal stimulus to industrial activity, and preventing the normal check upon laziness.

So far as socialism involves a similar theory, the same objections may be urged against it, but this word is generally used to cover the proposition of substituting the governmental for private and competitive management. Now, it is the testimony of nearly every competent observer that governmental management is less economical, less energetic, and less plastic than private management. The result of its substitution would be in the long run to lower the product both in quality and quantity, through waste, incompetence, and a tendency to retain old methods where new and better ones should be tried. The reasons for this are not far to seek. Lacking the normal and powerful stimulus of self-interest, as well as the energy which is the outgrowth of competition, the state, as an industrial agent, can never be relied upon to equal in productive results the present system of individual management. But this of itself would not necessarily condemn it, if it can be shown that socialism, by raising the moral tone of society and more equitably distributing its economic product, gets rid of those evils which, it is claimed, are caused by individualism, and, thus elevating the standard of social well-being, more than balances the loss in production. It is indeed conceivable that men might live happier and better than they do at present by restoring the ancient ideal, and limiting their wants to those things only which are essential to human welfare; and that production might, as a whole, be less than it now is, and yet society be better off, if work were so guided that there should be no such thing as overproduction of some articles and underproduction of others; or that such a ratio should be preserved that the purchasing power of the masses would keep pace with their productive power.

To this, however, it may be replied that there is no good reason for thinking that the state will be a better judge of what is essential for human welfare than the individuals who compose it, and it would not be as sure a check upon "overproduction" as the self-interest of the individual producers; for this will keep them alert and watchful of the conditions affecting demand and supply.

Moreover, the interests of society are advanced in several ways by the unequal distribution of wealth. If all existing wealth were equally distributed, it would not raise any one to affluence, or make unnecessary hard and continuous labor. A certain amount of leisure is absolutely necessary to the cultivation of those tastes and talents upon which the general culture and special knowledge of mankind depend. It is obvious that, where men have no time to devote to such matters, in consequence of the necessity of giving all their hours of labor to the production of the essential means of existence, the higher and particularly those immaterial forms of wealth out of which many of the greatest social gratifications are obtained will either not be produced at all, or produced to only a limited extent. Hence, the general culture of the community will suffer from this lack, and a lower type of organism will be developed.

To a certain extent the cultivation of science might, in such a community, be made a means of bread-winning, as its usefulness could be made more apparent, but the pursuit of knowledge would be likely to be confined to practical ends, and the resulting disadvantages to society would be very great. It would be impossible to calculate the amount of social benefit that has accrued from the unremunerated intellectual activity of men who have devoted their lives to the pursuit of knowledge for its own sake. Much of this devotion has been made possible by the existence of rich men who have directly or indirectly furnished the means to this end. Many of our schools, colleges, libraries, and art-galleries have been founded or more or less supported by contributions from the rich, and a deeper and richer economic return has been made possible.

But the fundamental objection to socialism is, that the economical disadvantages which its adoption would surely entail would not be balanced by ethical benefits that would repay the loss. The evils of which socialists chiefly complain are due to the inherent defects of human nature as it is. While some of these defects may be increased and intensified by the system of private property and free competition that now obtains, it is altogether unlikely that a change in the system would of itself greatly modify human nature. That requires long time and a co-operation of all the social factors. Moreover, the growth of the sense of social obligation gives promise that these very defects may be lessened and eventually overcome, by a more thorough recognition of our social duties and responsibilities, and the cultivation of a public opinion that will insist upon their performance. The main "justification of the existing industrial system is that it secures more responsible and far-sighted management of capital than could be obtained in any other way"; but when we "attempt to enjoy the rights of property without corresponding responsibilities," we give our opponents their most powerful weapon.^[11]

As a first requisite to the establishment of a correct public opinion, it is needful that we should teach more broadly the truth that men have no absolute right to do as they please with their own, and that the obligations which contract imposes are not the only ones to be taken into consideration. Not only must we, in accordance with the law of equal freedom, forbear to interfere with the equal rights of others, but we must also remember that our duty calls upon us to use our rights in such a way as not to demoralize, but on the contrary to conserve, the community in which we live. The test of this is the principle with which we set out—the well-being of society. We may not always be able to decide positively as to what is best in every case for the social welfare, but it is possible for us to do so in many instances; and wherever the absolute exercise of any right, which the principles of political economy otherwise sanction, seems likely to be detrimental to society, it is our duty to point out the limitations of this right, and to do so with the greater insistence, because the natural propensities of man will generally lead him to choose immediate rather than remote advantages, although the latter always coincide with the well-being of society. In other words, morality becomes the basis of our economics; for it is the "cardinal trait of the self-restraint called moral" that it is made up of those representative and re-representative feelings which, becoming increasingly ideal, enable us to postpone immediate for future gratification.^[12]

The basis of the old political economy was self-interest; its fundamental assumption, that "men strive to obtain the maximum of satisfaction with the minimum of sacrifice"; and the creature that it studied was the "economic man." There was much of truth in all this, but not the whole truth. Our ethical economics adds to self-interest the social interest, and the being whom it studies, "the starting-point as well as the object-point of our science, is man"^[13] as he is, with all those thoughts and feelings, those longings, desires, and wants, both of the body and the mind, which are a product of the social factor.

The history of our economic thought and economic action is a further proof of this. There seems always to have been a tendency to the establishment of a moving equilibrium between those forces which make for individualism and those forces which make for socialism, and an extreme development in one direction brings more strongly into play the opposite tendency. Individualism has just had its day; socialism seems now to be coming to the front, but, if not curbed before it has gone too far, the pendulum will again swing toward unappeasable individualism. Happily, however, for man, he is more susceptible of change in the direction of his nobler impulses and toward an ever-growing sense of justice and duty; and, wherever sympathy does not conspire to produce this result, it is eventually brought about by self-interest. Whenever the public opinion of any community allows men to "enforce their rights with hands of iron, while they disclaim their duties with fronts of brass," a reaction is sure to occur sooner or later, and, in order to preserve and retain some of the rights which this reaction imperils, greater concessions must be made to the opposing sentiment. These concessions, once obtained, become the starting-point for new rights and duties, and when these are found to be useful to society they are preserved. A new adjustment is inaugurated, but this time upon a higher moral plane than the former. Thus, "at the suggestion of some immediate interest or convenience," or through the impulse of the higher moral feelings which have already been brought about as described, "fresh types of conduct gradually set into form and give rise to corresponding rules. These rules are the body of morals."^[14] Nor is this all. As this conduct becomes habitual in the individual it affects him physiologically as well as psychologically, and through the changed cerebral structure which it produces, it is transmitted to his offspring, to become in the long process of the ages those moral intuitions which we group under the name of conscience. Note further that the kinds of conduct which our intuitions regard as authoritatively prescribed are such as long social contact has shown to be essential to the well-being of society, and that this same well-being furnishes us the test of our duty to fulfill obligations which for any reason have become ambiguous and indefinite. May we not conclude, then, that the fulfillment of duty to self and to society is the true end of economic action? If so, "let us bind love with duty, for duty is the love of law, and law is the nature of the Eternal."^[15]

 

1. Fiske's "Outlines of Cosmic Philosophy," vol. ii, p. 170.
2. "Political Economy," Walker, p. 49.
3. "Political Economy," Walker, p. 275.
4. "Progress and Poverty," Henry George, p. 3.
5. "Social Statics," Herbert Spencer, p. 121.
6. Roscher's "Political Economy," vol. i, p. 235.
7. "Principles of Political Economy," p. 583.
8. Roscher's "Political Economy," vol. i, pp. 235, 236.
9. Franklin H. Giddings, in the "Quarterly Journal of Economics," April, 1887, p. 371.
10. Sidgwick, "Political Economy," p. 526.
11. "The Nation" for December 1, 1887, p. 431.
12. See Spencer's "Data of Ethics," chap. vii.
13. Roscher's "Political Economy," vol. i, p. 51.
14. Martineau, "Types of Ethical Theory," vol. ii, p. 374.
15. "Daniel Deronda," George Eliot, vol. ii, p. 335.