XVII. Private Wealth and Public Interest

CI-IAPTER XVII PRIVATE WEALTH AND PUBLIC INTEREST iTHERE are many people outside the ranks of the Socialists who are troubled in their minds as to the justice of private wealth. There is quite enough obvious abuse of wealth to promote widespread sym pathy with the idea of public ownership. "Wealth," says John Stuart Mill, " consists of all things useful and agreeable having exchange value, " and it is advisable to bear this definition in mind in thinking of property and its ownership, and to remember that there are various sorts of wealth. In this discussion we are only concerned with wealth as defined by John Stuart Mill. There is wealth in St. Paul's Catheqral or th~ Tower Bridge; there is wealth in the roads.and the sewers; there is wealth of another kind in Health and Education, but none of these things was in the mind of Mill when he gave us the definition that I have quoted. -It is advisable to classify and. keep separate dif .ferent kinds of wealth. There is, for instance, no economic connection or similarity between the watch that is in my pocket and the fabric of Westminster Abbey. One has exchange value, and the other has no value whatever in any market where things are exchanged. A good deal of confusion arises from' failure to make these classifications of wealth, con fusion which is very commonly seen in the conversa tion of Socialists who will quote the roads and the public parks as illustrations to show that the State can own and manage factories and steamships.

Another introductory note which is necessary in 198 Private Wealth and Public interest 199 the proper consideration of the subject of wealth has to do with its comparative nature. Wealth isa mat ter of comparison; indeed, everything in life is com parative. Queen Elizabeth, without a water supply, and with a tallow candle as her only means of enjoy ing the evening hours, was a positive slum-dweller by comparison with the residents of Putney to-day. The possession of riches, property, or wealth as commonly understood consists in the possession of something that is not owned by the average person. If, for instance, everyone were reduced to' a level, and everything were equally divided, there would be no wealth in the sense in which the word is often used to-day. We mean, when we speak of wealth, the posses sions of someone who owns or has control of com modities or advantages which are not available to the average person, and here we come up against one of the inherent difficulties in the democratic system, for democracy aims at spreading power equally amongst us.

In a democratic State, through the machinery of the ballot-box, every citizen possesses an equal amount of power, whereas wealth in the sense men-' tioned above is, and always must be, an attribute of the minority. In one way it is a difficulty; in another way it is a safeguard; in a perfectly wise State it is a very .happy position when power is equally divided, but wealth remains in the hands of those who, tested by competition, are the best qualified to make, to hold and to preserve it. This comparative characteristic of wealth is all too 200 The Return to Laisser Faire little understood and considered. History, especi ally the history of the last I S0 years, is full of examples of large masses of wealth which have been thrown into the common pool, and, because they have been divided up among us, are not recognised as wealth at all. All the marvels in engineering in the matter of transport, the provision of facilities for getting about which have enabled this generation to run from one end of London to the other, have dis tributed real wealth beyond the wildest dreams of our grandfathers or even fathers. When the day arrives-and it cannot be far distant-when every labourer has some sort of motor car, motor transport will cease to be wealth, and the agitation will move on to the unfortunate owners of airships. The Socialist-minded will not then question the right to a motor .car any more than they now question the right to a wireless set, and all the argument about confiscation and taxation will move on to airships.

It is extremely natural for a poor man to want to divide with a rich man. It is undeniably true that if a penniless man -could share up with a neighbour who has £ 100,000 in the bank, the former would be £ 50,000 better off, and here we come up against perhaps the greatest difficulty of all in all this dis CUSSIon. It is so hard for an impecunious individual with his day-by-dayproblems, trying to make the shillings pan out, to realise that the dividing method will not help us. The individual Socialist voter no doubt casts his vote because he thinks that in that way he will get at the individual owner of wealth ; but he Private W ealthand Public Interest 201 forgets that we are concerned not with particular in dividuals, but with 43,000,000 human beings when we consider this problem as it affects society as a whole. The dividing folly was completely exposed by Professor Bowley and Sir Josiah Stamp even be fore the war, when we were better off than we are to-day. These distinguished statisticians proved, and their evidence has been universally accepted by all who have studied the question, that the Rowntree minimum of 35s. 3d. for a man and 20S. for a woman simply did not exist in the whole of the national income before the war. The case, how ever, was really very much worse than Professor Bowley made out, because he, as he was bound to do, divided up the wealth of the country reckoned in terms of money, and ignored the obvious fact that a very great deal of that wealth, though capable of measurement in terms of money, is from its nature totally incapable of any physical division at all.

This brings us back to the Mill definition, and the vital last three words "having exchange value." A diamond may be said to be worth £ 10,000, and is reckoned in the Bowley figures on that basis, but if everybody had the 35s. 3d. a week with which those figures were concerned; a diamond would be worth nothing at all. Nobody could possibly pay £10,000 for a diamond. We only say that a dia mond is worth £ 10,000 because, as things are arranged at the moment, there are a few people who are capable of handing from one to another £10,000 in money in exchange for a diamond. Similarly, property like the " Alice in Wonderland" manu202 The Return to Laisser Faire script, sold the other day for £ 16,000, or my por trait by Sir William Orpen, valued at £ 2,000, or a stall ata theatre, valued at 14S., all disappear as wealth in the Mill sense the moment that you attempt any dividing. There is a very great deal of work to be done in the education of the public on this simple point alone, and if it could be commonly understood that most of the wealth. of which we talk is incapable of division and ceases to be wealth for Socialist pur poses so soon as division is contemplated, a great deal of ground would be cleared. As a general proposition it may be said that there are very few things possessed by the wealthy, which would be of any use at all in any system of society except the sys tem of private ownership and personal property. It is not suggested that the wealthy have more than their share of food; the reverse is in fact the case.

The food which keeps together the body and soul of the average duke, would be quite insufficient to per form the same service for the average labourer. The wealthy classes may perhaps possess a super abundance of clothing. and some of them might be able to part with a few suits or a few' dresses, but there is for the most part very little else which could be used in any scheme for dividing wealth more equally. The Rolls Royce can never be divided. It would be easy to take one man out of a Rolls Royce and put him in the gutter and take another man out of the gutter and put him into the Rolls Royce, but that would not be the division of wealth; it would be merely the substitution of .one situation Private Wealth and' Public Interest 203 for another. If only we could get people into the habit of thinking in things instead of money, if it were recognised that poverty is 'the absence of things, and that wealth is the possession of things or the 'power over them, a great deal of misapprehen sion would be avoided. It is difficult, very difficult, it always will be difficult, so long as we desire to enjoy the advantages of a convenient medium of exchange like money. The more, we develop the machinery of money, the more difficult it will be come, and the more necessary, therefore, is it for everybody to understand that money is nothing but a tally, a means of. reckoning, a medium of ex change, and has no other use, purpose or value.

The driving force behind the idea of the division or the better distribution of wealth is the notion that riches are the cause of poverty, awholl y false idea. When you add to this fallacy all that natural weak ness from which very few of us are free and which makes us feel a certain envy of those who do better than ourselves, you have the complete explanation, not only of the Socialist movement, but of the move ment in all political parties for higher' taxation and more public expenditure. When 'Parliament has to consider another shilling on the super tax or another addition to the death duties, it is safe tb say that while some of the mem bers are thinking entirely of the need for the money and the purpose to which itwill be put, the majority is formed of those who feel that the super tax payer and the wealthy testator are fair game for punish ment~ 204 The Return to Laisser Faire Riches are the antidote to poverty, not the cause of it. Poverty is the absence of riches, and more poverty is made by preventing the acquisition of new riches or the retention of old. The man or woman who succeeds by any proper means in the difficult task of acquiring some new riches does not in point of fact deprive anyb9dy else of those riches.

What he or she does is to contribute towards the set ting of new standards which in time become the common standards. The ordinary amenities of life now common to everybody~ sanitation, clothes, food, means of transport, literature, were each in their. time highly-prized wealth, owned and enjoyed by the privileged few. The study of any market emphasises this point. In clothes the fashion is set by Worth or Paquin, is enjoyed for a brief spell by a wealthy minority, and in an incredibly short space of time is available to the whole of the civilised world. These things happen very quickly in clothes, but they happen just as surely in every thing else. The first lady's safety bicycle that I can remem ber was made by the Enfield Company in the early nineties and cost £ 35. In the village where I then lived this bicycle caused a good deal of heartburn ing among the women who, because they were not in the position of the fortunate daughter of the Squire, busied themselves with discussing the impropriety of bicycling for women and the frightful waste of £ 3S on such a fantastic whim. But while that par ticular bicycle could never have been divided, it was directly responsible for the £ 3 lOS. od. machine Private Wealth and Public Interest 205 which every girl can buy to-day and which would not be on the market if its £ 35 predecessor had been taxed out of existence. I am perfectly sure that 1f the Squire who gave his daughter that expensive bicycle had been subject to the present rate of taxa tion, the bicycle would never have been bought and probably never have been made.

There is in these days no case for ownership as mere ownership. The" what's mine's my own P line of argument is not only out of date, but danger ous, and, I think, wrong. Individualists in discuss ing these matters with Socialists, especially senti..: mental Socialists, are badly handicapped by the in contestable fact that many of the owners of wealth are not good citizens, and do not appear to be useful members· of society. The Squire's daughter with her £ 35 bicycle spent, if I remember rightly, far too much of her time in mere frivolity, and it would be absurd to argue that when riding her bicycle she was conscious of the tremendous economic developments in which she was a pioneer. Private property in present circumstances can only be justified in the public interest. The owners of private property must be regarded as trustees on behalf of the public. Only on these lines can Indi vidualism hope to make an appeal to thoughtful people. The argument must be built up in this way.

Civilisation depends upon property, upon the mak ing and saving of ever greater quantities of real wealth, and as all history proves that the private individual is the only agent that can make, preserve 206 The Return to ·Laisser Faire and save wealth, society is dependent upon the pri vateindividualas the owner of wealth. We all depend upon saving. Life itself would disappear unless a sufficient amount of saving is done. We have only to eat the whole of this year's potato crop to be sure that no potatoes would exist next year . It is immaterial to society, who saves the seed potatoes from this year's crop. The essential thing is that they must be saved. The private indi vidual may be actuated by the lowest motives of per sonal gain when he does the saving. I myself do not find those private individuals whom I know to be full of greed and avarice and personal desire· in the way that we are asked to believe .by Socialists.

But that does not matter. The point is not a good one. Whatever may be the motive, the economic necessity is that the saving. should be made . The savings made by society in its collective capacity, by States, by County Councils, and .. by other public authorities are infinitesimal, and there is no single case where the real property owned by a _ public authority is worth more than a fraction of the debt piled up by the same agency. The individual is always striving to save, always striving to put something away for a rainy day or for a future generation. It is an extraordinary and disturbing reflection that when this same individual becomes a member of a public body he proceeds at once to reverse his policy and to pile up debts and obligations which he leaves to future generations. to dis charge. It can thus be seen that there is really no Private Wealtk and IJublic Interest 207 such thing as public ownership. What the poli ticians mean when they talk that way is the use of the things which are privately owned by the indi viduals of the moment, and the mortgaging of the things which they hope will be owned by the indi viduals of the future. The list of failures of public ownership is a very long one; the list of failures of public management is equally long, and indeed no body denies, so far as I am aware, that such indus trial efforts as have been made in the name of the public, or as experiments in Socialism, have hither to failed.

There is another line of argument which can be pursued with advantage in this connection. It does seem plausible to think that the wisdom of a government or a council is at least as great as the wisdom of the individual, and it is hard to doubt that a public body is of itself less qualified to own a c;oal mine than, let us say, the Duke of Northum berland. But that idea arises from a failure to understand the way in which the work of the world is really done. We all depend upon multitudinous little bits of effort pulling in all sorts of directions and conflicting one with another. Socialism seems to think that a policy can be devised for the guid ance of everybody, and that we calJ. all move for ward together in one uniform progress. The truth, surely, is that in every little detail of life a balance is necessary. That balance is main tained by conflicting interests or opposing forces.

,This book exists because one man wants to get rid of it and another wants to acquire it. .The fact that it 208 The Return to Laisser Faire contains this chapter, which is an emphatic protest against the current of public opinion, is another reason among the many which bring it into exist ence. But the moment that any property or anyen terprise is owned by the public it has to conform to a policy accepted by the whole public. We makeshift for the moment with majority opinion, but Russia and all Socialism bank on unanimous opinion. There is no room for contra diction 'Or conflict or a balance of forces in the Socialist philosophy, and it thus comes about that public enterprise lacks the essential essence of enter prise, and the need for uniformity reduces the whole scheme to a dead level of inefficiency. The moment that a little bit of property or a little bit of work gets into the hands of a public authority it must conform to well-understood principles and well-defined prac tices. Interest passes automatically from the little bit of work to the principles and practices. This is natural and necessary and is another explanation of the impossibility of the Socialist idea.

-It is easy to rail at red tape, at forms, at bureau cratic methods, but these things are inseparable from public enterprise and constitute the simplest practical reason why public enterprise is impossible. The fortune which the Duke of Northumberland is reputed to take out of coal mines mayor may not be an abuse, that depends on the use which the Duke makes of the fortune, but the fact remains that public ownership of the same mines would involve expenditure in connection with the necessary im position of principles and practice far in excess of Private Wealth and Public Interest 209 any fortune which the most rapacious duke his ever taken out of mineral rights. I have always felt, and still feel, that the theoreti cal argument for the public ownership of land is un answerable, but then I come to this same· practical difficulty. The cost of the public ownership of land, because of the necessity for the observance of uniform principles and practice, would be far heavier than all the ground rents and unearned in crements of which we hear so much to-day.

Private property can thus be justified in theory as well as in practice. In practice the justification rests mainly upon the inherent impossibility of public ownership, supported by illustrations which are to be found on every hand. The amenities of life, all those material things on which we depend, all those little things of which each generation requires in creasing quantities, and which pass very rapidly one after the other from the class of riches and luxury into the class of necessities, can be divided very simply into two big categories: those which have been left to private enterprise and individual owner ship on the one hand, and those which have been the subject of political action on the other. The contrast between these two categories is marked, startling and convincing. The world is well supplied with clothes, food, literature, and amusements, to name only four big simple classes.

On the other hand, where the political idea has entered, where political action and collectivist theory have been applied, there is want, shortage and poverty. It is only necessary to name, in this 14 210 The Return to LaisserFaire connection, houses, coal and employment. In each of these three matters the interference of the poli tician, the attempt to apply the powers of collec tivism, have landedus'in disaster. It must also be remembered that private property is quite worthless to the private owner unless it is used in the public interest. Whether the property appears to take the form of money or whether it con sists in buildings or plant or stock, the owner can only derive benefit from it by placing it on terms at the service of others. The private proprietor is con stantly impelled to find new ways of inducing other people to made adequate" and 'proper use of his property. Public ownership is in 'quite another position. It can leave property to rot, as in the case of Slough or Richborough, or,it can use property in a way which is not acceptable to a sufficient number of people to pay expenses, and take the loss out of the successes of the private owner. When property is in public hands there is no effective test of ade~ quate use, whereas the private owner is, for the most part, under' the absolute necessity to use it in such a way as freely to attract others.