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The Pamphlet Collection of Sir Robert Stout: Volume 71

Chapter XIV. — Labour Versus Capital is an Incorrect Description of the Issue

Chapter XIV.

Labour Versus Capital is an Incorrect Description of the Issue.

It is important to look at a most singular misapprehension which has taken hold of the public mind, and perhaps especially of wage-earners. It is distinctly traceable to the confusion of thought which page 30 is mainly responsible for the continued existence of the present land-system. The confusion alluded to is that which classes land and the products of industry together. Wherever this confusion exists in any man's brain, It is quite natural that he should look at the use of capital applied to the purchase of land in just the same way as its use applied to carrying on any industry. In this way the present land system is responsible for a very mischievous reflex influence upon industrial life, and has led to a great amount of misdirected antagonism between employers and wage-earners of every variety.

The land system has permitted certain capital to forestall industry, to curtail its operations, and to take toll from it; and by these means to bring the use of all capital, though applied to widely different purposes, under suspicion and discredit. This result is not to be wondered at, for even political economists have missed or concealed the true issue. There is no wonder, therefore, that wage-earners generally think that it is the capital which conducts the industries in which they are employed which grinds down their pay. But if the producing and employing capitalist could be made, for the time being, invisible, so that they could see past him to the land-owning capitalist in the background, they would see the true author of their troubles. There are two very significant differences between the nature of the operations of these capitalists which lie on the very surface, and which supply a hint of deeper differences. The land-owning capitalist derives his income from many men, who are poorer than himself. The employing capitalist supplies an income to a number of men poorer than himself. The land-owning capitalist shuts the gate upon Nature's storehouse of materials, and denies access until his terms are conceded. The employing capitalist first makes his own terms with the land-owning one, and afterwards invests and risks a part of his savings in the plant and machinery necessary to his enterprise; thus giving "hostages to fortune." When this is done, he offers wages to men in exchange for their labour. Then there is a great difference between the operation of competition upon the two. From the moment the employer starts his business, he is open to the assaults of competition from rivals who may commence. The result of competition upon him will be to reduce his profits. But what will another effect of the starting of a rival employer be? It will create an increased demand for land, and consequently swell the ground-rent fund. As land is a fixed quantity, another factory will increase the value of another site. The increase of enterprise therefore produces two opposite effects—it reduces the employer's profits, but increases the landlord's ground rent Wage-earners always rejoice at the starting of a new industry, but no person who earns his living can be pleased to see land bought up by speculators or landlords.

There are several suggestive facts which may be placed in parallel columns to show how completely these different uses of capital contrast with each Other in their effects upon the interests of wage-earners and of the community: page 31
Capital used in Employing Labour Capital Invested in Land Values
1. Transforms raw materials into useful articles. 1. Demands a toll for granting access to raw materials.
2. Causes competition for the purchase of labour, and therefore tends to raise wages. 2. By increasing the price of land retards the operations of capital applied to production, and therefore reduces the demand for labour.
3. Reduces the price of commodities to all consumers, of whom wage-earners form the most numerous section, and that which spends the largest percentage of its income upon commodities. 3. By retarding the operations of producing capitalists checks the reduction of price to consumers.
4. Makes many useful operations possible which, from their magnitude, could not be carried on without its aid. 4. Does not assist a solitary useful or profitable operation, but throws hindrances in their way.
5. Makes it more costly and difficult for wage-earners to secure building sites.
6. Causes all the losses detailed in the six items forming "the indictment of the system" at page 24.

The true inference to draw from these facts is that the issue commonly spoken of as "Labour versus Capital" is incorrectly described. The term which would accurately describe it is the following:—" Labour, and the capital which is used in employing it, versus capital invested in land values."

Both the wages of labour and the profit earned by capital applied to employing labour are reduced by the exaction, the uncertainty, and other hindrances caused by capital being invested in land values.