Distributive Justice: The Right and Wrong of Our Present Distribution of Wealth

PREFACE

Five of the nine members of the late Federal Commission on Industrial Relations united in the declaration that the first cause of industrial unrest is, "unjust distribution of wealth and income." In all probability this judgment is shared by the majority of the American people. Regarding the precise nature and extent of the injustice, however, there is no such preponderance of opinion. Even the makers of ethical and economic treatises fail to give us anything like uniform or definite pronouncements concerning the moral defects of the present distribution. While the Socialists and the Single Taxers are sufficiently positive in their statements, they form only a small portion of the total population, and include only an insignificant fraction of the recognised authorities on either ethics or economics.

The volume in hand represents an attempt to discuss systematically and comprehensively the justice of the processes by which the product of industry is distributed. Inasmuch as the product is actually apportioned among landowners, capitalists, business men, and labourers, the moral aspects of the distribution are studied with reference to these four classes. While their rights and obligations form the main subject of the book, the effort is also made to propose reforms that would remove the principal defects of the present system and bring about a larger measure of justice.

Many treatises have been written concerning the morality of one or other element or section of the distributive process; for example, wages, interest, monopoly, the land question; but, so far as the author knows, no attempt has hitherto been made to discuss the moral aspects of the entire process in all its parts. At least, no such task has been undertaken by any one who believes that the existing economic system is not inherently unjust. That the present essay in this field falls far short of adequate achievement the author fully realises, but he is sustained by the hope that it will provoke discussion, and move some more competent person to till the same field in a more thorough and fruitful way.

John A. Ryan.

The Catholic University of America,
Washington, D. C., June 14, 1916.

CONTENTS

Preface		vii
Introductory Chapter: The Elements and Scope of the Problem		xiii
	General References	xvii
SECTION I THE MORALITY OF PRIVATE LANDOWNERSHIP AND RENT
CHAPTER		PAGE
I	The Landowner's Share of the National Product	3
	Economic Rent Always Goes to the Landowner	4
	Economic Rent and Commercial Rent	5
	The Cause of Economic Rent	6
II	Landownership in History	8
	No Private Ownership in Pre-Agricultural Conditions	10
	How the Change Probably Took Place	12
	Limited Character of Primitive Common Ownership	14
	Private Ownership General in Historical Times	15
	Conclusions from History	17
III	The Arguments Against Private Landownership	19
	Arguments by Socialists	19
	Henry George's Attack on the Title of First Occupancy	21
	His Defence of the Title of Labour	24
	The Right of all Men to the Bounty of the Earth	30
	The Alleged Right of the Community to Land Values	39
IV	Private Ownership the Best System of Land Tenure	48
	The Socialist Proposals Impracticable	48
	Inferiority of the Single Tax System	51
V	Private Landownership a Natural Right	56
	Three Principal Kinds of Natural Rights	57
	Private Landownership Indirectly Necessary for Individual Welfare	59
	Excessive Interpretations of the Right of Private Landownership	61
	The Doctrine of the Fathers and the Theologians	62
	The Teaching of Pope Leo XIII	64
VI	Limitations of the Landowner's Right to Rent	67
	The Tenant's Right to a Decent Livelihood	69
	The Labourer's Claim Upon the Rent	71
VII	Defects of the Existing Land System	74
	Landownership and Monopoly	75
	Excessive Gains from Private Landownership	80
	Exclusion from the Land	90
VIII	Methods of Reforming Our Land System	94
	The Leasing System	95
	Public Agricultural Lands	97
	Public Ownership of Urban Land	98
	Appropriating Future Increases of Land Value	100
	Some Objections to the Increment Tax	102
	The Morality of the Proposal	108
	The German and British Increment Taxes	114
	Transferring Other Taxes to Land	117
	The Morality of the Plan	120
	Amount of Taxes Practically Transferable	122
	The Social Benefits of the Plan	127
	A Supertax on Large Holdings	130
	References on Section I	133
SECTION II THE MORALITY OF PRIVATE CAPITAL AND INTEREST
IX	The Nature and the Rate of Interest	137
	Meaning of Capital and Capitalist	137
	Meaning of Interest	138
	The Rate of Interest	141
X	The Alleged Right of Labour to the Entire Product Of Industry	145
	The Labour Theory of Value	146
	The Right of Productivity	149
XI	The Socialist Scheme of Industry	152
	Socialist Inconsistency	152
	Expropriating the Capitalists	154
	Inefficient Industrial Leadership	158
	Inefficient Labour	162
	Attempted Replies to Objections	162
	Restricting Individual Liberty	168
XII	Alleged Intrinsic Justifications of Interest	171
	Attitude of the Church Toward Interest on Loans	172
	Interest on Productive Capital	175
	The Claims of Productivity	177
	The Claims of Service	181
	The Claims of Abstinence	182
XIII	Social and Presumptive Justifications of Interest	187
	Limitations of the Sacrifice Principle	187
	The Value of Capital in a No-Interest RÉgime	188
	Whether the Present Rate of Interest is Necessary	191
	Whether at Least two Per Cent. is Necessary	193
	Whether any Interest is Necessary	196
	The State is Justified in Permitting Interest	199
	Civil Authorisation not Sufficient for Individual Justification	201
	How the Interest-Taker is Justified	204
XIV	Co-operation a Partial Solvent of Capitalism	210
	Reducing the Rate of Interest	211
	Need for a Wider Distribution of Capital	213
	The Essence of Co-operative Enterprise	214
	Co-operative Credit Societies	216
	Co-operative Agricultural Societies	217
	Co-operative Mercantile Societies	220
	Co-operation in Production	222
	Advantages and Prospects of Co-operation	228
	References on Section II	233
SECTION III THE MORAL ASPECT OF PROFITS
XV	The Nature of Profits	237
	The Functions and Rewards of the Business Man	237
	The Amount of Profits	239
	Profits in a Joint-Stock Company	241
XVI	The Principal Canons of Distributive Justice	243
	The Canon of Equality	243
	The Canon of Needs	244
	The Canon of Efforts and Sacrifice	246
	The Canon of Productivity	247
	The Canon of Scarcity	250
	The Canon of Human Welfare	252
XVII	Just Profits in Conditions of Competition	254
	The Question of Indefinitely Large Profits	255
	The Question of Minimum Profits	258
	The Question of Superfluous Business Men	260
XVIII	The Moral Aspect of Monopoly	262
	Surplus and Excessive Profits	263
	The Question of Monopolistic Efficiency	265
	Discriminative Underselling	267
	Exclusive-Sales Contracts	270
	Discriminative Transportation Arrangements	272
	Natural Monopolies	273
	Methods of Preventing Monopolistic Injustice	275
	Legalised Price Agreements	277
XIX	The Moral Aspects of Stockwatering	279
	Injurious Effects of Stockwatering	281
	The Moral Wrong	284
	The "Innocent" Investor	286
	Magnitude of Overcapitalisation	288
XX	The Legal Limitation of Fortunes	291
	The Method of Direct Limitation	292
	Limitation Through Progressive Taxation	296
	The Proper Rate of Income and Inheritance Taxes	299
	Effectiveness of Such Taxation	300
XXI	The Duty of Distributing Superfluous Wealth	303
	The Question of Distributing Some	303
	The Question of Distributing All	308
	Some Objections	311
	A False Conception of Welfare and Superfluous Goods	314
	The True Conception of Welfare	316
	References on Section III	318
SECTION IV THE MORAL ASPECTS OF WAGES
XXII	Some Unacceptable Theories of Wage-Justice	323
	I The Prevailing-Rate Theory	323
	Not in Harmony with Justice	325
	II Exchange-Equivalence Theories	326
	The Rule of Equal Gains	326
	The Rule of Free Contract	328
	The Rule of Market Value	330
	The MediÆval Theory	332
	A Modern Variation of the MediÆval Theory	337
	III Productivity Theories	340
	Labour's Right to the Whole Product	341
	Clark's Theory of Specific Productivity	347
	Carver's Modified Version of Productivity	351
XXIII	The Minimum of Justice; a Living Wage	356
	The Principle of Needs	356
	Three Fundamental Principles	358
	The Right to a Decent Livelihood	360
	The Claim to a Decent Livelihood from a Present Occupation	362
	The Labourer's Right to a Living Wage	363
	When the Employer is Unable to Pay a Living Wage	366
	An Objection and Some Difficulties	370
	The Family Living Wage	373
	Other Arguments in Favour of a Living Wage	376
	The Money Measure of a Living Wage	378
XXIV	The Problem of Complete Wage Justice	381
	Comparative Claims of Different Labour Groups	381
	Wages Versus Profits	388
	Wages Versus Interest	390
	Wages Versus Prices	393
	Concluding Remarks	398
XXV	Methods of Increasing Wages	400
	The Minimum Wage in Operation	400
	The Question of Constitutionality	405
	The Ethical and Political Aspects	407
	The Economic Aspect	408
	Opinions of Economists	412
	Other Legislative Proposals	416
	Labour Unions	417
	Organisation Versus Legislation	420
	Participation in Capital Ownership	423
	References on Section IV	425
XXVI	Summary and Conclusion	426
	The Landowner and Rent	426
	The Capitalist and Interest	427
	The Business Man and Profits	428
	The Labourer and Wages	430
	Concluding Observations	431
	Index	435

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