ever feeling that the spirit of man is a child of Heaven, and has thoughts and aims in which self and its interests are lost from the eye, as the Eagle is swallowed up in the brightness of the sun to which it soars: Let us be wise, let us admit this painful but medicinal conviction, and meekly learn the lesson which it teaches us. O, Jane! Why should we murmur? Are we not rich in better things than silver or gold, or the vain babble of stupid men? We have found each other, and our hearts are one, our beings are one; for we love each other with a love not grounded on deception but on truth, and no force can part us, or rob us of that blessing! Heavenly affection! Heavenly trust of soul to soul! This can soften all afflictions, if it is genuine and lasting, as it is in noble hearts. The summer sunshine of joy is not its chosen place; it burns with its clearest light in the dark winter of sorrow, when heart is pressed to heart, and one has no hope but in the other, no care but for the other.23

These are words worth pondering. With them I close the volumes before me, and take leave of the noble letters of the dead,' which have made an end of an ignoble legend.

VOL. LXV-No. 387

23 Vol. ii. p. 158.

W. S. LILLY.

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THE MISSING ESSENTIALS IN ECONOMIC

SCIENCE

SECOND ARTICLE

I

I POINTED out in the preceding article-the first of the present series -that the essence of the modern capitalistic system of productionthe inner dynamic element which distinguishes it from the systems previous to it, and which Marx declares to consist in the simple fact of the labourers being divided, so far as ownership is concerned, from their implements-is really a division much more profound than this. It is a new division of effort, incomparably more efficient in augmenting men's powers of production than the mere division of labour, or individual task-work, to which Adam Smith credited nearly all industrial progress.

It is a division according to which the performance of individual physical task-work is assigned to one class of men, and the higher mental processes by which such task-work is directed to another class. This is the distinctive essence of the capitalistic system. This and this alone gives us any explanation of the fact that economic effort, since that system has been established, has become beyond all comparison more productive than it ever was before during the whole history of mankind.

The general fact and nature of this division of effort is what I have endeavoured in the preceding article to elucidate. I now propose to examine it more minutely, and shall first show how, as I have had occasion to observe already, this fact has so far escaped the analysis of the orthodox economists that they have not even provided themselves with terms in which it can be expressed intelligibly; and how Socialists, on the other hand, whenever it is put before them, endeavour to get rid of its unwelcome implications by obscuring it.

II

The agencies involved in wealth-production are still described in the orthodox economic text-books as being three in numberland, capital, and labour. Such language, as applied to the

productive system of to-day, is on a par with that of the physicists who divided the physical world into fire, water, earth, and air. Each of these three economic terms is inadequate, and for that reason misleading; but we will for the present confine ourselves to the term labour, as the only term in accepted use amongst economists for productive human effort, no matter of what kind. The use of this single term for efforts distinct and contrasted, and answering to classes of men whose respective rights or claims form the subject of most modern discussion, not only causes inconvenience in describing facts. It is the parent of endless ambiguities in economic thought itself, and has effectually prevented otherwise clear thinkers from perceiving systematically how basic facts are connected, which they do not fail at intervals to recognise in unrelated isolation.

Mill, for example, on ninety-nine occasions out of a hundred uses the term labour in its commonly accepted sense, as synonymous with the manual task-work of the ordinary wage-paid workman--as may be seen by the title which he gives to one of his chapters, namely, The Probable Futurity of the Labouring Classes.' On the other hand, from time to time he admits in some lucid parenthesis that amongst the chief causes by which labour is made more productive are the acquisition of knowledge by men who are decidedly exceptional,' and the application of this knowledge by the practical genius of others to the invention of industrial implements and the discovery of industrial processes. But for the efforts of such men he can find no place in his system except by the expedient of classifying them as kinds of labour. The result of this procedure is that it leaves him without any adequate means of explaining how labour of such exceptional kinds connects itself with, and affects the mass of ordinary manual effort for which, except on rare occasions, labour is his distinctive synonym. The best he can do, by way of getting over the difficulty, is to translate knowledge and genius into the ' labour' of industrial superintendence'; and, taking an employer who directs, and a multitude of labourers who are directed, he seeks to comprise under the category of wages of labour the rewards earned by the personal efforts of all. What the employés earn is, he says, the wages of labour. What the employer earns personally is the wages of the labour of superintendence. The important point to be noted here is as follows. Wage-paid labour, as was shown in the preceding article, is in its essence super-directed labour, or labour directed by the man who pays the wages; but the part of the employer, as Mill himself perceives, is not to be directed, but to direct; and thus by comprising the rewards received by both in the single conception of the wages of different kinds of labour he effectually obliterates the difference, the nature of which he had almost grasped.

The same want of any full fundamental analysis is shown by General Walker in a very remarkable volume, better known in

America, his own country, than in England. General Walker, in the middle of his work, lays bare what is really the whole heart of the matter. The augmented wealth of the modern world is, he says, due, not to the labourer but to the 'entrepreneur,' by which word he means the men who conceive businesses and who direct them. But this part of his argument he leaves standing by itself, and he does nothing to correlate it with the principles with which he starts. He starts as Mill does with the old crude analysis. All wealth is produced, he says, by land, capital, and labour; and he leaves labour and the entrepreneur to connect themselves as best they may. The truth which he signalises is embedded in his system like a heart which beats, but is unconnected with the veins that pervade the body.

And now, having seen how the great central feature of the modern capitalistic system—namely, the division of effort into labour and the higher tasks of directing it is obscured by the orthodox economists and is incapable of being expressed in their language, let us see how the Socialistic economists, whenever it is forced upon their notice, do their best to obscure or get rid of it in their several different ways.

Those of them who still adhere to the formal doctrines of Marx seek to perform this feat by distorting the difference, real so far as it goes, between the value of commodities in use and their prices or value in exchange. They are accustomed to explain their meaning by the following kind of illustration. They take two groups of men who, under certain given conditions, can produce in the same time commodities of two different kinds--boots, let us say, and travellingtrunks. Four men, who are all of them called Henry, can in a day manufacture one travelling-trunk. Four other men, who are all of them called Edward, can in the same time manufacture two pairs of boots. Under these conditions the exchange-value or the price of a travelling-trunk will be two pairs of boots; that of two pairs of boots will similarly be one travelling-trunk. Or, if we express these facts in terms of money, and suppose that a sovereign represents the exchange-value of four men's labour for a day, a travelling-trunk will be worth a sovereign, and a pair of boots ten shillings. Should, however the disciple of Marx proceeds-conditions so change in respect of one of these industries that the Edwards can produce in a day four pairs of boots instead of two, the Edwards will be producing more values in use, but the exchange-value of the sum of them will be just what it was before. Four pairs of boots in exchange will be worth no more than two were. The price of each pair will have sunk from ten shillings to five; but the price of a travelling-trunk will still remain a pound. The trunk will cost four pairs of boots instead of the previous two.

The moral drawn by the Marxians from this illustration is that, no matter how much the productivity of a day's labour may be

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augmented, the exchange-value of the products always remains unchanged, bearing an unalterable ratio to the labour-time required to produce them. Hence labour, they say, is obviously the producer, and the amount of labour is the measure of all exchange-values, or, in other words, of all wealth.

Now, to show the puerile fallacy latent in this argument it will be enough to carry the illustration but a single step farther, and suppose that the four Henrys find suddenly that their labour in trunk-making has doubled its productivity like that of the four boot-making Edwards. The four Edwards now with the products of one day's labour will be able to purchase not one travelling-trunk but two. The exchange-value of their one day's labour will have doubled itself, which has indeed been the case already with regard to the four Henrys. If, however, we desire to bring our illustration into closer accord with the realities of industrial progress, we must remember that boots and travelling-trunks, like all other commodities, cease, whether in use or exchange, to have any value whatever as soon as their number exceeds the number that can be employed or worn. If we suppose, then, that prior to the sudden increase in productivity undergone by the respective labours of the Henrys and the Edwards equally, the supply of boots and travelling-trunks was sufficient for all current needs-namely, one travelling-trunk and two pair of boots daily--and that now two Henrys instead of four can produce the former, and that two Edwards instead of four can produce the latter, we must suppose further that the other men, instead of continuing their former and now useless avocations, will take to making commodities of other kinds. Henry III. will make four railway-rugs in a day; Henry IV. will make two pounds of tobacco; Edward III. will make four pairs of stockings; Edward IV. will make eight jam tarts. Under such conditions the exchange-value of the labour-products of the four Edwards, instead of being one travelling-trunk, will be one travelling-trunk as before, and a railwayrug for each of them, and eight ounces of tobacco as well; whilst the exchange-value of the products of the Henrys will have increased in the same way.

Now we have merely to express once more the situation in terms of money, and the nature of the change which has taken place will be plain. We started with supposing that the ratio of coin to commodities was such that day by day the products of four men had a value expressed by a sovereign. A sovereign in the hands of the Edwards would then purchase one travelling-trunk. A sovereign in the hands of the Henrys would then purchase two pairs of boots. It will now purchase in both cases many other things also. The Edwards can purchase with it railway-rugs and tobacco; the Henrys a pair of stockings and two jam tarts for each of them. This is what would happen on the assumption that, whilst the volume of