VII.

THE MODERN ECONOMIC SYSTEM.

It is said of the tutor of king Gustavus Adolphus of Sweden, the celebrated chancellor Oxenstierna, that he once said to his pupil: "My son, you have no idea with how little good sense and reason the world is governed." Indeed, it seems that the world is oftener governed by follies and absurdities than by wise and prudent measures. But I believe that the world cannot always be governed by follies, absurdities and inconsistencies, certainly not by the same ones.

As far as economics are concerned, absurdities and inconsistencies arise by development. That is to say, institutions which, in their beginning, appear quite sensible, nay, even necessary, breed in course of time absurdities by unforeseen and unintended effects. Whenever these absurdities appear, it is a sure sign that the prevailing economic system is reaching its climax, that it has become inconsistent with the best interests of society, and that the end of its career is approaching. I think, therefore, that a statement of some of the absurdities, inconsistencies and peculiarities of the modern economic system will be quite instructive.

This system is, in one sense, based upon the principle of freedom of contract. But in giving effect to this principle, freedom is considered from a political and not from an economic standpoint, although most contracts are of an economic character. The contract of a minor,

for instance, be he ever so intelligent, is invalid, but the contract of a hungry man is valid. A man contracting under threats of violence is considered to act under duress, but the man who accepts a very dangerous, or very loathsome, or very ill-paying employment, because of his fear that he may find no other employment, and would be in danger of starving, if he refused it, is considered in law a free agent. Considering the condition of the average employee, it is quite clear that his freedom of contract is nothing but a legal fiction. Yet, it is upon this legal fiction that courts have repeatedly set aside as unconstitutional legislative enactments for the abolition of certain abuses in the treatment of workingmen, as for instance the truck system. The law, based upon, or rather being the fruit of, our economic system, presupposes a freedom of will, where there is no freedom of choice-a palpable impossibility. Or it assumes the freedom of choice on the part of the working classes—a palpable error.

The inability of our jurists to distinguish between man as a citizen, that is, as a political being, and man as an individual, that is, as a natural being, has led to another anomaly, namely, the legal fiction of equality. Ignoring economic inequalities, and accepting political equality as an existing fact, they insist upon legislation which affects all classes equally. This, however, is impossible. If the legislator legislates in favor of the laborer by limiting the hours of labor, or prescribing certain rules of payment of wages, the courts, under the fiction of civil equality and protection of the rights of contract and property, declare such laws to be class-legislation and, therefore, unconstitutional.

Obviously, only such legislation is judicially declared

to be class-legislation which affects the interests of the ruling class unfavorably. Laws rendering illegal contracts for the payment of wages in anything else but money, or in longer than certain periods, have been declared unconstitutional as class-legislation and because they rob the laborer of his freedom to contract as he pleases for the sale of his labor, which is his property. Does this principle not apply to the money lender as well as to the laborer? Do usury laws not violate the freedom of contract? Why is the money lender's freedom of contract not protected? Simply because usury laws-which now have the sanctity of age-are of feudal origin and served to protect the ruling class.

But how can theories of property be applied to íabor force? By another fiction: the fiction that labor is property, for the sale of which the laborer who sells it must be as free to contract as for the sale of any other property. But labor-force lacks all the elements of property. The seller cannot divest himself, nor be dispossessed of it, without either suicide or homicide. It exists and dies with the laborer himself. What property rights could the purchaser of labor assert, if he should pay for it in advance and the seller should refuse to work? Labor cannot be replevied, it cannot be taken on execution, it cannot be attached, it does not go into the hands of the administrator, nor descends to heirs. It is inseparable from man, it is man himself. Labor can only be property, if the laborer himself is property. Consequently only slave labor can be property, but not wage labor.

Thus to prevent legislation favorable to the laborer, courts pretend to protect the laborer's fictitious liberty and protect it by impregnating wage labor with the characteristics of slave labor.

Can anything be more absurd?

Legal fictions have taken the place of class-privileges of former times and they preserve economic inequality with equal effect. Theoretically, that is politically, we all have the same right to become rich, but how could the wage system be maintained without a poor class? In practice, the conditions are those of a lottery, in which everyone taking a chance may win, but in which the gains of the winners are made up of the losses of the losers.

There is a conflict between theory and practice. Economic conditions make the exercise of political freedom and equality, principally in matters of contract, impossible to a certain class of citizens. Whether a right does not exist, or cannot practically be used, the effect is the same. But how do our jurists get out of the dilemma? By the fiction that, if one does what he would prefer not to do, were he not by circumstances compelled to do it, his action is nevertheless that of his own free will. They insist upon the existence of equality and the absence of classes, because the law grants no privileges.

It is one of the characteristics of our economic system that, working only through the effect of conditions. and not through express legal enactments, its modus. operandi is so difficult to understand. The relations of the slave to his master and of the serf to his lord, are so simple and transparent that their effect can be comprehended without trouble. The relation of the wageworker, however, who apparently receives for his work all that it seems to be worth, and yet remains poor, while the purchaser of his labor is in a condition to grow rich and frequently does grow rich, is quite a complicated

matter which requires a great deal of study for its understanding. Hence the difficulty of comprehending the source of the capitalist's power and the slowness of movements for economic reforms.

References to such movements are frequently brushed aside with a wave of the hand and the careless remark that there have been always rich and poor, and that there always will be such. Of course, it is unnecessary to say that the fact that a thing was, is no proof that it will be. The poverty of the laborer of former periods was the direct result of the force of law and only the indirect result of the force of conditions, while his poverty at present is the direct result of the force of conditions and only the indirect result of the force of law.

Wealth is created by production. This requires no explanation. But the distribution of wealth is not regulated by production but by the manipulation of the products, which in itself creates nothing. If I have lumber of the value of five dollars and make out of that lumber a table worth twenty dollars, I have by my labor produced a value of fifteen dollars. The general stock of products, the wealth existing, has been increased by so much. Now, if somebody gives me twenty dollars for the table and afterwards sells it for twenty-five dollars, no new wealth has been produced by that process; there are neither more tables in the world, nor more money; yet somebody 'has five dollars more than he had before. The table may be sold a second time and bring thirty dollars, and again somebody has five dollars more than he had before, although there are neither more tables nor more money in the world. Of course, I know that a pseudo science explains that value is added to the table by bringing it nearer to the consumer, but this is