will in effect cease to be surplus, being completely absorbed in satisfying the human requirements of individuals and society.For not only will it furnish the expenditure required to bring the standard of consumption of all grades of workers up to the level of a full satisfaction of human needs, but it will establish an entirely new conception of public income.For it will be recognised that the public revenue, taken either by taxation or as profits of public industry, is earned by public work precisely as the revenue of individuals is earned by private work, and is required for public consumption just as private income is required for private consumption.
Thus the whole of what now figures as a wasteful 'surplus' would be applied in productive consumption.
The scope of the operation of this organic law, of course, widely transcends this special application to the distribution of economic income.It is the general law of order and of progress in all departments of organic activity.But for our task, that of a human valuation of industry, its worth is supreme.For in the application of the organic law of distribution all the great antagonisms which loom so big as social Problems, Luxury and Poverty, Toil and idleness, The individual and Society, Authority and Liberty, find their solution.9NOTES:
1.Even there he is not separated in physical functions.The sexual, philoprogenitive, and the gregarious instincts, which are rooted in physical structure, negate physical individualism.So does the structure of his brain, which in solitude decays or becomes diseased.
2.The Common-sense of Political Economy , p.698.
3.p.345.
4.Work and Wages , Vol.I, p.14.
5.Professor Pigou ( Wealth and Welfare , p.176), though adopting the general position of marginalism, makes a concession, as to its applicability, which is a virtual admission of its futility.For by showing that only in 'industries of constant returns' are 'supply price' and 'marginal supply price' equal, and that in industries of 'decreasing' or of 'increasing'
returns there exists a tendency to exceed or to fall short of 'the marginal net product yielded in industries in general,' he virtually endorses the criticism that 'marginalism' assumes a statical condition of industry.
For only in a statical condition would all industries be found conforming to constant returns: the operation of increasing or diminishing returns means nothing else than that changes in volume or methods of production are raising or lowering productivity and remuneration above or below the equal level which 'marginalism' desiderates.
6.From the standpoint of the individual business firm 'costs of production'
may include many higher rates of payments, necessary under the actual conditions of competitive industry to secure the use of the required agents.
7.For it must be kept in mind that the 'productive expenditure' to which reference is here made refer ultimately to a standard not of market but of human values.
8.Economists, following the classical distinction made by Adam Smith in the case of land values, may break up the surplus into various species of scarcity rents on the one hand and differential rents on the other.
A scarcity or 'specific' rent will occur when the whole supply of some factor of production, e.g., all the land available for some particular use, or all the capital employed in some trade, is in a position to take a payment higher than is obtainable where more land or capital is available for this particular use than is required to turn out the supply of goods that is actually sold.The worst hop land in use in England obtains a positive rent, the worst equipped ships in the Atlantic combine obtain a surplus-profit:
better acres of hop land, better-equipped ships obtain a differential rent or profit in addition.Both specific gain and differential gain are surplus, and the basis of each is a scarcity of supply and a restraint of competition.
9.For a detailed and more technical defence of the fundamentally important distinction between 'costs' and 'surplus' and for a closer analysis of the sources of 'unproductive surplus,' readers may be referred to the author's earlier work, The Industrial System: an enquiry into earned and unearned income.(Longman's 2nd and revised edition, 1909).
