Capital: What It Is and What It Is Not.

Dear Mr. Tucker,— Your comments on my letter in a recent issue call for some response, as it is clear you have not yet got full possesion of the idea you characterise as “unmitigated bosh based on pure chimera.”

Let us pass over the first four and the seventh of your points, for a while, and consider the fifth and the sixth.

You say: “We quite agree with Mr. Smart that ‘accumulated thought and experience are capital,’ but we utterly fail to see why ’things that perish almost as fast as they are produced are not capital!’”

I am glad you admit that “accumulated thought and experience are capital.” You admit, then, that capital is not necessarily material. And you will admit, consequently, that thought and experience (knowledge) — being capital, and being productive — are a force; that, when combined with the simple action of brain and muscle (a purely natural force), they aid the latter, labor, in production. Good!

Now, let us suppose an untutored savage in the wilds of Africa or Australia, who knows just enough to break off a cudgel in the forest to defend himself with or to knock down an animal for food; suppose him carried into civilised lift and taught some useful art by which he can supply himself with previously undreamed-of comforts,— all his capacities developed. From being merely a natural element or organism, possessing dormant or undeveloped capacities and wants, he has now, combined with these, capital, and has become a civilized Man.

Thus far you will agree with me.

Now, let us suppose a piece of uncultivated land in the midst of a jungle, remote from civilization, possessing all kinds of capacity for animal, vegetable, and mineral production, but yielding nothing valuable; suppose a railroad taken in there, axes, ploughs,— in short, all the appliances of civilization. The land will be cleared and fenced and cultivated, and will soon be smiling with abundant crops. From being merely a natural element or organism, possessing dormant or undeveloped capacities and wants, it has now, combined with these, capital, and has become a civilized piece of land,— a farm, or a mine, or a garden.

Now, what difference is there between the two cases? In the one case we have a human savage converted into a civilized man; in the other a land savage converted into a civilized farm.

If the culture invested in the Man is capital, as you admit, why is not the culture invested in Land capital in just the same sense?

And is it not just as proper — or rather, just as improper — to call the material organism, Man, capital, as it is to call the material organism, Land, capital? or any other natural elementary substance, such as wood, stone, coal, or iron; or any animal creature?

Do you not see my meaning? That the productive property or potentiality possessed by any material substance — animate or inanimate — is invested in it, precisely as it is invested in a man’s brain, and is of precisely the same kind. It is capital in the only correct sense of the word; it is stored-up labor in a higher sense than that of the political economists; and neither the man himself, nor the creatures he has civilized, nor the land or things he has civilized are capital.

Have I made this point clear?

As my letter is already long enough for your space, and as I do not wish to confuse this primary question with the other questions included in our discussion, I will leave them for the present.

We are discussing a vital principle,— the corner-stone of Socialism.

W. G. H. Smart.

[Nothing but the above letter was needed to clinch our statement that Mr. Smart’s socialism is an incoherent structure. We print it because we do not wish to be in the least unfair, but we really have not the patience to follow the writer in his absurd hypotheses and indiscriminate analogies. For instance, his statement that “the productive property or potentiality possessed by any material substance” alone is capital, when he has previously supposed no capital to be contained in “a piece of uncultivated land possessing all kinds of capacity for animal, vegetable, and mineral production;” or, his identification of “productive property or potentiality with “stored-up labor,” as if there was no such thing an a natural productive force independent of labor; or, his confusion of man with capital, as if the word capital had not been set apart, in contradistinction to labor, to denote all productive forces and aids to productive forces outside of the laborer, man, and for the express purpose of affording a convenient terminology to be used in discussing the relation of man to wealth; or, finally, his starting out to explain to us why “things that perish almost as fast as they are produced are not capital,” and then making it the conclusion of his letter that capital is stored-up labor and that “neither man himself, nor the creatures he has civilised, nor the land or things he has civilized are capital.” Upon which Mr. Smart asks us if we see his meaning. Well, we frankly confess that we do not, unless he means that men and animals and land are “things that perish almost as fast as they are produced.” But it is useless to ask you, Mr. Smart, what you mean. You probably think that you mean a great deal, but as a matter of fact you do not mean anything at all. You have not the faintest idea of the nature of capital. The A B C of political economy is unfamiliar to you. You have long been an earnest student of the industrial question; you have thoroughly acquainted yourself with many important phases of it; you are constantly saying many good and true and useful things about it; but you have never yet planted yourself upon an intelligible basis, and that is why nobody can ever understand Mr. Smart. — Editor Liberty.]

Capital: What it is and What it is Not.

DEAR MR. TUCKER:  — I have no desire whatsoever to obtrude myself into your controversy with Mr. Babcock, but I cannot help wishing to say a word or two about Bastiat's plane story, which you quote from Ruskin with his own remarks regarding it.

The story itself is, of course, nothing but an economical conundrum; and it would have no point whatever, were it not for the absurd property system which makes it necessary for our "William" to borrow planes and other instrumentalities of labor from our "Jameses." (1)

Mr. Ruskin himself only uses the illustration to ignore it as at all explanatory of the principle of interest (2); and, were it not for the first part of the article that you quote from him, I should derive some hope, from his last sentence, that he has a glimmering idea of the true nature of capital.

He says: "There are, indeed, very many subtle conditions involved in any sale; one among which is the value of ideas,... (the article is not one which modern political economists have any familiarity with dealings in;)" &c. (3)

The point I wish to make relates to his supposition of the, practically, total destruction of "capital" (4), in the passage in the beginning that I have referred to.

He says: "If all the money of all the capitalists in the whole world were destroyed; the notes and bills burnt, the gold irrecoverably buried, and all the machines and apparatus of manufacture crushed, by a mistake in signals, in one catastrophe; and nothing remained but the land, with its animals and vegetables, and buildings for shelter," — well, what then? Why, he says: "the poorer population would be very little worse off than they are this very instant... it is only we who had the capital who would suffer."

I must not ask for space to quote his description of the conditions of the two classes — laborer and capitalist — under the supposed — catastrophe. (The word calamity would not be appropriate to such and event, for, in my opinion, it would be anything but a calamity in its general results.)

Now, it is quite evident to me that Mr. Ruskin, when he wrote those words, has not a correct idea — and I doubt if he has to-day — of the misapplication he was making of the term "capital" And yet the very results which he was partially right in imagining would occur from the catastrophe ought to have taught him that, were all these things which he erroneously called "capital" suddenly destroyed, capital, real capital, would still remain, comparatively unimpaired!

Things that perish almost as fast as they are produced are not capital.

The accumulated and developed thought and experience of the race alone are capital. (5)

It is this thought and experience embodied in material forms that are really that property of "wealth" which makes it an invaluable aid to labor, and which renders wealth, in any other than its private (6) use, a privilege as dangerous to society and to Liberty as we all see it to be.

But the value of capital, embodied in these material forms, is as nothing compared with its value in the form of knowledge stored up in men's minds, and reaching to their fingers' ends. This was the portion of capital that Mr. Ruskin left out of the account (7) in the above supposition, and it would exist in all classes of men in about the same proportions as it does to-day. So that, in the case supposed, Mr. Ruskin would not "starve," for learned teachers like him would be wanted just as much, and, I may add, would be highly appreciated, and command greater influence. But I am encroaching.

[For convenience of comment under Mr. Smart's letter, we have inserted in it parenthetical figures at the points which it is our intention to consider.]

(1.) We made practically the same statement in the following issue of Liberty in these words: "Those who would have the userer rewarded for rendering a service always find it convenient to forget that the userer's victim would not need his service were it not that the laws made at his bidding prevent them from saving themselves." "Apex," one of our valued correspondents, elaborates the same important point in a litter printed in the present issue.

(2.) Not at all! Mr. Ruskin accepts the illustration as explanatory of the principle of interest, and alters only the language in which it is couched, so simplifying and abridging it as to bring the atrocity of that principle more clearly into view.

(3.) In our view Mr. Smart misconceived Mr. Ruskin's meaning in using the phrase, "value of ideas;" though it must be confessed that his meaning seems rather vague. That he had clear meaning, however, need not be doubted.

(4.) Mr. Ruskin makes no such supposition. He supposed the destruction of what is ordinarily called capital — that is, money and machines, — and shows that in that event, the laborers would immediately by the exercise of their wits, — that is, the really important part of their capital, — manufacture new machines and proceed as before. In saying this he should have Mr. Smart's applause (he certainly has ours), for he calls attention to Mr. Smart's pet idea, that capitalistic nature of accumulated thought and experience.

(5.) We quite agree with Mr. Smart that "accumulated thought and experience are capital," but we utterly fail to see why "things that perish almost as fast as they are produced are not capital." Any product that lasts any time at all and is capable of use as an aid to reproduction is capital.

(6.) Mr. Smart's distinction between social and private wealth, calling the former capital to be held in common and the latter personal property to be held by individuals, lies well towards the bottom of his philosophy, but nevertheless is unmitigated bosh based on pure chimera. All wealth is social wealth; all wealth is private wealth. Capital is product, and product is capital. And to the producer belongs product and capital. In the words of Proudhon, "we produce to consume and consume to produce." A man's coat is capital as truly as a steam-engine. The food that we eat is capital; the clothing that we wear is capital; the picture that we feast our eyes upon, provided they are well executed and teach ennobling lessons, are capital. And in just the same sense and for the same reason, — namely that they aid in reproduction, — the spade and the axe and lathe are capital. And any man may own one as well as the other, but neither unless he earns it. And wealth that is earned, whether by labor of brain or labor of muscle, is never a privilege, and cannot, per se, injure either society or Liberty. To be logical, Mr. Smart must either stand for unqualified communism and deny individual possession altogether, or stand for unqualified Liberty and claim for each and every individual the possession of his product or an equivalent of it. His so-called socialism is a hybrid philosophy, incoherent in its structure and unreal in its elements.

(7.) As we indicated above, Mr. Ruskin, instead of leaving this portion of capital out of account, wrote this paragraph in question expressly to emphasize the importance of taking it into account.

Mr. Smart's letter ought to have appeared more promptly, but the character of our reply will probably convince him that the delay was due to no disinclination to grapple with his criticisms. — [EDITOR LIBERTY.]

A Welcome and a Warning.

DEAR MR. TUCKER, - I am very much obliged with Liberty. I can give it no higher praise than to say it is as good, and no better than, I expected from you. Barring the doctrine it teaches, - some of them, - I have not a criticism to make nor an improvement to suggest. The "heading" - a point about which I claim to be a judge - is striking and artistic, and you are quite right in calling it "a real work of art." I am glad you have chosen the word "L i b e r t y" - with every letter standing alone - for your title; it is decidedly suggestive of "individual sovereignty." By the way, one criticism: why have you connected the letters of the word at the head of the second page? You ought not to be inconsistent. You believe that every man - and woman too - can stand alone, and that he or she ought to be let to stand alone. You don't want any social ties or guarantees. Though I should think that the very pronouns "he" and "she" ought to convince you that the two sexes cannot stand alone. And if the two sexes cannot be independent of each other, much less can they, individually or collectively, be independent of that large entity we call "society."

I welcome your paper with congratulations and sincerity. At last we have a frank, honest, outspoken, and aggressive advocate of egoistic liberty. Now we shall know what "An-archism" (with or without the hyphen, and in the truest sense of the word) means. You have thrown down your gauntlet in the face of society, including Mrs. Grundy and Mr. Grundy and all the little Grundys. And you have thrown it down especially in the face of the Socialists. That is good. We shall not be slow in taking it up. Socialists of all kinds - and you know there are many kinds - will go for you. They will neither ask nor give quarter. It is true, we have a common enemy. Our great battle is not with each other, but with the gross tyranny called - falsely - "society" to-day. But I recognize that we have to whip you, "body, soul, and breeches," before we shall be fairly ready to show an unbroken front to our and your more powerful enemy.

In your first number you have defined the State. You have made of it a great Tyrant. We will show you an individual that is composed of all individuals; an individual that is indivisible, immortal, and supreme.

But I must stop. You have hoisted the banner of Egoistic Liberty. You spell the word with disconnected letters. It means An-archy.

We will meet you with the flag of "Freedom," and we will write the word with a running hand. It will be Social Freedom - Society.

Au revoir W.G.H. SMART
Mattapan, Mass., Aug. 9, 1881.