Evening star., 1934-04-29
Continued From First Page.)


short and miserable lives. In Africa
little children are still crippled so
that their broken bodies will not be
worth the slave-hunter's taking. In
India the wretched millions live an
average life of 25 years, and they
work for 20 cents a day. The
Chinese coolie, for IS cents a day,
works as a pack animal until his
veins burst and he dies. In China
baby bodies float down the rivers
to the sea, but no garbage ever
drifts far. Women still do the work
of horses in many parts of the
world.
A Grand Success.
The capitalistic system, as con-
trasted with any other existing in the
past, is a grand success With fair
accuracy you can measure for any
nation the length of life, the standard
of living, the quality of education, the
care of little children and the protec-
tion of women by the per capita horse
power developed by its machines. 1t
is one of the little ironies that the
parlor Communists who fill the air
with talk about the failure of capital
ism-all of them pensioners of the
capitalistic order who would have to
go to work under a Communistic sys-
tem-would not have been born if the
machine age had not been the success
it is.
Conceding the success of the indus
trial system, We must also admit that
it is imperfect. 1t is full of conflict,
hardship, unearned privilege and ILL
requited labor. 1t fails outright in
four major aspects. 1t has not abol-
ished poverty; quarter of our people
lead bleak and squalid lives of poverty
and toll Second, it has not provided
economic security, even for the rich;
the shadows of unemployment and
economic uncertainty lie over all.
Third, it has permitted unrestrained
competition to make distribution OF
wealth that in some respects is in
equitable. Finally, at intervals the
whole system breaks down in grievouS
depressions, spreading misery like
plague.
Remediable Conditions.
It is not the purpose of this article
to discuss poverty, insecurity, in
equitable distribution and depression.
They are all remediable and they can
be and should be cured without de-
stroying the system responsible for
them. We are looking today at one
aspect only of the problems of security
and poverty-the relationship of labor
and capital in this powerful and faulty
economic system.
The essence of the capitaliStic sys-
- hi 0f 10
instruments of production by corpo-
rate enterprise, guided by an incessant
search for profits with the worker
dependent on the capitalist for work
and wage At first glance there is
here a deep conflict of interest, with
the worker at great disadvantage.
Apparently the worker Is helpless, as
he must have employment or starve.
Apparently, also, it is to the employers
interest to keep wages low.
Forces Beyond Control.
In actual fact wages are set by forces
beyond the control of employer or
employe. At any time there is given
amount of land, capital and labor.
These three create joint product and
of this product each receives a share
roughly proportioned to its Importance
in the common enterprise. In Eng
land. where capital and labor are
relatively abundant, rents are high,
wages are fair and the return to capi-
tai is low. In China, where the excess
of labor is extreme and capital is
scarce, the interest rate is Is to 40 per
cent. rents are extortionate and wages
a pauper pittance. In our own coun-
try our land resources are very rich.
labor is not yet overabundant; capital
is, despite the pseudo-economists, fairly
scarce, and the returns to both capital
and labor are the wonder and the envy
of other nations.
Left to themselves, the factors OF
production will adjust themselves SO
that two important results accrue.
First, all the Nations resources Will be
used to the best advantage. Second,
the returns to labor. land and capital
will be in proportion to the contrlou-
ton each makes. Departures from
these natural rates of return mean
injury to society. Let some un-
principled monopoly extract abnormal
profits, and all consumers are hurt.
Raise wages unnaturally by some Vls-
ionary legislation, and capital neces-
sary to production is reduced.
Natural Profits Proper.
So long as we have this capitalistic,
profit-motive economy. the natural
rates of return to capital and labor
are the proper rates. Pinch capital
or labor, and the total product for all
is reduced. If, as may be, the share
poinp TO the private owners of capital
or land seems unduly large, 1t is
economically a grievous wrong to IN
terfere with the natural processes.
The proper method is to let these
shares flow on and then tax them.
Rent cannot be abolished, but the
whole share may be taken from the
landowners in taxes. All the argu-
ments of conservative economists have
failed to make a dent in this funda-
mental proposition of the single
takers, simply becaue it Is sound
economics. -,
The Russian experiment has dis
covered that it canont abolish the
return to capital, and today in Russia
the people are paying for capital
larger share of their total incomes
than the people of America, even If In
the 1uJuT6 lCIu14lo 4AOAAA s~~-~ SS~F
ital will be given to the WorKers.
There is only one way by which any
factor of production can increase its
share in the total product, and that
is by becoming relatively more I'M
portant than the other two. For labor
there are minor ways of doing this,
but only one major way-for the
numbers of the workers to increase
less than the amount Of capital In
creases. The Chinese wage rate Is
simple coeficient of population 10
capital and land. No Fascist revolu-
tion can raise the rs cents a day OF
the italian worker, but drop In the
birth rate will do so in time.
In practice the natural rates OF re-
turn are imperfectly realized. The
endless Embellishments and failures
of the competitive system, occasional
situations that give capital or labor
&1%~ n