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第47章 Two Theories of Economic Progress(3)

I wish next to examine Mr George's theory of economic progress.Mr George is a disciple of Ricardo,both in his method and his conclusions;he has as great a contempt for facts and verification as Ricardo himself.By this method he succeeds in formulating a law,according to which,in the progress of civilisation,interest and wages will fall together,and rents will rise.Not only is the labourer in a hopeless condition,but the capitalist is equally doomed to a stationary or declining fortune.'Rent,'he says,'depends upon the margin of cultivation,rising as it falls,and falling as it rises.

Interest and wages depend on the margin of cultivation,falling as it falls,and rising as it rises.'The returns which the capitalist obtains for his capital and the labourer for his work depend on the returns from the worst land cultivated;that is,on the quality of land accessible to capital and labour without payment of rent.

Now Mr George's observations are derived from America,and what he has done is to generalise a theory,which is true of some parts of America,but not of old countries.His book seems conclusive enough at first sight.There is little flaw in the reasoning,if we grant the premisses;but there are great flaws in the results when tested by facts.Do interest and wages always rise and fall together?As an historical fact they do not.

Between 1715 and 1760,while rents (according to Professor Rogers)rose but slowly (Arthur Young denies that they rose at all),interest fell,and wages rose.Between 1790 and 1815 rent doubled,interest doubled,wages fell.Between 1846 and 1882 rents have risen,interest has been stationary,wages have risen.

Thus in all these three periods the facts contradict Mr George's theory.Rent indeed has generally risen,but neither profits nor wages have steadily fallen,nor have their variations borne any constant relation to one another.Coming to Mr George's main position,that rent constantly tends to absorb the whole increase of national wealth,how does this look in the light of fact?Does all the increase of wealth,for instance,in the Lancashire cotton manufactures,go simply to raise rents?Evidently not.

Wages have risen owing to improvements in machinery'.and in most cases profits have also risen.We can prove by statistics that in England the capitalists'wealth has increased faster than that of the landowners".for in the assessments to the income-tax there has been a greater increase under Schedule D,which comprises the profits of capitalists and the earnings of professional men,than under Schedule A,which comprises revenues from land.At the same time,Mr George has made out a strong case against private property in land in great towns;but here he has only restated more forcibly what Adam Smith and Mill advocated,when they recommended taxes on ground rents as the least objectionable of all taxes.Under existing conditions the working people in great towns may be said to be taxed in the worst of ways by the bad condition of their houses.An individual or a corporation lets a block of buildings for a term of years;the lessee sublets it,and the sub-lessee again for the third time.Each class is here oppressing the one beneath it,and the lowest unit suffers most.

This is why the problem of the distribution of wealth is sure,in the near future,to take the form of the question,how to house the labourers of our towns.

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