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tive man is for law, definite, concise law. He even argued
that it is more important that the law be definite and concise
than that it be just, though both are of very great importance.
It is probable that a system of laws which are well understood
because they are clear and concise, and which are regularly
enforced without variation or favoritism, even though they are
in some respects unjust, is better for a people than a system
of laws which are in essence just, but which are not clearly
understood and not regularly and impartially enforced ; but of
course it would be still better if they were both just, on the
one hand, and clear, concise, and regularly enforced, on the
other. When everyone knows definitely what the law is, and
knows definitely that it will be enforced not only against him
but equally in his defense, he at least knows what he can
count upon. Nothing so discourages industry and enterprise
as uncertainty as to what other men are likely to do, and
uncertainty as to the enforcement of law contributes to that
uncertainty as to what other men are likely to do.

The problem as to what the government can do, through its
laws and its administration, for the promotion of the economic
prosperity of the people, is of the very greatest importance.
The specific aim should be to call out the very best and most
productive efforts of every individual. Since the greatest re-
source of any nation is the productive energy of the people

1 Physics and Politics, fifth edition, p. 21. London, 1879.
5



LAW AND GOVERNMENT 51

themselves, it follows that the conservation and development
of that productive energy is the most constructive policy that
any government can pursue. It also follows that the worst
form of waste that any government could permit or encourage
would be the waste of the productive energy of the people.

The repression of destructive and deceptive action. The first
and most obvious thing which the government must do is to
prohibit and prevent all the destructive and deceptive forms
of conflict as outlined at the beginning of the last chapter.
It is of the utmost importance that this shall be accomplished ;
and, what is equally important in determining the duty of the
government, law and government are the only agencies which
can accomplish it. He who has no moral scruples against pur-
suing his selfish interests by destructive or deceptive methods
can be restrained only by the superior force of the many as
it is exercised through the government. If he is allowed to
pursue his selfish interests by these methods, he not only
wastes his own powers in unproductive efforts but also tends
to destroy the products of other people ; and, what is more
important, he discourages them from further productive effort,
and thus causes their productive powers to go to waste. It may
therefore be said that, whatever other functions government
may have, its primary function is to repress the destructive
and deceptive methods of pursuing self-interest.

The first effect of this repression of the destructive and
deceptive methods is to transform the struggle for self-interest
from the brutal struggle for existence, where the strong prey
upon the weak and the ferocious upon the gentle, into a
struggle wherein the persuasive and the productive triumph
over the unpersuasive and the unproductive. If it were possible
(and it probably is) to carry this repression still farther, and
not only to eliminate all destruction and deception but also
to eliminate from persuasion all demagogy, all appeal to passion,
everything in fact except the appeal to reason and justice, then
it would be literally true that reason would everywhere triumph



52 PRINCIPLES OF POLITICAL ECONOMY

over unreason, justice over injustice, usefulness over useless-
ness, and productiveness over unproductiveness. Under such
a government each and every one would succeed in getting
what he wanted in exact proportion as he contributed to others
what they wanted ; the most useful would be the most success-
ful, and the indispensable man would be the great man. In
that situation we should have a literal fulfillment of the words,
" Whosoever will be chief among you, let him be your serv-
ant." And a servant is not necessarily one who comes at your
beck and call to do your bidding ; he may be merely the one
who does you a service or who produces what you need.

Nothing could be more favorable to the prosperity of a
nation than a general following of such a rule. If we could
conceive of a nation in which no one could gain anything
except by producing an equivalent or by contributing an equal
amount to the prosperity of someone else, then the more
ardently everyone strove to better his own condition, the more
ardently would he be striving to better the condition of some-
one else, driven thereto not by benevolence or philanthropy,
but by self-interest. Then the more people there were striving
to acquire wealth, the more there would be striving to produce
it ; and the more ardently they desired to acquire it, the more
ardently they would labor to produce it. Such a nation would
certainly prosper out of all proportion to a nation in which
destructive and deceptive methods were practiced by a large
proportion of its people.

Two ways of promoting the productive life. There are
two conceiveable methods by which such an ideal might be
realized. One is such a perfection of the moral nature of
every person in the nation as to make him unwilling to gain
anything without producing it or its equivalent or rendering
a service of equivalent value. The other is such perfection of
law and government as to make it impossible for anyone, how-
ever much he desired to do so, to gain anything without pro-
ducing it or its equivalent or rendering an equivalent service.



LAW AND GOVERNMENT 53

In neither case would it be necessary for men to cease caring
more for themselves and their own families and neighbors
than for other men and their families and neighbors. In
neither case would it be necessary to do away with competition,
or the struggle for individual gain. It would only be neces-
sary so to hedge men about, either by moral restraints or by
positive laws, as to compel them to compete fairly, always
giving an equivalent for everything they get.

It must not be hastily assumed that the repression by the
government of the destructive and deceptive methods of acquir-
ing possession of desirable things is merely negative work.
By this kind of repression every producer is protected in the
possession and enjoyment of the fruits of his own productive
effort. Knowing that he will enjoy the full advantage of his
own industry, enterprise, and foresight, he will have the strong-
est kind of motive for exercising these virtues to their full
capacity. This lets loose the productive energy of the people
in a way which would be impossible without the protection of
law and government. The people can be trusted to take the
initiative and start all sorts of productive enterprises if they
are thus safeguarded. There is nothing any more positive and
constructive than the free spirit of a vigorous race of people
when they are left to direct themselves in the field of produc-
tion but are restrained from entering the fields of destruction
and deception. They can safely be intrusted with the task of
looking after themselves if those who are criminally inclined
can be prevented from interfering with them. Give the people
confidence in the justice and efficiency of the government and
in one another, and their own productive virtues will develop,
their industrial power will multiply itself, and the prosperity
and power of the nation will be assured.

Confidence and economy. Confidence is one of the greatest
of all economizers of human energy. Its greatest value is not
in the stability which it brings to the financial market, though
that is very important. It is found rather in the unshackling



54 PRINCIPLES OF POLITICAL ECONOMY

of enterprise which results from confidence in the government
and in one's neighbors and fellow citizens. The average
citizen has more points of contact with his neighbors, his
associates in business, and his fellow citizens than with the
government or the financial market. The sum total of his
dealings with his fellows exceeds that of his dealings with both
the government and the financial market. It is in these
numerous points of contact, and in the vast sum of these deal-
ings of man with man, that confidence produces its greatest
economies, and its lack the greatest waste.

Professor E. A. Ross, in his book entitled " The Changing
Chinese," mentions certain bad neighborhoods in China where
the farmer must guard his rice field every night to keep his
crop from being destroyed or stolen. The energy that is
wasted when so many people stay awake every night must be
stupendous, but this waste is a trifling matter compared with
the discouragement and lack of enterprise which result from
the feeling of uncertainty which such lawless conditions beget.
Unless we have at some time been confronted by the same
situation, we can hardly realize how much energy we save by
being able to sleep at night in confidence that the products
of our labor will not disappear before morning.

Before we expend too much sympathy on those Chinese
farmers, we should consider the condition of the fruit growers,
gardeners, and farmers in the neighborhood of some of our
large towns. Unless one is very favorably situated with respect
to police protection, one is frequently compelled to keep a
watchman or else to expose the entire produce of his toil to
the depredations of town marauders. Even though these
marauders are generally thoughtless rather than vicious, their
work is just as expensive to the producer as though they were
degenerate criminals. They occasion the same economic waste
and discouragement ; they therefore detract just as much from
the national efficiency and add just as much to the cost of the
necessaries of life for all classes, the very poor as well as



LAW AND GOVERNMENT 55

the very rich. Their depredations are especially disastrous to
the family garden, where the owner cannot afford to hire a
watchman and is himself engaged in other work which makes
it necessary for him to sleep at night.

Observance of law a patriotic duty. There are three reasons
for choosing the orchardist and the gardener as examples of
producers who gain through a government and a community
in which they can have confidence, and lose through a govern-
ment and a community in which they can have no confidence.
In the first place, it is so obvious that it does not have to be
proved, that these men are producers who contribute certain
vital necessities to the prosperity and well-being of the whole
community, and that the community gains when they are
successful and suffers when they are unsuccessful. In the
second place, certain young persons who read this book may
know something at first hand about the troubles and dis-
couragements which those producers have. In the third place,
it ought to be easy for the average person to understand that
any act of his which makes it uncertain as to whether or
not the producer will reap certain rewards of his labor is
an injury not only to the producer but to the consumer and
to the whole nation as well, and that, in consequence, the
observance of law and the preservation of order are as truly
patriotic duties as fighting the battles of one's country.

Standardization and economy. Aside from police protection
there are certain other important functions which law and
government can perform better than private individuals or
voluntary groups of individuals. t One of the most important
of these is the standardizing of coins, weights, and measures.
Whatever differences of opinion may exist with respect to
other functions of government, little is said or to be said
against coining money and fixing the standards of weights
and measures. 1 Though these two functions are grouped

1 See the author's articles on " Standardization in Marketing," Quarterly
fotimal of Economics, February, 1917.



56 PRINCIPLES OF POLITICAL ECONOMY

together in the same clause of our federal constitution, it is
doubtful if it is generally understood what a close connection
there is between them. Both result in great economy of effort
in the transfer of goods. The economy involved in transfer-
ring coined money instead of uncoined metal is apparent. Coin-
ing the metal by a reliable and responsible government merely
gives the public confidence in its weight and fineness. When
it is once coined, it is enabled to pass from hand to hand
without the labor of inspection on the part of everyone who
receives it. Otherwise the receiver would always have to weigh
it to determine its quantity and test it to determine its quality.
When it is coined it " sells " (if we may speak of selling money)
on grade and reputation rather than on inspection. Confidence
is what makes it sell on grade and reputation ; lack of con-
fidence would necessitate inspection, that is, weighing and
testing, which would be very wasteful of time and labor.

By the process of standardization any other commodity may
also sell on grade and reputation rather than on inspection.
This also would be economical and, as in the case of coin,
would be a result of confidence. All civilized governments
have done something toward standardization and the establish-
ment of confidence by fixing uniform standards for deter-
mining quantity ; that is, by fixing standards of weights and
measures. In proportion as these standards are fixed and
enforced by law we save time and energy in transferring
goods. If it were possible to go farther and both fix and
enforce standards of quality as well as of quantity, still greater
economies would be effected.

Individuals and firms have frequently succeeded in standard-
izing their goods, both as to quantity and as to quality, so
effectively that buyers can buy on grade and reputation rather
than on inspection. Whenever individuals or firms succeed
in inspiring such a degree of confidence, it generally increases
the salability of their goods. It saves the purchaser some
time and trouble, and he is usually willing to pay something



LAW AND GOVERNMENT 57

for that saving. Only the government, however, can enforce
uniform standards among all producers and all dealers.

Not the least of the advantages of a minute division of
labor 1 is the fact that each individual can avoid the necessity
of being expert in many things, and therefore has time to
become a specialist in one thing. One of the advantages of
standardizing commodities is that the average consumer can
save himself the trouble of being an expert buyer or an expert
judge of the many things which he has to purchase. If he
has confidence not only in the weights and measures but also
in the government which standardizes and the seller who
uses them, and if he has the same degree of confidence in
the alleged quality of the goods offered for sale, he may make
his purchases with very little expenditure of time and strength
and save his time and strength for his own special work.

The enforcement of contracts and agreements is another
way of creating confidence, and, through the creation of con-
fidence, of economizing energy and encouraging production.
Where men commonly regard contracts as scraps of paper, and
do not solemnly and completely fulfill them, and where law
and government fail to compel their literal fulfillment, there
would, of course, be great difficulty in working together in
productive enterprises.

The exercise of authority. It is clear, therefore, that one
very important function of government is to create that state
of confidence which results in economy, and to create it, first,
by repressing destruction and deception through the police
power of the state, second, by standardizing products, and,
third, by enforcing contracts. These tasks, which are neces-
sary in the interest of the highest economy, are thrown upon
the government because no other agency is in a position to
perform them. They call for the exercise of authority, backed
up by physical force, and that is a work which can be intrusted
to no private agency.

1 See Chapter XI, The Division of Labor.



58 PRINCIPLES OF POLITICAL ECONOMY

We need not limit the functions of government, however,
to those requiring the exercise of authority, though usually
it will be found that the government is best fitted to perform
those which require some degree of authority, whereas private
individuals and organizations can usually be intrusted with
those enterprises which can be carried out wholly on the basis
of free contract. This distinction is not always clear, but a
little careful study will usually reveal the fact that there is an
element of compulsion in those enterprises which the govern-
ment carries on most successfully. The maintenance of light-
houses will serve as an illustration. If a private company were
to maintain lighthouses, its product, light, would be difficult
to sell. The light would shine for all who came within its
reach, and the shipowner who refused to pay for it would
get the same advantage as the one who paid his share. All
who get the benefit should be compelled to pay a share of
the cost, either in the form of taxation or in some other form.
This requires a power of compulsion which the government
alone possesses.

Even in the case of the post office, as it is thought best to
run it, there is an element. of compulsion. Many local post
offices are maintained at a loss, since there is not local busi-
ness enough to pay expenses. Under private management
these local offices would be closed, unless the people of the
neighborhood would voluntarily pay enough postage to cover
expenses, or unless larger communities would voluntarily pay
enough surplus to cover the losses on the smaller offices. It
is deemed expedient to establish a uniform rate, regardless of
differences in the cost of service. Some people are therefore
compelled to pay more than the cost of the service which they
receive, in order that others may get their service for less
than it costs. No one complains of this, but it is apparent
that it could not be carried on in this way on the basis of
free contract. Some degree of compulsion is necessary in
order to compel some people in some localities to pay higher



LAW AND GOVERNMENT 59

rates than are necessary, higher than they would have to
pay if they were permitted to patronize private postal carriers.
The good of the whole country seems to demand that this
be done. The government alone can exercise the necessary
authority, since it is sometimes thought best even to compel
the people to pay in the form of taxes enough to cover the
losses on the postal business.

However, we need not hold to any hard-and-fast definition
of the functions of the government. It is sufficient to say that
anything is a proper task for the government if there is rea-
sonable ground for believing that the government can do it
better and more economically than private enterprise can rea-
sonably be expected to do it. That reasonable ground exists
in favor of government enterprise whenever authority or com-
pulsion is necessary to its successful accomplishment. When
there is no need whatever for compulsion (that is, when every
part of the work, including the selling of the product, can be
conducted on the voluntary basis of free contract), the general
tendency is to leave the task to private enterprise.

Beneficent uses of power. There is a wide difference, how-
ever, between using force to compel a man to do something
which he has voluntarily contracted to do and using it to com-
pel him to do something which he has never agreed to do and
would prefer not to do. As a matter of observation it will be
found that most if not all of the things which the government
is able to do well involve some element of compulsion of the
latter kind. Public education will serve as an example. Wher-
ever it is a success, there is either compulsory attendance or
compulsory payment, or a combination of both. In the lower
grades of our public-school system we have both. In the
higher grades and in our state colleges and universities we
have compulsory payment ; that is, the taxing power of the
government is used to procure the means for the payment of
expenses. Both compulsory attendance upon the lower grades
and compulsory support of all grades are beneficent uses of



60 PRINCIPLES OF POLITICAL ECONOMY

the power of the government over the individual ; but it must
be remembered that it is the use of power. There is no reason
for believing that a government school on a purely voluntary
basis would be superior to a private school ; that is to say, if
both attendance and payment were voluntary on the part of
individuals, it is difficult to see how it could be more successfully
managed by the government than by some private agency.

That which is true of public education appears to be true
of every other enterprise upon which it would be possible
for the government to enter. The government has no advan-
tage over a private individual or a voluntary association of
individuals except in the use of force or compulsion. That
is to say, any enterprise which can be carried on on a purely
voluntary and contractual basis, without any use of compul-
sion except in the enforcement of contracts which are them-
selves voluntarily entered into, can probably be fully as well
managed by private individuals and associations as by the gov-
ernment ; but if any degree of compulsion is necessary in
order to insure its success, it becomes a fit subject for gov-
ernment enterprise. There is undoubtedly a large field for
the beneficent exercise of compulsion. There is also a large
field where freedom and voluntary agreements are better than
compulsion. If we can locate the limits of the beneficent
exercise of force, we shall have located the limits to the
beneficent exercise of government enterprise.

Human interests sometimes in conflict and sometimes in
harmony. In a previous chapter it was pointed out that
human interests are frequently in conflict with one another.
They are also frequently in harmony with one another. Where
they are in conflict, that is, where one man's interest conflicts
with that of someone else, there is likely to be trouble.
Only three things can prevent uneconomic, that is to say,
either destructive or deceptive, conflict. The first is the vol-
untary submission of the weaker man through fear. That
results in despotism. The second is such moral self-restraint



LAW AND GOVERNMENT 6l

on the part of one or both as will prevent a quarrel. Willing-
ness to give up not only one's coat but one's cloak also
would preserve peace. The third is a strong and effective
umpire who will promptly decide the case and enforce his
decision upon both parties to the conflict. This umpire is
the government.

It will generally be agreed, except by extreme anarchists,
that wherever human interests come in conflict, a strong um-
pire of some kind will be necessary until men are so self-
restrained by their morals or their religion as to govern
themselves. Without such self-restraint the conflict of inter-
ests will result in the wasting of human life and energy by
destructive combats, fights, and duels, unless there is a govern-
ment at hand to settle the difference and send the disputants
about their business.

Government control unnecessary where human interests are
in harmony. But human interests are sometimes harmonious.
When this is the case, the individual who pursues his own
interest is also promoting the interest of others. Within this
field where interests are in harmony it is true, as Adam Smith
said long ago, that we are sometimes led as by an invisible hand
to promote the public interest while trying to promote our
own. 1 It is to the interest of the farmer to grow good crops ;
it is likewise to the interest of the public to have him do
so. In this and a vast multitude of other cases the individual
needs no compulsion to lead him to promote the public good.
In all such cases it seems to work better in the long run
to leave the individual very much to himself. The wise
government will generally keep its hands off.

1 He generally, indeed, neither intends to promote the public interest, nor
knows how much he is promoting it. ... By directing [his] industry in such a
manner as its produce maybe of greatest value, he intends only his own gain,



Online LibraryThomas Nixon CarverPrinciples of political economy → online text (page 5 of 48)