of leisure, as of income, it may be laid down that the ideal distribution is according to the capacity of individuals to make a good use of it. From which it follows that, other things being equal, both an increase in leisure and a decrease in the inequality of its distribution will increase economic welfare. $5. The comparative importance of a further increase in production, of a diminution in the inequality of incomes, of a diminution in the subjective cost involved in production, and of a diminution in the inequality of subjective cost borne by different individuals, will vary in different stages of a community's economic development and will always depend to some extent upon individual opinion.1 In even the wealthiest communities a considerable increase in productive power is still necessary before a point will be reached, at which an approximately equal distribution of income and a large general reduction of subjective costs will provide, according to modern standards, a reasonably high level of economic welfare. For a while, though not, we may hope, for ever, a serious check to production would be a high price to pay for an improvement in the other main factors of economic welfare. This consideration makes it all the more important to discover methods of improvement in these other factors, which shall actually stimulate production.3 1 Compare Marshall, Industry and Trade, p. 659, and the problem as stated by Robertson, Industrial Fluctuation, pp. 253-4. * Compare Dr. Stamp's pre-war estimates of The Wealth and Income of the Chief Powers, (Journal of the Royal Statistical Society, July, 1919). Mr. Keynes, (Economic Consequences of the Peace, pp. 16 ff), argues that inequality was a dominant cause of accumulation during the nineteenth and early twentieth century. This no doubt is true, though it seems an obvious exaggeration to say that during this period "Europe was so organised as to secure the maximum accumulation of capital." (p. 16). But the circumstances of the future are likely to differ markedly from those of the past and the problem of diminishing inequality, without diminishing production, will need a solution appropriate to the changed circumstances. The development of the habit of collective, as distinct from individual, saving will be a necessary §6. It remains to notice that among certain sections of the workers in modern communities, there is growing up, alongside of the resentment at the contrasts of wealth and poverty, referred to in the last chapter, a resentment at the contrasts of economic function which are found in the modern industrial system.1 Objection is taken, not only to the fact that large numbers of workers receive a comparatively small share of the total product of industry, but also to the fact that they exercise comparatively little control over the management of the industries, in which they are employed. These two objections are sometimes combined in the objection, not indeed very happily phrased, to werking" in order to make unlimited profits for private capitalists." Of this resentment at contrasts of economic function Mr. Justice Sankey in the Second Report of the Coal Commission of 1919 wrote, "half a century of education has produced in the workers of the coalfields far more than a desire for the material advantages of higher wages and shorter hours. They have now, in many cases and to an ever increasing extent, a higher ambition of taking their due share and interest in the direction of the industry to the success of which they, too, are contributing."2 And this ambition is not confined to workers in the coalfields. The idea of increased "control of industry" by the workers employed in each industry takes various forms, and has been worked out in various ways. It is one of the dynamic ideas of this generation, and raises important issues, in relation both to economic and to non-economic welfare. No modern student of economic science can afford to neglect it. But it does not fall within the scope of this book. It has been claimed by enthusiastic condition of the successful abandonment of the capitalist system. Compare Part IV., Chapter X. below. 1 Compare de Maeztu, Authority, Liberty and Function, pp. 197-199 2 Report p. 11. advocates of this idea that" the question of poverty has now given place to the question of status," but this is an exaggeration. The problem of poverty will continue to exercise men's thoughts, as long as the fact of poverty remains a reality, and the idea of a more equal distribution of an increasing income obtained with diminishing effort will not easily be surpassed in practical importance or in vividness of appeal to modern minds. CHAPTER III JUSTICE AND THE INEQUALITY OF INCOMES §1. In the last chapter the inequality of incomes was considered in relation to economic welfare. In this chapter it will be considered in relation to the idea of justice. This division corresponds to Professor Cannan's distinction between considerations of economy and considerations of equity.1 The conception of justice has been the subject of agelong dispute, and the statement of ideals, and especially of economic ideals, in terms of justice seldom leads to clear practical conclusions. More often it leads to moral indignation without reflection, to the enthusiastic assertion of inconsistencies, or to such absurd bravado as that of the old Roman who cried "fiat justitia, ruat cœlum!"— "let justice be done, though it should bring down the sky upon our heads " But if the sky had fallen and had proved as heavy as the physicists of those days imagined it to be, just and unjust Romans would have been overwhelmed together, and the just might plausibly have complained of the injustice of their fate. For the purpose of our present enquiry, it is important to answer two questions. First, how far, if at all, are 1 See, e.g., his History of Local Rates, Chapters VII. and VIII. and his Economic Outlook, pp. 299 ff. 24 Blessed,' it is said, are they that hunger and thirst after justice!' But perhaps it is more easy to hunger and thirst after it than to define precisely what it means." Mackenzie, Manual of Ethics, P. 310. current canons of economic justice regarding the distribution of incomes in conflict with the canons of economic welfare discussed in the last chapter, and second, in so far as there is no such conflict, does the idea of economic justice lead us to any important practical conclusions in addition to those reached in the last chapter? §2. Chapter V. of Mill's Utilitarianism, "On the Connection between Justice and Utility," suggests a clue to the answers we are seeking. "People find it difficult to see in justice," says Mill, "only a particular kind or branch of utility," but in truth justice is no more than a name for certain moral requirements, which, regarded collectively, stand higher in the scale of social utility, and are of more paramount obligation than any others." According to this view, the sphere of justice is included within the sphere of social utility, or, as some would prefer to say, of social welfare. Nothing is just which does not increase welfare, but, out of the aggregate of actions which increase welfare, some, which increase it in a specially high degree, may be classed together as just. Thus Mill distinguishes justice from mere beneficence or generosity. "Justice implies something which it is not only right to do, and wrong not to do, but which some individual person can claim from us as his moral right."s The practical question at issue might, therefore, be restated in this form. What classes of actions which increase welfare may justly be demanded by individuals as their moral rights and, in particular, what public policies which increase welfare may be justly demanded by individuals from society? This view of justice is fatal to the formula "fiat justitia, ruat cœlum," except on the assumption that, if the sky were to fall, welfare would be increased. §3. We may now consider, in the light of their probable 1 Utilitarianism, p. 63. Ibid, p. 95. Ibid, p. 75. |