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35 ous learned societies about the true reading of

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35
ous learned societies about the true reading of the inscription on thestone that Mr. Pickwick found. But that it is much more than a formaldistinction will be apparent when it is considered that upon the differ-ence between the two propositions are built up all the current theories asto the relations of capital and labor; that from it are deduced doctrinesthat, themselves regarded as axiomatic, bound, direct, and govern theablest minds in the discussion of the most momentous questions. For,upon the assumption that wages are drawn directly from capital, and notfrom the product of the labor, is based, not only the doctrine that wagesdepend upon the ratio between capital and labor, but the doctrine that in-dustry is limited by capitalthat capital must be accumulated before la-bor is employed, and labor cannot be employed except as capital is accu-mulated; the doctrine that every increase of capital gives or is capable ofgiving additional employment to industry; the doctrine that the conver-sion of circulating capital into fixed capital lessens the fund applicable tothe maintenance of labor; the doctrine that more laborers can be em-ployed at low than at high wages; the doctrine that capital applied toagriculture will maintain more laborers than if applied to manufactures;the doctrine that profits are high or low as wages are low or high, or thatthey depend upon the cost of the subsistence of laborers; together withsuch paradoxes as that a demand for commodities is not a demand for la-bor, or that certain commodities may be increased in cost by a reductionin wages or diminished in cost by an increase in wages.In short, all the teachings of the current political economy, in thewidest and most important part of its domain are based more or less di-rectly upon the assumption that labor is maintained and paid out of exist-ing capital before the product which constitutes the ultimate object is se-cured. If it be shown that this is an error, and that on the contrary themaintenance and payment of labor do not even temporarily trench oncapital, but are directly drawn from the product of the labor, then all thisvast superstructure is left without support and must fall. And so likewisemust fall the vulgar theories which also have their base in the belief thatthe sum to be distributed in wages is a fixed one, the individual shares inwhich must necessarily be decreased by an increase In the number of la-borers.
The difference between the current theory and the one I advanceis, in fact, similar to that between the mercantile theory of internationalexchanges and that with which Adam Smith supplanted it. Between thetheory that commerce is the exchange of commodities for money, andthe theory that it is the exchange of commodities for commodities, theremay seem no real difference when it is remembered that the adherents ofthe mercantile theory did not assume that money had any other use thanas it could be exchanged for commodities. Yet, in the practical applica-tion of these two theories, there arises all the difference between rigidgovernmental protection and free trade.

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Term
Spring
Professor
King
Tags
Henry George

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