Spencer Heath Archive

Item 938

Lengthy pencil drafting by Heath on the theme of social-ized property, or capital, in the same note pad as Items 938-943, subsequently revised and typed by Heath on ring-binder paper. To rescue it from its political meaning, Heath in later writings hyphenated the word ”socialized,” as “social-ized,” and that usage has been followed here and elsewhere. Title supplied.

No date

 

White envelope has items 938-943. Includes 5 pages in paperclip that should be part of item 938.

 

/THE THREE ASPECTS OF CAPITAL/

 

The popular idea of property is primitive. It is thought of as material things. Some are able to think of it as a relationship between an individual and such material things as he holds for himself and excludes others from. Under this definition any man or any other creature who seizes prey or any other thing and excludes others from it makes it his property. But such a conception of property is wholly animal or physical and is therefore without any social connotation or significance. It rests only on the physical relationship between the individual and whatever it is that is regarded as his property or between him and all other individuals, if exclusion can be considered as a relationship.

     In a state of society, in which state men cease to practice self-service by exclusive relationships and adopt the far more productive social technique of obtaining services and goods from each other by the active yet peaceable process of exchange, property is not a relationship to things but a relationship to each other with reference to the employment of things on behalf of others for the purposes of service and exchange. Hence in a society property is social and inclusive and not anti-social or exclusive. It is true that some material things are in process of being consumed by those who own them and not being held or employed for the service of others or in any way contributing to the exchange of services or goods. Such things are property in the primitive sense only, for however they may have been previously owned, they no longer have any social or service significance. The relationship of the owner to them is only physical or physiological and has no social or inclusive-of-others character. It has lost its social significance with its passing out of the system of service by exchange. It has thus become exclusive as regards all others with its becoming inclusive to its possessor and to his interest alone. Moreover, such property, besides lacking all social, service or exchange function or significance, is the least in quantity or amount and the lowest in permanency or duration.

    

     The great bulk of the property in any civilized community, all of the property that is being owned or maintained or in any held for the use of others or for exchange and not for its owners’ own consumption or use is social-ized property. Such property is all being held, operated and manipulated by its owners in the service of others either with a view to itself being exchanged or with a view to some other property or product being brought into a condition for being exchanged. All this social-ized property, technically called capital, is property not because its owners use it in the service or for the use of themselves exclusively but because they engage it inclusively of and for the service and benefit of others. Their ownership therefore is not merely static or possessive or permissive; it is functional, in the sense that it makes possible the devotion of the property to the ends of and to the process of exchange.

All this vast system of social-ized property that is called capital does not exist as an object or end for its own sake or for the sake of the relatively few persons who own and administer it but for the sake and service always of persons beyond.

     The social function, and the sole function, of all capital or social-ized wealth is to serve, either indirectly or directly, the needs and desires of persons other than the present owners. It must, indeed, be engaged by its owners as instruments of service to others. If they fail so to engage it, if they perform no service with it neither directly nor by letting or hiring it out to others they will receive no continuing income, revenue or recompense for their services; there will be no income to be capitalized and hence no capital value. Every single item of this capital property flows forward in the course of exchange until it becomes a ministrant to some individual need or desire or until it takes its place as the means or instrument for preparing or in some way moving many other items forward to the same ends or until it comes directly into the use of persons who have and enjoy the services of the property without having any ownership in the property itself.

     Capital wealth is of three varieties as regards its manner of bringing services and satisfactions to those whom its owners serve. One variety moves forward bodily in the course of exchange, its successive owners each incorporating special kinds of services into it, until it comes to the place and condition where it gains no further value by exchange but, passing out of the exchange system, ceases to be capital and falls bodily into consumers’ hands. This is called moving or flowing capital, inventories, stocks on hand. When it is in condition for its last movement and actual exchange into consumers’ hands it is called, by way of anticipation and somewhat imprecisely, “consumers goods,” meaning that the goods are for retail exchange and to pass presently into consumers’ hands.

     A second great variety of capital goods passes bodily a shorter distance (so to speak) through the exchange system. It does not go on to the point of itself becoming consumers’ goods but finds its place at a point in the exchange system where it becomes the instruments, such /as/ a plant, machinery, equipment, facilities etc., used in the preparation of and to facilitate the flow of other capital properties and goods that are in the course of exchange and destined either themselves to become further facilities of production and exchange or to pass through the full course of exchange and bodily into consumers’ hands. Capital goods are thus used to produce more capital goods. Such capital is often called “producers goods” or even more loosely referred to as “heavy industries.” This capital continues indefinitely as capital. It does not pass through and out of the exchange system but remains social-ized capital throughout for it never comes to be owned otherwise than administratively or productively for the use and benefit of others, whether so intended or not.

     A third variety of the social-ized property called capital is owned and administered not to the end of accumulating services and being bodily transferred in the course of exchange, nor yet to become any instrument or facility in the preparation of other goods. This third variety of social-ized property comes into possession of its owner by exchange but it is not so passed on by him. It is held and administered for the service and limited use of others. This limited use is called hiring, leasing or renting. The property does not pass outright but only the use of it for a limited time. The recipient of this limited use may employ it for the direct satisfaction of himself or he may, in turn, administer it for the benefit of persons whom he serves as his patrons in the course of trade and exchange. For example: Land, as property, may be owned either in the primitive and exclusive manner for the self-service or direct satisfaction of the owner, without regard to any other service or exchange, or it may be owned as an instrument for conveying services to others, and these others may, in turn, use it for their own satisfaction or in the course of giving services and satisfactions to still others in the course of business or trade. The same is true of any improvement or building or other product of land; it may be individually used and enjoyed and consumed by its owner or it may be socially engaged by him in the course of service by exchange.

     The recompense that is received for an unlimited use, for the outright transfer, of land or of any property is called its price. Where the use is not outright but limited as to time the recompense is called rent. Where the property transferred is not a specific property, but only a general right and command, such as money or credit, over any and all property that is being generally exchanged, then the recompense received for the general right to command and use property, if for a limited time, is called interest. What is returned at the expiration of the limited time is not any specific property, as in the case of hiring or renting, but in the form of money or a generalized credit and command over the general markets, such as was originally received.

     The third variety of social-ized property, then, is that which is held for hire and is socially distributed by a mere merchandising, distributing or sales service without any physical production or manipulation of the property, as in the case of letting out parcels of land. This property may consist of improvements on land such as a hotel or other complex service organization in which the property is administered and its limited use distributed by a rental process just as land is let out. This class of social-ized property is characterized by its not being directly in the course of exchange and being bodily exchanged nor being used for the manipulation of other property in the course of exchange, but by its being used as an instrument of production and distribution of services in the form of limited use of the property. It is distinguished from the other two varieties by the fact that it is used for the supplying of services rather than of commodities, and only limited uses of the property are sold or exchanged.

     This third variety of social-ized property, the ownership of which provides services rather than goods, is exemplified in residential and commercial hotels, in communal business properties such as industrial, professional, commercial and office buildings, residential communities under owner-management and operation and even in those general agencies and organizations that supply the public with vehicular conveyances and other apparatus and appliances for limited times or the service of them in limited amounts.

     A significant character of all these services organizations is that they are prototypes or reflections in a limited way of the general organization of the community itself — and it is to be remembered that except in a general community, there can be no security of either possession or ownership of land or anything else and therefore no system of production and exchange. The great difference between these limited and private community services and those of the general community is that the private ones are conducted socially by exchange and consent. Those who conduct them have no coercive or compulsive powers over those whom they serve; their strength lies in the services they perform and not in any power that they seize, and their revenues flow to them exclusively by contract and consent. They cannot practice tyranny of any kind, for when they cease to serve they soon cease to exist — unless they are invested with special and exclusive privileges conferred by a political power or state. So far as they are corrupted by anti-social state power or political privilege they no longer practice a social and creative but a compulsive and destructive process upon those whom they purport to serve. Such are the many forms of monopolies that wittingly or unwittingly are brought into being in consequence of taxation and other invidious violence imposed by political power upon the system of freedom, service and production under voluntary contract and exchange.