Spencer Heath Archive

Item 2234

Citadel, Market and Altar, Chapter 26, with some slight revisions of punctuation.

 

See item 2747 for notepad with first pencil draft of this chapter, starting on page numbered “1” in notepad.

 

 

 

 

 

CHAPTER 26

Towards the Utopian Dream

A Hypothetical Distribution of National Income under Proprietary Public Administration

 

In the foregoing pages, the primary relationship that exists be­tween the owners of labor and of private capital on the one hand, and the owners of land and its public capital on the other, has been described in general terms and in the light of there being a general system of exchange into which the specialized services of the re­spective parties are being constantly pooled en masse for exchange; and then selectively withdrawn in full variety as dictated by the need and desire and in the proportions of recompense to contribution that the open voting of the market as to prices and terms demo­cratically allows.

 

 This social process of democratic distribution by consent and exchange has been shown to apply to such services and goods as remain under the social jurisdiction and free disposition of the market after the part required by the political authority has been forcibly or coercively withdrawn. The annual contribution of services coming from the owners of labor, capital and land, measured by the exchange appraisements of the market in terms of money or bank credits, is collected by statisticians and footed up as the national income. Of this total national income, the part taken by government, including its borrowings, is subject to political distribution not in exchange for any contributions made to the market, but to consumers who, in peace as in war, do not make any corresponding contributions to the general exchange system. This depletes the market. What re­mains, the market socially distributes by contract and exchange back to the owners of labor, capital and land in the proportion of their respective contributions. The diagram and table annexed at the end of this chapter have been prepared for the more graphic illustration of the distribution of social income under present-existing conditions and of what the volume and the distribution might become under a proprietary ad­ministration by public owners of the public services, beginning with the new public service of abolishing unnecessary waste and taxation and, finally, all taxation. It is assumed that in response to such services, labor, capital and land, released from the penalization of their services and products, would come into full employment, thus causing the national income progressively to rise from a figure ranging between 75 and 100 billions, as in the late nineteen-thirties, to twice the latter figure (assuming no further debasement of the dollar) at the point where taxation would be entirely superseded and far more than replaced by the newly created and enhanced ground rent accrued to the Proprietary Community-Service Au­thority out of the magnified national income consequent upon its new and enhanced public services.

 

 It is further assumed that upon the final abolishment of the re­strictions upon employment and production resulting from taxation — and of the unbalanced distribution of national income thus caused — and upon replacement of the dis-services of politics and government by the exchange services of public proprietorship, con­sciously and intentionally performed, there would continue to be a progressive increase of real social income.[1] This increase is indicated by the heights of the successive columns in the diagram and in the series of totals set at the bottom of the table.

 

 Placed in the left vertical column of the table are three factors, Labor, Capital and Land, contributing their respective services into the common pool of the exchange system before receiving any ex­change recompense therefor, and at the bottom is a fourth, Govern­ment, which participates forcibly in the joint product without mak­ing any present or subsequent return to the exchange system.

It should be noted that in the table, Labor refers not at all to self-services but to services to others, to social or societal services. Capital, likewise, refers not to ownership for the use of the owner — for one’s own use — but to ownership for the service of others. In a similar manner, Land, as an economic factor, refers to the ownership and administration of sites, locations, natural advantages and resources, including the artificial advantages of public capital, for the public and general service of others by making a social — a contractual — distribution and not a forcible, arbitrary or irresponsible distribution of public advantages, both natural and artificial. Land, as a social or economic factor, refers to the persons who distribute and administer land through contractual relations, in the same manner as the products of Labor and Capital are distributed. It does not refer to those who hold land merely for self use. Nor do Labor and Capital, as economic factors contributing to the exchange system, hold land, or indeed anything else, otherwise than for the service of others. In all categories, only the services performed or property owned for the service of others has any societal import or social or economic significance.

 

 The second vertical column in the table lists, opposite the three factors in production, the kind of services contributed by them to the exchange system and the kinds of recompenses, as exchange values, received for them. However, in the space opposite Government, it is necessary to list service and recompense more darkly and in reverse, since political government, as distinguished from the Proprietary Community-Service Authority, impinges upon but does not operate within the general democratic and non-compulsive societal system of voluntary services and exchange.

 

 In the third and subsequent vertical columns, footed by the figures for successively increasing national incomes from 75 to 400 billions, the services contributed by each factor have numerical as­signments, and under these are lesser numbers to represent the values or recompenses received in return, the service contributions and value recompenses becoming one and the same and set in a single line only from the point in progress where Government, with its crude financing by taxation and inflation, ceases to impinge.

 

 There are thus formed six horizontal columns marked off by Roman numerals I to VI. The first two service factors, Labor and Capital, occupy respectively horizontal columns I and II, but to the

factor Land, as the Proprietary Public-Service Authority, the three horizontal columns III, IV and V are assigned. This is for the purpose of making very clear the three kinds of services, actual and potential, that this public authority can provide.

 

 The first of these proprietary services (horizontal column III) has reference only to the gifts of nature with which a population, as a community, is endowed. Ground rent, so long thought to be un­earned, is, in the first instance, the value received for making social distribution of these natural things. When taxation is relatively high, and the production contributed to the market therefore relatively low, land, like other things, is but little distributed and but little if any ground rent is actually received. Leases default, voluntary sales cease to be made, and there is little or no return or value in real estate, except from the improvements upon it, at such times.

 

 Horizontal column IV refers to the second kind of services contributed to the exchange system by the public owners. This has reference to the social distribution not of natural but of artificial ad­vantages arising from the presence of public capital in a community, such as water supply, street paving, public sanitation, educational and cultural facilities, etc., the advantages of which in any degree or for a time outweigh the disadvantages of increasing taxation and its concomitant disservices. This field of public capital services under political and predatory public administration is of questionable, transitory and abortive value, but under public proprietary adminis­tration it is open to enormous desirable and profitable developments. With expanding national production providing abundant proprie­tary profits and income from the maintenance of existing public facilities for reinvestment in further public capital services, it could surpass such literary (as in libraries), artistic and recreational public services as are now supplied in cities and in many hotels. It might be extended even so far as to include the supplying of food in the form of a community service as is now done in “American plan” hotels, where the rents paid for the various rooms or occupancies include dining room and food service as appurtenant to the rooms.

 

The third category of public services is described briefly in horizontal column V. This service at present is only potential. Unlike those of horizontal columns III and IV, it is not automatically per­formed in the ordinary course of selling and leasing of the com­munity advantages appurtenant to its lands. In a hotel, the owning interest not only distributes and dispenses its public and general bene­fits and advantages to its rent-paying occupants, but along with this it supervises and directs the community servants from the general managers down, not omitting those who police the premises, and thus it protects the liberty and property of all who there abide. This protective service in a hotel is supplied by the proprietors as a matter of course.

 

 But in the great out-of-door communities, now dominated and being broken down by the political techniques of their putative pub­lic servants, no corresponding protective service by the proprietary interest is being performed. The political authority, not being so­cially — that is, by contract and consent — integrated with the volun­tary exchange system, is always bankrupt, in the sense of having no ownership or income of its own. Pending its evolution into the pro­prietary pattern of services for recompense by exchange, it is there­fore of necessity predacious upon the national income and ultimately inimical to the solvency and continued existence of the exchange system itself.

 

 In the graphic diagram at the left of the table, the line B-B represents the base on which all the services and goods contributed to and pooled in the general exchange system rest, upon which all the market or exchange values are built and below which all things de-social-ized out of the market by a contrary or compulsive technique, and therefore having no market or exchange value, must fall. The fourteen vertical columns correspond with the fourteen national in­comes of the table. The first five drop below the exchange level by the amount that taxation takes out of the exchange system by com­pulsory process and thus makes unavailable for free contractual dis­tribution by exchange. The portion below the base line need not be here analyzed into the multiplicity of political expenditures that do not create any exchange values or otherwise reappear into and re­store the broken balances of the exchange system. The portion re­maining within the exchange system is projected upward in each column and divided into three segments corresponding with the three divisions in the tabular analysis: Land and Public Capital at the base, Private Capital next above, and Labor completing the column height. The first column shows only two divisions. Land, under this national income, is too depressed to have any income; but in the second and succeeding columns all three divisions are shown.

 

 It must not be supposed that any of the figures given are held to be based on exact statistical data or to be otherwise quantitatively correct. The first two columns of national incomes are, indeed, rough approximations to a known experience, and the distribution indicated here is at least roughly in the known order of recompense; for it is known that under ordinary conditions, the largest share goes to Labor, the next largest to Capital, and the least, if any, to Land. The figures are offered therefore as being only schematically correct and for the purpose of showing the general relationships that commonly prevail and how these relationships will develop and improve under the expanding national production that such extension of the proprietary public services as is indicated in horizontal column V can release. The table and diagram are offered not for the setting out of specific figures and facts but as the pattern of distribution that is in­herent in the present economy — the system of production and ex­change — that supports civilization and upon which its continuance depends.

 

 As set out in detail in the preceding chapter, it is the golden but unseen opportunity of the land-owning interest in any political community to take unified action of service in defense and protection of the exchange system that now only occupies its properties through striving, manfully, to utilize both the resources inherent therein and the public capital appurtenant thereto. For in the vast flow of pro­duction and income thus released the landed interest would become, in its recompense and values, the prime participant. And what is equally to be desired, the public servants and employees would then be well and abundantly, instead of improperly and insufficiently, financed.

 

 In the first two vertical columns of national income, under the heading Service Contributions and Exchange Values Received, it is taken that the total income may be either 75 or 100 billions (depending on the trade-cycle phase) without any of the protective services de­scribed in horizontal column V being performed.

 

 But in the third column of national income (125 billions), the proprietary interest has begun to waken and embrace its golden opportunity for public service and magnificent reward. The increase from 100 to 125 billions is attributed to the initial new services of the proprietary interest, Land, in procuring for its tenants and customers a reduction of 25%, from 20 billions to 15 billions, in the exchange deficit due to taxation. The addition of 25 billions to the total in­come is assumed to be due to an increase of 10 billions (20%) in the productivity of Labor, and an increase of 10 billions (33%) in the productivity of Capital, and an increase from a total of 20 billions to a total of 25 billions (25%) in the productivity of Land and Public Capital administration. Labor, Capital and Land, each and all of them, are now receiving out of the exchange system greater per­centages of their respective contributions in the order listed, Labor being rewarded with 55 out of 60 billions of production instead of 45 out of 50 as before. Capital getting back 35 out of 40 instead of 25 out of 30, and Land receiving 20 out of a total contribution of 25 instead of 10 out of a total contribution of 20 to the previous lower national income.

 

 The next four vertical columns proceed upon the supposition that the proprietary interest continues its third category of services, namely, protective services (horizontal column V), until a national income of 200 billions is reached, at which point the exchange deficit due to taxation is entirely extinguished and the proprietary interest creates and receives a total income of 50 billions, which is an increase of 40 billions over its maximum total income before it began to per­form these services. This shows the proprietary interest in receipt of additional earned income, out of which to maintain and finance its public enterprises, two and one-half times as great as the taxes taken forcibly before the new services were undertaken and performed.

 

 It is assumed that during this change from a 100 billions to a 200 billions national income, private capital has reinvested much of its income progressively in private enterprises and that the proprietary interest has likewise made increasing investment of its returns back into new and enlarged enterprises of public capital. The increasing productivity and income of both private and public capital guaran­tees this. And if both are and remain equally efficient, and therefore equally profitable, doubtless both will continue to reinvest their accumulations and thereby come into receipt of continuously in­creasing returns. This is shown graphically in the diagram and by figures and notations on the right-hand side of the table where simi­lar efficiency of private and public capital is assumed. This is taken as the ground for their coordinate development as shown.

 

 There is, however, much reason to anticipate that under equally skillful administration by its owners, the capital invested in public enterprises would be the more efficient and therefore more pro­ductive of income and values. Assuming this to be true, there would be a natural tendency towards free capital investment in the public and more profitable enterprises. The old socialist argument against the alleged wastefulness of multiple deliveries of such things as groceries or milk to variously located customers by numerous com­peting enterprises, and in favor of a unified public service, would have here a legitimate application not through any compulsive abolishment of “wasteful competition” but by the benign operation of competition itself. As the public enterprises became more profitable, the investing public, being the owners of private capital, would be more and more disposed to sell out of private enterprises and buy into the public and more profitable ones, thus providing the pro­prietary interest with additional funds for buying into the assets of and thus taking over private enterprises in due course by the wish and will of all concerned. Nor could the public owners wish or afford to take over any private enterprise unless or until they could make the public administration of it more serviceable and efficient and therefore more profitable. Not only would it be costly to pur­chase a highly productive private business, but to do so would de­prive the proprietary interest of a valuable rent-payer as a customer of its own public services. From the standpoint of the public pro­prietors, the question would be: “How can we obtain the highest rent revenues? Will it be by continuing to serve this private enter­prise as a desirable rent-paying customer of our services or by ac­quiring its securities or assets and seeking to administer them so much the better publicly that the rent revenue in general will rise by a greater amount than the particular rent lost through acquisition of this private enterprise?”

 

 There can be no doubt that, with an enormously increasing abundance of services and supplies of every kind, economy and efficiency would lie more and more in the direction of the public administration of and a general participation in them. As an example of this, the unprecedented abundance of food in nineteenth-century America was probably the chief reason for its being dispensed in hotels usually as a generalized service, instead of by the sale of specific items or menus. When the public proprietors of America awake to the profit­ableness of releasing the potential productivity of their rent-paying inhabitants, it may well be that the resulting enormous abundance will come under a veritable “American plan” of a more and more generalized system. There has, indeed, already appeared a tendency for the public to purchase at a rental or use charge the service or use of many articles and commodities rather than taking full ownership themselves, leaving upon the highly specialized owners, in addition to the usual services of production and distribution, also the re­sponsibilities of continued maintenance and the general duties and obligations of capital administration. The extension of living facili­ties through apartment housing, the community use of business and professional premises and facilities, including shopping centers as business communities under unified proprietary administration, group medical and surgical services and even installment buying (so-called)[2] with trade-in allowances have been among the distinct evidences of the trend, under a high abundance of production, towards a general distribution of the services of both public and private capital on a rental basis, leaving ownership and its administrative responsibilities concentrated in better organized and more competent hands.

 From these and similar considerations it is taken that such increasing abundances of national income as are indicated towards the right-hand columns of the table would carry with them a corresponding tendency towards the public and general use of things on an inclusive rental basis, just as many things now are supplied in office buildings, highly developed hotels and the like community properties. Accordingly, it is taken that if, as seems likely, the public and general administration of enterprises, when administered by the proprietary public authority, should prove the more profitable, there would be a tendency for them to outgrow the private ones by at­tracting capital investment at a greater rate. This could occur through the investing public selling out of private enterprises and buying into the public ones, or by the direct exchange of private for the public securities, by which method private enterprises would be­come at once public and take on the advantages of community-wide administration.

 

 This probable development is indicated in the diagram at the left of the table by the dotted lines beginning at the dividing line between the public proprietary income and that of the private capital in the column for 200 billions national income. These dotted lines indicate an increasing proportion of the entire capital income arising out of the public capital, leaving the relatively diminished private capital at first with less and eventually with a relatively declining return.

 

 The tendency thus indicated might be supposed to lead ultimately to all private capital coming under the public proprietary administration. This would of course realize, in effect, although not in method, the socialist ideal. All industry might gravitate towards a public and general administration by the responsible community owners, of both the natural and the artificial means and instruments of production, service and exchange. Private employment would become public, and in this extreme development (if it can be im­agined) commodities and services would be distributed largely if not entirely as appurtenances and perquisites of the sites and occupancies for which the consuming public would pay such voluntary rents as the open market would set or allow.

 

 Thus, by the mere emancipation of the owners of private capital from tax-expropriation of their private incomes and assets, there is permitted to arise and develop a free evolution of capital ownership and administration with its resulting production in such abundance that it may become feasible and more efficient to produce and dis­tribute in a general fashion, on a community-wide scale, services and goods of many varieties and kinds in addition to those which are now commonly accepted as public or community services.

This evolutionary advance would spring from the enormously expanded community services being not merely distributed, as now, but also being created and financed by the proprietary authorities out of their own property and income. This capacity of a veritable public service to evolve on the basis of its own earnings is in the highest contrast to that of a compulsive authority that for its revenues must seize not only the property of conquered and subject peoples but even the properties and incomes of its own citizens whom it is as­sumed, and whom it professes especially, to represent and serve.

 

 But the conversion of private into public capital could never become absolute and complete. The relative efficiency of private ad­ministration versus public administration would determine the allo­cation, finally, of all capital income — profits to private owners and net rents to the public owners and community administrators. But at all stages of such development, some private capital services would be in constant competition with some corresponding public capital service and would be brought under the latter mode of administra­tion only as it became more profitable to all concerned for them to do so. Even if a full cessation of private capital administration could occur, there would remain always potential private capital competi­tion (there being no political restrictions creating monopolies) ready to spring up and correct with its higher efficiency any very serious deficiency in the public administration — even as, under present con­ditions, superior water and other services are privately supplied to those who can afford them when the public supply is meager or falls short or its quality falls low.

 

 There are forms of community service that require the occupancy of streets or highways and other public domain and cannot be performed by a multiplicity of agencies without conflict of authority or impractical duplication of facilities, such as police or military pro­tection, public transportation and communications, the supplying of water and drainage service or of power or heat through installations occupying public domain. All such as these are necessarily as public, from their inception, as is the domain delegated to them by the public charter or franchise in which the services are prescribed and the manner and amount of their recompense fixed. Such services at inception and during their development, and especially when the direct use and benefit of them can be measured out, are recompensed usually by authorized graded tolls or a system of fees levied on the immediate beneficiaries. In most cases, their installation is initially financed by the capitalization of these prospective tolls or fees. Not­withstanding that they are publicly created agencies, the persons or companies performing these services are often regarded as “private” or merely quasi public because “affected with a public interest.” When such public agencies are transformed through financing them with public debt, and those persons who formerly had a limited di­rection over them become, or are displaced by, public employees with only political and no proprietary responsibility, this change is commonly regarded as a change from private ownership to public ownership.

 

 In either case, any economic advantage to the inhabitants of the community, above the disadvantages of the tolls, fees or taxes politically prescribed and imposed to maintain them, is contractually distributed among the inhabitants by the community owners, just as all the merely natural advantages are. Their recompense for this social dis­tribution is included in their ground rent, or land values. It is the prime economic interest of land owners not alone to distribute these benefits but to insure administration of these public facilities to the utmost advantage and least detriment or inconvenience to the in­habitants of their communities.

 

 However completely and inclusively the public capital facilities may come to be administered by the enlightened proprietary interest, and however high their honors and rich their rewards, there would always be at least a modicum of private services, especially those growing out of fresh discoveries in science and thus likely to begin tentatively and on a small scale. Certainly those services which become most widely distributed and participated in are most likely to be “free,” payment for them being included in the rent or other general service charge for the location, occupancy or community membership to which they appertain.

 

 In any case, it is highly apparent that the present existing exchange economy of “free enterprise” rightly understood, and when re­deemed from the governmental depredations that destroy it, holds all that is essential not only to an enormous growth and expansion of its private and individual services but also an inherent capability of indefinite development and transformation in the general direction of a completely unified system under the free contractual technique of proprietary public administration. A total transformation is probably impossible, but it could remain the ideal end-point or con­dition towards which the societal evolution under full freedom of contract would tend.

 

 The present discussion of a universalized proprietary public service — the socialist ideal — as a possible and probable outgrowth from the present existing system of capital services, once it is emancipated from unnecessary and destructive taxation, has not been with pur­pose to advocate the imposition or adoption of any unified collective system. It is only to point out how the collectivist ideal is inherent in the existing capitalist system, once its creative technique of con­tractual services for voluntary recompense and automatic values is permitted to expand. There is no fallacy in the socialistic ideal; only the methods proposed have been futile and false. Ages of indoctrina­tion in the worship of organized force have impressed great masses of “intellectual” men with an almost inexpugnable faith in the essen­tial benevolence of political and governmental power — so only it be “democratic” in form and his submission to it be without physical or political revolt. Believing that free contractual relationships are somehow essentially dangerous and depraved, these pseudo-intel­lectuals make the Citadel their Altar, despite the warning clanking of its chains. Not in slavish traditions, not in submission nor in revolt, but in new awakenings to the basic realities and the high potentiali­ties of the societal heritage as it now exists, is the social ideal to be attained.

 

 Free enterprise is so called not because the persons and organizations engaged in it are free from the burdens and compulsions im­posed by political power, but because the parties contractually en­gaged are in exclusively free and voluntary relations with one another, no force or compulsion being applied on either side — except as some of the parties or interests jeopardize their own free­dom by contriving governmental abridgements of the economic freedom of other members of the voluntary system. Yet with all such defections from it, and notwithstanding the huge political bur­dens that it bears, the creative and productive power of free enter­prise is the miracle of the modern age. In the two decades, 1935 to 1955, it increased the national income (gross national product) for the United States from 75 billions to 175 billions, in the dollars of 1939, at a very nearly uniform rate. On this basis it may reach as much as 225 billions in the same dollars by 1965. Current forecasts indicate that the population will then be about 170 millions. This will amount to about $1,300 per capita or $6,500 per family of five, equivalent, doubtless, to $15,000 or $20,000 per family in the dollars of 1965.

These figures reflect the enormous productivity of the non-political form of organization. If they seem extravagant as to the future, they are certainly not more so than were those that have been actually attained, when these are viewed from almost any standpoint in the past. And when this free system of administration has developed so far as to take not only agriculture and industry out of governmental operation and control, as it has done in the historic past, and carries its technique of proprietary administration into the public and com­mon services as well, no bounds can be imagined beyond which the national income and the public welfare may not rise.

 

 The foundation of all life, not to say all progress and all attainment, lies in the environment of mankind and the welfare that it affords. Unlike any other creatures, human beings have learned to practice, in a limited way, a universal relationship that of itself creates favor­able human environment and at the same time gives them productive and creative power over their material world. Production is creative. A national income is a numerical expression of the extent to which a population, with each member serving many others, has modified into wealth and satisfactions its environing world. And these ma­terial things are not without higher significance. They flow out of a spiritual, a golden rule relationship of services reciprocally performed — services that create an ever new and renewing world environment, fit for the self-creation of a higher, a longer living, a less and less mortal, mankind.

 

 As services and supplies become abundant and assured, human nature exhibits less and less tendency towards separate and exclusive possessions. Things are enjoyed by participation more than by possession, and the habits and manners of the drawing room and banquet hall become the rule. Ownership thus takes the form less and less of personal possessions and more and more of capital enterprises in the service of others by those who enjoy the responsibilities of owner­ship and administration and rejoice in the development of pre-visioned plans and ends and the winning of contingent recompenses above mere wages or stipendiary rewards; while those more nu­merous persons, who care but little for the burdens of administra­tive policies and plans will prefer to engage themselves to the former with variously skilled but subordinate services at customary or specially negotiated rates. Under a growing abundance, this latter class comes into increasing leisure and freedom for the spontaneous activities of personal and social recreation, and of those esthetic and creative arts that spring directly from the individual and constitute the soul of a society, while the owning administrators of public and private capital enterprises and properties through employment of talented executives create, in gracious architecture and design, the noble habiliments of material environment in which alone a spiritual­ized society can be both nourished and clothed.

 

 

[Insert table, “Hypothetical Distribution

                            of National Income”]