March 2006

Ruskin Revisited, Part II

In the preface to the Preface, Ruskin repeats and reinforces his definition of value from Unto This Last. Value is first of all intrinsic, use-value. A thing is of value as it "avails towards life." Value is not determined by exchange:

The most dull economist would perceive, and admit, that a gentleman who had a fine stud of horses was absolutely richer than one who had only ill-bred and broken-winded ones. He would instinctively feel, though his pseudo-science never taught him, that the price paid for the animals, in either case, did not alter the fact of their worth. . . . [Yet] no economist has endeavoured to state the general principles of the National Economy, even with regard to the horse or the ass, [much less with regard to works of art]. The first specialty of the following treatise consists in its giving at the outset, and maintaining as the foundation of all subsequent reasoning, a definition of Intrinsic Value, and Intrinsic Contrary-of-Value. (7-9)

As an example of the viciousness of the pseudo-science based on a false concept of value, Ruskin cites its results in the promulgation of war in a piece of sarcasm that could have been penned by Douglas:

Capitalists, when they do not know what to do with their money, persuade the peasants, in various countries, that the said peasants want guns to shoot each other with. The peasants accordingly borrow guns, out of the manufacture of which the capitalists get a percentage, and men of science much amusement and credit. Then the peasants shoot a certain number of each other, until they get tired; and burn each other's homes down in various places. . . . And then the capitalists tax both, annually, ever afterwards, to pay interest on the loan of the guns and gunpowder. (19)

Definitions

Political Economy

regulates [the acts and habits] of a society or State, with reference to the means of its maintenance. . . . By the "maintenance" of a State is to be understood the support of its population in healthy and happy life; and the increase of their numbers, so far as that increase is consistent with their happiness. (1f.)

Value is

the life-giving power of anything. . . . But in order that this value . . . may become effectual, a certain state is necessary in the recipient of it. . . . The production of effectual value, therefore, always involves two needs: first, the production of a thing essentially useful; then the production of the capacity to use it. Where the intrinsic value and acceptant capacity come together there is Effectual value, or wealth. (14)

Money is

a documentary expression of legal claim. It is not wealth, but a documentary claim to wealth, being the sign of the relative quantities of it, or of the labour producing it, to which, at a given time, persons, or societies, are entitled. . . . Money is, therefore, correspondent in its nature to the title-deed of an estate. (21, my italics)

This is an improvement on Unto This Last, in which Ruskin had defined money as a claim on labor, a difference from Douglas. Now he anticipates Douglas's understanding of money as ticket system. For this reason he also anticipates Douglas in repudiating the gold standard: "The use of substances of intrinsic value as the materials of a currency, is a barbarism." (25).

Given this nature of money as a ticket or title-deed, it follows that "so long as the existing wealth or available labour is not fully represented by the currency, the currency may be increased without diminution of the assigned worth of its pieces" (23). This concept becomes very important for social credit.

Riches "is a relative term, expressing the magnitude of the possessions of one person or society as compared with those of other persons or societies" (11). This is not objectionable in itself, for there are good and bad inequalities, or good and bad riches. The economist will want to know what brought about the inequalities: What made the one society or the one person relatively rich, the other relatively poor? Then he will want to know how to assure that riches will be in hands that will order things that are good for life, direct labor justly, and provide for the future farsightedly. This is the essence of mastership (see below). These considerations all stem from the definition of effective value above.

Store-Keeping

A thing I own but lack the capacity to use is not wealth, it is "nothing more than a cumbrous form of bank-note, of doubtful or slow convertibility" (36). True possession "is in use only," and how much any individual can use is necessarily limited: "He cannot live in two houses at once; a few bales of silk or wool will suffice for the fabric of all the clothes he can ever wear" (37, a sentence that could have come from Douglas).

Therefore, beyond what we can personally use, "we have but the power of administering, or mal-administering, wealth. . . . And with multitudes of rich men administration degenerates into curatorship," that is, one amasses money and goods beyond one's ability to use them, with the purpose of bequeathing them (37). So for that person's lifetime, they are wasted - they might as well not exist. They are wasted in that they don't avail for life all that time. If then the heir does the same, they are wasted even longer; and if they are not wasted by neglect, they are wasted by being squandered by sons who never had an example of wise use set before them.

The ordinary capitalist suffers from a similar disease, spending money to make more money, but ignorant of how to recognize a good thing or get the life-nourishment out of it. It is but "bulb issuing in bulb, never in tulip" (Unto This Last 73).

It follows from this definition of wealth that

the sum of wealth held by the nation, instead of being constant or calculable, varies hourly, nay, momentarily, with the number and character of its holders! and that in changing hands, it changes in quantity. And farther, since the worth of the currency is proportioned to the sum of material wealth which is represents, if the sum of the wealth changes, the worth of the currency changes. (39)

People bring the product of their labors to the national store, receiving, in exchange, an order for the return of the thing or its equivalent in other things. Such an order is, in a word, money. This assumes that the administrators of the store merely preserve the goods received. If, however, they employ the wealth received resulting in increase, then they are "enabled, for every order presented, to return a quantity of wealth greater than the order was written for, according to the fructification obtained in the interim" (41) - in other words, pay a dividend.

Thus, to ascertain the wealth of the nation, we need to put two questions: "What store has it?" and "Who are the holders of the store?" (46). Both questions involve the currency, that is, the relation of store to currency and the relation of holders of store to holders of currency.

Money, recall, is a claim on either goods or labor. The former is a fairly simple relationship; but the latter very complex, involving, as it does, the relation

of the magnitude of the store to the mind of the population, . . . to their will for labour. . . . The worth of the piece of money which claims a given quantity of the store is, in exchange, less or greater according to the facility of obtaining the same quantity of the same thing without having recourse to the store [i.e., by having it made]. In other words, it depends on the immediate Cost and Price of the thing. . . . All cost and price are counted in labour. (58f.)

Labor is "the suffering in effort"; and the cost of a thing is "the quantity of labour necessary to obtain it." "The object of Political Economy," Ruskin observes, "is not to buy or sell labour, but to spare it" (59f. and n.). It is, in other words, a negative quantity.

Cost (in labor, negative) and value (for life, positive) are objective qualities. Price, in contrast, is dependent on the human will expressed in an "estimate of desirableness," or demand. However, on the assumption that the demand is constant, "the relative prices of things [i.e., what quantity of one article will be accepted for what quantity of another] are as their costs [i.e., as the labor that went into each]" (62f.). This, labor for labor, was the standard for the just price established in Unto This Last.

Thus, Ruskin concludes,

the real working power or worth of the currency is founded on the entire sum of the relative estimates formed by the population of its possessions; a change in this estimate in any direction (and therefore every change in the national character), instantly alters the value of the money, in its second great function of commanding labour. . . . A currency is true or false, in proportion to the security with which it gives claim to the possession of land, house, horse, or picture; but a currency is strong or weak . . . in proportion to the degree of estimate in which the nation holds the house, horse, or picture. (65)

Currency is, by definition, "a claim to goods which are not possessed." (Douglas recognizes this obvious fact in his national balance sheet, when he puts things on one side as assets and money on the other as a liability.) Its quantity reflects the volume and complexity of claims in relation to actual possession. If a cattle breeder

is content to live with his household chiefly on meat and milk, . . . and the wives and daughters of families weave and spin the clothing of the household, . . . [the nation] has little occasion for circulating media. . . . The store belongs to the people in whose hands it is found, and money is little needed. . . . But in proportion as the habits of the nation become complex and fantastic, . . . its circulating medium must increase in proportion to its store. (66f.)

In other words, the requirements for money depend not on how much goods there are absolutely but how much goods are on the market.[1] This brings us to the second key question to ascertain a nation's wealth, "Who are the holders of the store (and what is their relation to the holders of the currency)?"

Coin-Keeping

"The currency of any country consists of every document acknowledging debt, which is transferable in the country." By "debt" Ruskin means the debt of goods that the store, as debtor, owes to the holder of the money, as creditor: "I do not mean the demand of the holder of a five-pound note for five pounds, but the demand of the holder of a pound for a pound's worth of something" (69 and n.).

It is undesirable to have one's currency based on a commodity subject to volatile demand like gold. It would be better to select a commodity of enduring value for life, like bread. Or perhaps a tripod of three commodities. In other words, make the unit of currency a legal claim to so much of one to three commodities of guaranteed quality, and the prices of all other things will find their natural level in comparison.

Healthy people know that wealth consists of good things and good use of them and rightly see money as a mere adjunct to goods. They measure money by what goods it will buy. Unhealthy people imagine the reverse and measure their goods by the amount of money they could bring. To the extent a nation's citizens appreciate what true wealth consists of, good things will be produced in the nation, find their way into valiant hands, and become wealth.

"A True Government Set to True Work"

A common feature of official governments is that they are costly, but

suppose it should thus turn out, finally, that a true government set to true work, instead of being a costly engine, was a paying one? that your government, rightly organised, instead of itself subsisting by an income-tax, would produce its subjects some subsistence in the shape of an income dividend? – police, and judges duly paid besides. (129)

What is true work?

The way to produce more food is mainly to bring in fresh ground, and increase facilities of carriage; – to break rock, exchange earth, drain the moist, and water the dry, to mend roads and build harbours of refuge. Taxation thus spent will annihilate taxation. The way to produce house-room is to apply your force first to the humblest dwellings. When your bricklayers are out of employ, do not build splendid new streets, but better the old ones; send your paviours and slaters to the poorest villages, and see that your poor are healthily lodged, before you try your hand on stately architecture. . . . The way to get more clothes is – not, necessarily, to get more cotton. [In the words of Carlyle:] "Bare backs were never more numerous among us. Let inventive men cease to spend their existence incessantly contriving how cotton can be made cheaper [for export]; and try to invent, a little, how cotton at its present cheapness could be somewhat justlier divided among us.". . . [As for fuel,] we don't want to produce more fuel just now, but much less; and to use what we get for cooking and warming ourselves, instead of for running from place to place. (157-59 and n.)

And what is a true government? Government doesn't necessarily mean the official government, it can be a body of private persons. [2] The essence of government is command over labor, or mastership. Just as there are good and bad inequalities in wealth, there is good and bad mastership. We cannot ask to do away with mastership. What we can and must ask for is what Ruskin calls the merchant as hero; Ferguson, the public man of business; and Douglas, the aristocracy of producers.

"But nothing of this work will pay?" No; no more than it pays to dust your rooms, or wash your doorsteps. It will pay; not at first in currency, but in that which is the end and the source of currency, – in life. (160)

The final part of this essay will see what contribution the above may make to our understanding of social credit.

Notes

1. "Exchange, or commerce, in itself, is always costly; the sum of the value of the goods being diminished by the cost of their conveyance, and by the maintenance of the persons employed in it; so that it is only when there is advantage to both producers (in getting the one thing for the other) greater than the loss in conveyance, that the exchange is expedient. And it can only be justly conducted when the porters kept by the producers (commonly called merchants) expect mere pay, not profit" (98) -- that is, due reward for labor or skill, as opposed to gain from taking advantage of ignorance or the state of the market.

2. Government includes "even any body of private persons, entrusted with the practical management of public interests," for good or for ill, such as those who administer the national store (App. 4).