690 REPORT— 1902. 



why, in a word, some are rich and others poor. The teacher will here explain that 

 the share of each person depends on the amount and value of his contribution to 

 production, whether that contribution be labour or the use of property. He will 

 show how this system of distribution is essential to the existing system of produc- 

 tion, where no man is compelled to work or to allow his property to be used by 

 others, and where every man has legal freedom to choose his own occupation and 

 the uses to which he will put his property. He will beware of claiming for it that 

 it is just in the sense in which justice is understood in the nurseries where jam is 

 given when the children are good. There is, he will explain, no claim on behalf 

 of the system that it rewards moral excellence, but only that it rewards economic 

 service. There is no claim that economic service is meritorious. Whether a man 

 can and does perform valuable economic service does not by any means depend 

 entirely on his own volition. His valuable property may have come to him by 

 bequest or inheritance ; his incapacity to do any but the least valuable work may 

 be the result of conditions over which he has had no control. The system exists 

 not because it is just, or to reward merit, but because it is inextricably mixed up 

 with the system of production. It has one great evil — its inequality. Moralists 

 and statesmen have long seen the evils of great inequality of wealth, and now, 

 thanks to modern discoveries in economic theory, the economist is able to explain 

 that it is wasteful, that it makes a given amount of produce less useful, because 

 each successive increment of expenditure yields, as a rule, less enjoyment to the 

 spender. The teacher will go on to show how this organisation of production and 

 distribution is made possible by the order enforced by government, and how, in 

 various ways, government supplements or modities it ; but I shall not enlarge 

 upon this part of the teaching of economics, as its practical usefulness is obvious. 

 My theme is the usefulness of the other part, the explanation of the organisation 

 of production and distribution in so far as it depenols on separate property, free 

 labour, and the consequent action of self-interest. 



In the first place, 1 maintain that the widespread dissemination of such teaching 

 would help to do away with a vast amount of most disastrous obstruction of neces- 

 sary and desirable changes. Take, for example, tbe obstruction offered to changes 

 in international trade. Of course every conceivable argument has been used by 

 different writers in wholly different circumstances for obstructing the co-operation 

 of mankind in production, as soon as it oversteps a national boundary. But what 

 is the real support of this kind of obstruction ':' Obviouslj^ the fact that certain 

 producers, or owners of certain means of production, are damaged by an increase in 

 the importation of a particular article. Their loss, their suffering, if their loss is 

 severe enough to deserve that name, appeals to popular compassion, and their 

 request for ' protection ' is easily granted, the new trade is nipped in the bud, and 

 things are forced to remain in their accustomed channels. The same principle is 

 not applied as between county and county or between province and province, 

 simply because there is then visible to everyone an opposing interest, the interest 

 of the new producers, within the hallowed pale of the national boundary. Adam 

 Bmith tells us that when the great roads into Ijondon were improved, some of the 

 landlords in the home counties protested on the ground that the competition of the 

 more distant counties would reduce their rent. The home counties did not get 

 the protection they wanted, because it was obviously to the interest of the more 

 distant counties that they should not have it. These two interests being balanced, 

 the interest of the consumer, London, turned the scale. So it usually happens 

 that beneficial changes in internal trade are allowed to take their course without 

 obstruction because the votes of two sets of producers counteract each other, and 

 the consumer's interest settles the question. But in international trade one of the 

 two sets of producers is outside the country : it consists of hated foreigners, the fact 

 that it will benefit is an argument against rather than for the threatened change 

 in trade, and the consumers therefore feel it patriotic to sacrifice their own interest 

 and vote for protection. But if they were properly instructed in economic theory 

 they would see at once that such magnanimity is entirely misplaced. They would 

 see that it would cut away all international trade, since, if there were no fallacy 

 involved in it, the stoppage of each import taken separately would benefit home 



