Functional socialism

118 FUNCTIONAL SOCIALISM

come to Smith’s argument for capital that we discover his helplessness in reconciling the claims of capital and labour.

II

INSTITUTIONS GROW LIKE TOPSY

Having broken away from the class economy of his time, and pictured Great Britain as a vast workshop with labour its dominant factor, having stated this with such sympathy and insight that he was, in a later generation, described as the father of Socialism, we now meet Adam Smith as the apologist of capital. We must understand Smith’s approach to these problems. His underlying theory is the spontaneity of economic institutions. They are “not originally the effect of any human wisdom, which foresees and intends that general opulence to which it gives occasion”. To Smith, therefore, capitalism is not a pre-determined, rational system, but a phenomenon. However true it may be that labour is the source of wealth, that ‘Labour, therefore, is the real measure of the exchangeable value of all commodities’’, “‘the real price of everything, what everything really costs to the man who wants to acquire it, is the time and trouble of acquiring it’’—surely Marx might have written this notwithstanding his criticism of it—nevertheless, we must reckon with this phenomenon of capital. It was Smith who first enunciated the theory that capital comes from savings. ‘The industry of society can augment only in proportion as its capital augments, and its capital