Functional socialism

CAPITAL I1g

can augment only in proportion to what can gradually be saved out of its revenue.’’ And, forgetting or ignoring his opening affirmation: “capital is the true source of economic life . . . capital fertilizes the earth, whereas the labour of man simply leaves it a weary waste”. So we come to his maxim “the general industry of the society never can exceed what the capital of the society can employ”. John Stuart Mill condensed this into “Industry is limited by capital’.

If, as Smith argued, capital is savings—‘“the principle which prompts to save is the desire of bettering our condition, a desire which, though generally calm and dispassionate, comes with us from the womb and never leaves us till we go into the grave’’—his opinion of the commercial world of his time was certainly not flattering. The interests of the traders and manufacturers are “‘never exactly the same with that of the public’”’; they have “generally an interest to deceive and even to oppress the public, and who accordingly have, on many occasions, both deceived and oppressed it”; “our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price and thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people”. Yet more significant: ““Whenever the legislature attempts to regulate the differences between masters