Monday, April 10, 2006


Chapter II

55. HUMAN beings are subject to various wants. Some of these wants have to be supplied to sustain life at all; others to render life comfortable and happy. If an individual produced, with no aid from others, all the numerous things requisite to supply his wants, the things which he produced—-his products—-would belong to himself. He would have no occasion to exchange with others, and they would have no equitable claims upon him for any thing which was his.

56. But such is not the case. We all want continually for our own support or comfort those things which are produced by others. Hence we exchange products. Hence comes trade,--buying and selling,--Commerce, including the hiring of the labor of others. Trade is, therefore, a necessity of human society, and consists of the exchange of the labor, or the products of the labor, of one person, for the labor, or the products of the labor, of another person.

57. It is clear, if this exchange is not equal, if one party gives more of his own labor—either in the form of labor or product—than he gets of the labor of the other,--either in the form of labor or product,--that he is oppressed, and becomes, so far as this inequality goes, the slave or subject of the other. He has, just so far, to expend his labor, not for his own benefit, but for the benefit of another. To produce good or beneficent results from trade, therefore, the exchanges should be equal. Hence it follows that the essential element of beneficent Commerce is EQUITY, or that which is just and equal between man and man.

58. The fundamental inquiry, therefore, upon the answer to which, alone, a Science of Commerce can be erected, is the true measure of Equity, or, what is the same thing, the measure of price in the exchange of labor and commodities. This question is one of immense importance, and, strange to say, it is one which has never received the slightest consideration, which has never, indeed, been raised either by Political Economists, Legislators, or Moralists. The only question discussed has been, what it is which now regulates price,--never what should regulate it. It is admitted, nevertheless, that the present system of Commerce distributes wealth most unjustly. Why, then, should we not ask the question, What principle or system of Commerce would distribute it justly? Why not apply our philosophy to discovering the true system, rather than apply it to the investigation of the laws according to which the false system works out its deleterious results.

59. Simple Equity is this, that so much of YOUR labor as I take and apply to MY benefit, so much of MY labor ought I to give you to be applied to YOUR benefit; and, consequently, if I take a product of your labor instead of the labor itself, and pay you in a product of my labor, the commodity which I give you ought to be one in which there is JUST AS MUCH LABOR as there is in the product which I receive.

The same idea may be differently presented in this manner. It is Equity that every individual should sustain just as much of the common burden of life as has to be sustained BY ANY BODY on his account. Such would be the result if each produced for himself all that he consumed, as in the first case supposed above; and the fact that it is found convenient to exchange labor and the products of labor does not vary the definition of Equity in the least.

60. To a well-regulated mind the preceding propositions present an obvious and self-evident truth, like the proposition that two and two make four, demanding no other proof than the statement itself. Yet simple and undeniable as they appear, with thus distinctly propounded, the consequences which inevitably follow from the principle which they affirm are ultra-radical and revolutionary of all our existing commercial relations, as will be shown in the subsequent chapters of this work. They contain merely, however, a statement of the Principle of Equity. They leave the question of the Method of making an application of the principle still open. They do not furnish the means of arriving at the measure of Equity. This, then, is the next step in the investigation.

61. If I exchange my labor against yours, the first measure that suggests itself for the relative amount of labor performed by each is the length of time that each is employed. If all pursuits were equally laborious, or, in other words, if all labor were equally repugnant or toilsome,--if it cost equal amounts of human suffering or endurance for each hour of time employed in every different pursuit, then it would be exact Equity to exchange one hour of labor for one other hour of labor, or a product which has in it one hour of labor for another product which has in it one hour of labor the world over. Such, however, is not the case. Some kinds of labor are exceedingly repugnant, while others are less so, and others still more pleasing and attractive. There are differences of this sort which are agreed upon by all the world. For example, sweeping the filth from the streets, or standing in the cold water and dredging the bottom of a stream, would be, by general consent, regarded as more repugnant, or, in the common language on the subject, harder work, than laying out a garden, or measuring goods.

But besides this general difference in the hardness or repugnance of work, there are individual differences in the feeling toward different kinds of labor which make the repugnance or attraction of one person for a particular kind of labor quite different from that of another. Labor is repugnant or otherwise, therefore, more or less, according to the individualities and opportunities of persons.

If you inquire among a dozen men what each would prefer to do, you will find the greatest diversity of choice, and you will be surprised to find some choosing such occupations as are the least attractive to you. It is the same among women as respects the labors which they pursue.

62. It follows from these facts that Equity in the exchange of labor, or the products of labor, cannot be arrived at by measuring the labor of different persons by the hour merely. Equity is the equality of burdens according to the requirements of each person, or, in other words, the assumption of as much burden by each person as has to be assumed by somebody, on his account, so that no one shall be living by imposing burdens on others. Time is one element in the measurement of the burdens of labor, but the different degrees of repugnance in the different kinds of labor prevent it from being the only one. Hence it follows that there must be some means of measuring this repugnance itself,--in other words, of determining the relative hardness of different kinds of work,--before we can arrive at an equitable system of exchanging labor and the products of labor. If we could measure the general average of repugnance,--that is, if we could determine how people generally regard the different kinds of labor as to their agreeableness or disagreeableness,--still that would not insure Equity in the exchange between individuals, on account of those individualities of character and taste which have been adverted to. It is an equality of burden between the two individuals who exchange which must be arrived at, and that must be according to the estimate which each honestly forms of the repugnance to him or her of the particular labor which he or she performs, and which, or the products of which, are to be exchanged.

63. It is important for reasons of practical utility to arrive at a general or average estimate of the relative repugnance of different kinds of labor, especially of the most common kinds, and that is done under the operation of the Cost Principle, as hereafter pointed out (195); but, as we have seen, if we had already arrived at it, it would not be a sufficiently accurate measure of Equity to be applied between individuals; while, on the other hand, this average itself can only be based upon individual estimates. The average which now exists in the public mind, by which it is understood that field labor, in cultivating grain, for example, is neither the hardest nor the easiest kind of work, and that sewing or knitting is not so repugnant as washing or scrubbing, rests upon the general observation of individual preferences.

64. It follows, therefore, in order to arrive at a satisfactory measure of Equity, and the adoption of a scientific system of commerce: 1. That some method must be devised for comparing the relative repugnance of different kinds of labor. 2. That, in making the comparison, each individual must make his or her own estimate of the repugnance to him or her of the labor which he or she performs, and 3. That there should be a sufficient motive in the results or consequences to insure an honest exercise of the judgment, and an honest expression of the real feelings of each, in making the comparison.

65. I.--That some method should be devised for comparing the relative repugnance of different kinds of labor. This is extremely simple. All that is necessary is to agree upon some particular kind of labor, the average repugnance of which is most easily ascertained, or the most nearly fixed, and use it as a standard of comparison, a sort of yard-stick for measuring the relative repugnance of other kinds of labor. For example, in the Western American States it is found that the most appropriate kind of labor to be assumed as a standard with which to compare all other kinds of labor is corn-raising. It is also found, upon extensive investigation, that the average product of that kind of labor, in that region, is twenty pounds of corn to the hour. If, then, blacksmithing is reckoned as one half harder work than corn-raising, it will be rated (by the blacksmith himself) at thirty pounds of corn to the hour. If shoe-making be reckoned as one quarter less onerous than corn-raising, it will be rated at fifteen pounds of corn to the hour. In this manner the idea of corn-raising is used to measure the relative repugnance of all kinds of labor.

66. II.--That, in making the comparison, each individual must make his or her own estimate of the repugnance to him or her of the particular labor which he or she performs. This condition must be secured, both for the reasons already stated, and because another equally important principle in the true science of society is the Sovereignty of the Individual. The Individual must be kept absolutely above all institutions. He must be left free even to abandon the principles whenever he chooses. The only constraint must be in the attractive nature and results of true principles.

67. III.--That there should be a sufficient motive in the results or consequences of compliance with these principles to insure an honest exercise of the judgment, and an honest expression of the real feeling of each in making his estimate of the relative repugnance of his labor. The existence of such a motive can only be shown by a view of the general results of this entire system of principles upon the condition of society, and upon the particular interests of the individual. These results must be gathered from a thorough study of the whole subject, in order to establish this point conclusively to the philosophic mind. The force of a public sentiment rectified by the knowledge of true principles will not be lost sight of by such a mind. (229.) The particular remedial results of deviations from the principle of Equity upon the interests of the individual will be specifically pointed out in the subsequent pates. (72-76.)

68. If an exchange could be always made and completed on the spot, each party giving and receiving an equivalent,--that is, an amount of labor, or a product of labor, which had in it an amount of repugnance or cost just equal to that in the labor or product for which it was given or received,--the whole problem of exchanges would be solved by the simple method just stated. There would in that case be no necessity for a circulating medium, or for anything to perform the part which is performed by money in our existing commerce. But such is not the case. Articles are not always at hand which have in them the same amount of cost; indeed, it is the rare exception that exact equivalents can be made upon the spot in commodities which are mutually wanted. Besides, it may frequently happen that I want something from you, either labor or the products of labor, when you, at the time, want nothing of me. In such a case the exchange is only partially completed on the spot, the remaining part waiting to be completed at some future time, by the performance of an equivalent amount of labor, or the delivery of products or commodities having in them an equivalent amount of labor.

69. In such a case as that just stated, it is proper that the party who does not make his part of the exchange on the spot should give an evidence of his obligation to do so at some future time, whenever called upon,--and this the origin of what is called the Labor Note, which is the form assumed by “Equitable Money,” the fourth among the elements of the solution of the Problem of Society. The party who remains indebted to the other gives his own note, provided the other consents to receive it, for an equivalent amount of his own labor, or else of the standard commodity,--say so many pounds of corn, specifying in the note the kind of labor, and the alternative. As it may happen that the party receiving the Labor Note may not require the labor itself, or that it may be inconvenient for the party promising to perform it when it is wanted, it is provided that the obligation may be discharged, at the option of the party giving the note, in the standard commodity instead. In the other hand, although the party receiving the note may not want the labor himself, yet some person with whom he deals may want it, and hence he can pass the note to a third party who is willing to receive it for an equivalent amount of labor, or products, received from him. In this manner the Labor Note begins to circulate from one to another, and the aggregate of labor Notes in circulation in a neighborhood constitutes the neighborhood circulating medium, dispensing, so far as this Equitable Commerce extends, with money altogether, or, rather, introducing a new species of paper money, based solely upon individual responsibility.

70. The use of the Labor Note is not, as has been already observed, strictly a principle of Equity, and partakes more of the nature of a contrivance than any other feature of the system of Equitable Commerce; but yet it seems to be a necessary instrument to be employed in the practical working of the system. The Theory of Equity is complete without it, but the necessity for its use arises from the practical fact that exchanges cannot in every case be completed on the spot. Hence a circulating medium of some sort is indispensable, and in order that the system may remain throughout an equitable one, in practice as well as in theory, the circulating medium must be based on equivalents of labor or cost between individuals.

The features of the Labor Note are peculiar, and the points of difference between it and ordinary money are numerous and far more important than at first appears. They are as follows:

71. I.--Its cheapness and abundance. As it costs nothing but the paper upon which it is written, printed, or engraved, and the labor executing and signing it, it may be said, for practical purposes, to cost nothing. The great fault of our existing currency is its expensiveness and scarcity. It is upon these properties that the whole system of interest or rent on money is founded, a tribute to which the rich as well as the poor have to submit, whenever they want a portion of the circulating medium to use. To show that this is a real and frightful evil in gold and silver currency, and consequently in all money of which gold and silver are the basis, demands a distinct treatise on money. Under the Labor Note system, every man who has in his possession his ability to work, or his character, or in these elements variously combined, the assurance of responsibility or the basis of credit, has always by him as much money as he needs. He has only to take his pen from his pocket and make it at will. There can be no such cases as happen now, of responsible men worth their tens or hundreds of thousands of dollars in property, but absolutely destitute of money, and forced to submit to the shaving process of bankers, brokers, and Jews.

72. II.--Being based on individual credit, it makes every man his own banker. This feature of the Labor Note system is substantially contained in the preceding statement, but the more important consequences of his fact remain to be pointed out. Bankers are proverbial for their anxiety to maintain their credit unimpaired and unsuspected. With them distrust is synonymous with the ruin of their business. Under this system every man, woman, boy, and girl, assuming the character of a banker, becomes equally solicitous about the maintenance of his or her credit. Upon the goodness of their reputation for punctuality of redemption depends the fact of their always having change in their pockets. Honesty comes then to a good market, and finds at once a pecuniary reward. If one's credit is suffered to fall into disrepute among this neighbors, he is left positively without money or the means of obtaining it, and reduced to the necessity of making all his exchanges on the spot. He is put pecuniarily into Coventry. Both the superior advantages of possessing credit, and the greater inconvenience of losing it, conspire, therefore, to install the reign of commercial honor and common honesty in the most minute and ordinary transactions of life among the whole people. The moralist who is wise will perceive herein an engine of reform immensely important to subserve his ends. This result is already satisfactorily proven in practice at one point, where this system of exchanges has been introduced, in the fact that every person is anxious to obtain the Labor Notes of others for use and to abstain, so far as he can, from issuing his own; as well as in the general solicitude for the preservation of credit, and the general promptitude in redeeming the notes that are issued. Notwithstanding the fact that, in now small a circle, it is only a part of the pecuniary transactions of the community which can be carried on upon the Cost Principle,--ordinary money having to be used in all transactions with the world outside, and even within the community, for those things which were purchased outside and which cost money,--still these results have been strikingly exhibited in practice.

73. III.--It combines the properties of a circulating medium and a means of credit. These qualities have been substantially stated above as separate attributes of the Labor Note system; but the advantage of their combination in one and the same instrumentality of Commerce is worth of a distinct observation. At the end of the third year from the commencement of the settlement above referred to, there were eighteen families having two lots of ground, each with houses-—nine brick and nine wooden ones—-and gardens of their own, nearly the whole of which capital was created by them during that period. The families, without exception, came there quite destitute of worldly accumulations. Thirty dollars in money was probably the largest sum possessed by any of them. Others ladened there with five dollars and ten as the whole of their fortune. They were nearly all families who had been exhausted in means as well as broken down and discouraged in spirit by successive failures of community, or association attempts at reform. The success they have thus achieved, in so short a time, has resulted entirely from their own labor, exchanged so far as requisite and practicable upon the Cost or Equitable Principle, facilitated by the instrumentality of the Labor Note.

74. A family arriving without means at the location of a village operating on the Equitable Principle, if their appearance or known character inspires sufficient confidence in the minds of the previous settlers, can immediately commence operations, not upon charity, but upon their own credit, issuing their Labor Notes—-men, women, and youths—-so far as their several kinds of labor are in demand, procuring thereby the labor of the whole village in all the various trades necessary to construct them an edifice, and supply them with the necessaries of life, so far as the size of the circle renders it possible to produce them on the spot. Labor, even prospective labor, thus becomes immediate capital. Interest and profits being discarded, the amount of capital thus existing in labor is greatly augmented. The fact that the labor of the women and children is equally remunerated with that of the men again adds to the amount of combined capital in the family. By the operation of these several causes, a family which has been struggling for years, in the midst of the competition of ordinary Commerce and the oppressions of capital, with no success beyond barely holding on to life, may become in a short time independent and well provided. Such are the legitimate workings of the true system of Commerce, and so far as it has been tested by practical operations the results have entirely corroborated the theory.

75. [The settlers at Trialville, however, would not wish any thing said upon this subject to be construed into any pledge on their part to supply any advantages to individuals coming among them. There is no community or society there in the corporate sense of the term. Every individual judges for himself upon what terms he will treat with others, how far he will receive their Labor Notes, or whether he will receive them at all. Persons going there must make up their own opinion whether there is a sufficient demand for the kinds of labor which they can perform, whether their own uprightness of character and punctuality in the discharge of obligations are such as to inspire and maintain confidence, and, indeed, upon every point relating to the subject. No guarantees whatever are given, except such as the Individual finds n the principles themselves, while it is left entirely to the decision of the Individual himself, on every occasion, whether even he will act on the principles or not. There is no compact or constitution,--no laws, by-law, rules, or regulations of any sort. The Individual is kept above all institutions, our of deference to the principle of Individuality and the Sovereignty of the Individual, which belong just as much to the fundamental basis of true society as the Cost Principle itself. There must, therefore, be no reliance on express or implied pledges, nor upon any species of cooperation which is contracted for, and binding by agreement. Besides, the extent to which the advantages of the Labor Note can be rendered available is limited in the beginning by the smallness of the circle, by the prevalence of pursuits unfavorable to the mutual exchange of labor or products, and by numerous other considerations, all of which must be judged of by the Individual upon his own responsibility, and at his own risk.]

76. When credit is raised upon the issue of Labor Notes, it has the advantage of being based upon that which the party has it in his power to give. He has in his own vaults the means of redemption. If a laboring man promises money, his ability to pay the money depends upon the precarious change of his finding a demand for his labor. If he gives a Labor Note, finding a demand for his labor, he secures the means of paying by the act of entering into the obligation. Even if the payment is demanded in the alternative, and is discharged in the standard commodity itself (corn), or, what is more likely, in other commodities, measured by corn, or in the Labor Notes of the others, still all of these are procured by the exchange of his own labor, and it will appear, upon a full exposition of the system, that under the operation of these principles labor will always be in demand, so that no laborer need ever be out of employment. (161.) As a result of this fact every man can know positively, beforehand, to precisely what extent he can, with safety, issue his Labor Notes, the contingencies of sickness and death alone excepted. Hence dishonesty finds no subterfuges. In the case of death the heirs possess the property, if there be property, for which the notes were given. To refuse to redeem them is a palpable ascertained fraud, and the same powerful motives which have been shown as operating on the original debt to insure honesty and punctuality operate also upon them. If they evade the obligation, they, too, are placed in Coventry, and cut off from all the advantages and privileges which such an association affords. The influence thus brought to bear upon them is ten-fold more potent than laws, and the sanctions of laws, in existing society. In the event of sickness, if the invalid has accumulated property, it serves to maintain him, and redeem his outstanding obligations, precisely as now. Such is the main purpose of accumulation. If a person has no property at the time his Labor Notes are given, then his credit is based solely on his future labor, and the liability to sickness and death enters into the transaction and limits the issue. The risk is incurred by the party who receives them. As the amount of these notes in the hands of any single individual is generally small, the risk is a mere trifle, and has never been found, practically, to be enough to make it worth while to take it into account at all. For the contingency of the loss of property by fire or other accidents, between the time when obligations are incurred and their redemption as well as at all other times, insurance can be resorted to, as is done in existing society. Thus the Labor Note, while it is a circulating medium, is at the same time the instrument of a system of credit, having all the advantages, with none of the frightful results of insecurity and bankruptcy, which grow out of, or accompany, the credit system actually prevailing in the commercial world.

77. IV.--The Labor Note represents an ascertained and definite amount of labor or property, which ordinary money does not. We have examples of this feature of currency in the railroad and opera ticket, and other similar representations of a positive thing. A railroad ticket represents a ride of a definite length today, tomorrow, and next day, but a dollar does not represent any thing definite. It will buy one amount of sugar or flour today, another amount tomorrow, and still a different amount the next day. The importance of this feature of the two different systems is immense. It can, however, only be exhibited in its consequence by an extended treatise on the subject. What is shown in this chapter is a mere glimpse at the system of “Equitable Commerce” in operation. A thousand objections will occur which it is impossible to remove at the time of stating the general outline. It will be perceived by the acute intellect that a principle is here broached which is absolutely revolutionary of all existing commerce. Perhaps a few minds may follow it out at once into its consequences far enough to perceive that it promises the most magnificent results in the equal distribution of wealth proportioned to industry, the abolition of pauperism, general security of condition instead of continual bankruptcy, poverty, universal cooperation, the general prevalence of commercial honor and honesty, and in ten thousand harmonizing and beneficent effects, morally and religiously. The larger class of persons, however, will require that each particular detail shall be tract out and defined, and the mass of mankind will only understand the subject upon the basis of practical illustration. Hence the necessity that the practice go along with the theory, a method which has been generally adopted and pursued, and of the results of which the public will be from time to time sufficiently advised.

It would be inappropriate at this early point, and before a better understanding of the results which flow from the fountain of Equity has been obtained, to trace the operation of the Labor Note more into detail. In a subsequent chapter it will be considered in the light of a universal or world-wide system of currency. (245.)


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