tive power, nor is all production merely the turning into other forms of this inert matter of the universe. It is true that if I put away money, it will not increase. But suppose, instead, I put away wine. At the end of the year I will have an increased value, for the wine will have improved in quality. Or supposing that, in a country adapted to them, I set out bees; at the end of the year I will have more swarms of bees and the honey which they have made. Or supposing, where there is a range, I turn out sheep, or hogs, or cattle; at the end of the year I will, upon the average, also have an increase. Now what gives the increase in these cases is something which, though it generally requires labor to utilize it, is yet distinct and separate from labor-the active power of nature; the principle of growth, of reproduction, which everywhere characterizes all the forms of life. And it seems to me that it is this which is the cause of interest or the increase of capital over and above that due to labor. . . . Now the interchangeability of wealth necessarily involves an average between all the species of wealth of any special advantage which accrues from the possession of any particular species, for no one would keep capital in one form when it could be changed into a more advantageous form.

And so in any circle of exchange the power of increase which the reproductive or vital force of nature gives to some species of capital must average with all; and he who lends, or uses in exchange, money, or planes, or bricks, or clothing, is not

deprived of the power to obtain an increase, any more than if he had lent or put to a reproductive use so much capital in a form capable of increase. Thus interest springs from the power of increase which the reproductive forces of nature, and in effect analogous capacity for exchange, give to capital. It is not an arbitrary, but a natural thing; it is not the result of a peculiar social organization, but of laws of the universe which underlie society. It is, therefore, just."

1

As we have already seen, the true reason why interest is paid, and why it is rightfully paid, is not, as George thinks, because of the naturally fructifying characteristic of certain forms of wealth, but because of the fact that an immediate advantage is actually worth more than a deferred one.

It is not to be gathered from the foregoing that confiscation by the State of land privately owned can never be justified save when compensation is offered. If the necessity for the change should be shown to be imperative, and yet the existing conditions should be of such a character as absolutely to preclude the possibility of payment of indemnity to the landlords, confiscation would be justified in much the same way that a private house may justly be demolished in order to prevent the spread of a conflagration, or the value of any private property

1 Op. cit., Book III, Chapter III. As Böhm-Bawerk points out, George's theory resembles Turgot's "Fructification Theory," but differs from it in that Turgot places the source of interest outside of capital, that is, in rent-bearing land, while George seeks it outside the sphere of capital in certain naturally fruitful kinds of goods.

destroyed by the exercise of the State's "police power."

This, however, is something quite different from what is maintained by the followers of George. They justify the exploitation of the landlord upon a theory as to the peculiar character of land which distinguishes it generically from all other forms of wealth. The principle which we have just stated recognizes the original right of the owners of the land, but supersedes it by the enforcement of a higher right. The followers of George deny the original equity of private ownership of land, and thus declare that no right exists for the violation of which a justification is needed.

The justice of the appropriation by the community of only the future unearned increment of land, as advocated, for example, by Mill, depends upon principles already stated. If this appropriation should be so made that the actual market value of land would not be affected, no special justification would be needed. Whether or not the step should be taken would, under such circumstances, be simply one of economic expediency. It may be observed, however, that it is by no means certain that there is an unearned, that is a socially earned, increment which attaches to land that does not also attach to many other forms of wealth.

The whole matter is summed up, however, in saying that unless land can be shown to be of such a character that for its private ownership there must be discovered an ethical warrant different from that

which is needed for other forms of property, an interference with its value by the State, present or future, can be defended only upon the same grounds that will justify a like interference with the values of other forms of wealth.

CHAPTER VII

OTHER CANONS OF DISTRIBUTIVE JUSTICE

Effort Theory. As we have seen, one of the chief objections to the ethical validity of the labor theory is that, in its apportionment of rewards, no distinction is made between that productive efficiency which is due to abilities patiently and laboriously acquired by the effort of the individuals concerned, and that which results from the qualities of mind and body naturally given by heredity or spontaneous variation. At first thought, a corrective to this defect seems to be given by making efforts expended, rather than actual results reached, the distributive criterion. But here, to an even greater degree than is the case with the other standards of distributive justice which we have considered, the principle is one impossible of practical application. The fatal difficulty is in determining, even approximately, the amount of effort honestly expended by an individual in the performance of a given piece of labor, or, if determined, of comparing it with the amounts expended by other individuals. As Mackenzie says: "Are we to mean by effort the amount of energy expended? or are we to mean the difficulty which a given individual experiences?