In view of the importance and authority of the Quarterly Journal, I cannot let pass without a reply the review of my Economic Synthesis by Professor Clive Day, published in the February issue. I would not lay stress on the unnecessarily aggressive temper of the review, nor show the inconsistencies between the opinions of my critic and those of the many scholars who have judged the book differently, or even the inconsistencies in his own opinions, the latter perhaps would be easier. In truth, there seems to be an inconsistency in writing so many pages, some of them no doubt suggestive, about a book which at the very outset is declared to be not worth reading.

I write these lines simply to protest with all my power against a literalness of exegesis which perhaps would be admissible as regards the Bible and the Koran, but which is quite out of place in discussing a work of science. Professor Day brings together all the pages in my book in which the word "subsistence" appears, and discovers that what I say in one place is not absolutely in accord with what I say in another. Why, instead of merely scanning minutely the words, like a glossarist of the Middle Ages, has he not considered the ideas? Had he done so, he would have seen that there is not a shadow of inconsistency in my exposition. What I say comes in substance to this. Subsistence is equal to the product of isolated labor, supplied with the necessary technical capital; whereas this same labor, as soon as it is associated, produces something in addition, which is revenue. Subsistence certainly is not luxury, not even comfort.


coincides essentially with the necessaries of the worker. But it has nevertheless to be understood, and I have taken care to repeat it many times, that these necessaries, which are rather moral than physical, by no means coincide with the minimum indispensable for life. They are not the same as starvation wages, which they may readily surpass. Hence there is no inconsistency on my part if I admit that the capitalist does his utmost to lower wages below the normal level fixed by subsistence, and that the laborer in turn endeavors to bring wages back to this level. This is the basis of the contest

between capital and labor. In the same way there is no inconsistency if I admit the possibility that the laborer may save a part of the wages or of the subsistence which he gets, even tho at the cost of severe privation.

I must also protest against the way in which my critic has stated some of my propositions. For example, according to him, I have said that "the quantity of incomes produced in a nation is determined by the quantity of capital productively employed, by the quantity and productivity of the land, by the quantity of public and private securities issued." Stated in this way, my proposition, I admit, would be an absurdity. But the passage referred to says nothing at all about the determination of total income; it bears exclusively on the classification of the different kinds of income, and says precisely this: "The quantity of the various consolidated and fluctuating incomes produced in each nation is determined by the quantity of capital productively employed," and so on (p. 154). This is an incontestable truth. Evidently for instance, the total volume of interest or dividends on public securities in a nation is the precise result of the amount of the public debt which has been issued.

Like every student of economic history, I know the various theories about the origin of the ancient agrarian community. I am well aware that the aristocratic theory of Kemble, Fustel de Coulanges, Seebohm, is in opposition to the democratic theory of Maurer, Vinogradoff, and others. I am well aware also that this controversy (which at bottom is a repetition of that carried on in the eighteenth century between

Boulainvilliers and Dubos) can be the occasion of much interesting discussion, as indeed I have indicated. But all this has nothing to do with the particular subject of my book, which is not concerned with any analysis of the political or legal aspects of the primitive community or with its free or servile origin. The book simply considers the technical and economic structure of the community, the processes of production and distribution as regards the productive agents and the product. Now, on this subject the theorizers of the two opposing schools are entirely in agreement. It suffices to compare the remarks of Seebohm (The English Village Community, 3d ed., London, 1884, pp. 123, 226, etc.) with those of Vinogradoff (The Growth of the Manor, London, 1905, pp. 165, 183; English Society in the Eleventh Century, London, 1908, pp. 216, etc.) on the organization of production and distribution in the English agrarian community. The comparison shows that these two authorities give an absolutely identical picture of the economic form, and that they represent it as a coercive association of labor organized by a central authority which endeavors to maintain substantially equal partition among the associates. This is all that I wish to bring


Professor Day makes the following criticism, "In Loria's mind there is no history, but only political economy stretching back over countless centuries of time." No less a person than Ricardo has been criticized in these identical words, and it might be considered a high honor for me to deserve it. But have I really deserved it? I think not. I have never believed that the economic phenomena analyzed by me are the whole of history, that they comprise the whole of humanity. Far from it; I should be the first to admit that these facts would present only one aspect, more or less fragmentary, in the general history of the species. Yet, admitting all this, one cannot doubt the enormous importance of these phenomena or their great historical significance. For example, it would certainly be absurd to believe that the efforts of the slaves and serfs to buy their liberty comprise the entire history of the periods in which these phenomena are found,

or even that they comprise everything that can be said on the evolution and decay of slavery and serfdom. But no penetrating thinker can doubt that this is an economic phenomenon of fundamental importance. The fact that the slave and serf employed his money, as soon as it had reached the requisite amount, for buying his liberty, which opened to him access to landed property, was far from being " a creation of my imagination of which I could give no proof"; it was formally embodied in legislation. It suffices to cite the rescript of Marcus Aurelius and of Severus about servus suis nummis emptus, where the manner and the effect of the purchase of the slaves by himself are carefully regulated (Buckland, The Roman Law of Slavery, Cambridge, 1908, pp. 606 et seq.). Now the effort was always made to counteract the slave's endeavor to buy himself by raising the price in such way that it should exceed somewhat the amount of his savings. And hence it is that the price of slaves, as has been well said by one of your own economists, Mr. Philipps, is the central fact in slavery. If Professor Day prefers to hold a different opinion, if he finds this analysis simply grotesque, I have nothing more to say.

According to my investigations, so long as the isolated laborer produces all his subsistence, he never associates his labor with that of another, and in consequence the association of labor takes place by compulsion, either through the compulsion of a collective authority, as in the ancient communities or despotisms, or through that of a private capitalist, as in the case of a bonanza farm. But it follows also that if the isolated laborer does not succeed in producing his entire subsistence, his opposition to the association of labor ceases, and the association becomes spontaneous. This conclusion, which Professor Day calls nonsense, is simply the logical outcome of premises established with precision.

I might add that my critic, notwithstanding the exuberance of his detailed remarks, finds not a word to say about my chapter upon the rational imposition of taxes, or on my studies concerning the distribution of revenue, the contest between the different revenues, the pyramidal distribution of

funded incomes which results from this struggle, — all subjects which form the essence and core of my book. I merely note these topics in order to enable your readers to judge for themselves the solidity and impartiality of my critic.




PROFESSOR Allyn A. Young's recent heretical utterances on depreciation in the valuation of public service properties for the purpose of rate control, compel every true believer to gird on his armor and come forth in defense of the faith.1 Professor Young's ideas are dangerous and his arguments are plausible; so all the more zeal for their destruction! So long as they had been advanced only by engineers and public utility experts employed by the corporations, or perhaps even by Mr. James E. Allison and the St. Louis Public Service Commission, there was no need for serious alarm. But when they are taken up by Professor Young, a vigorous thinker and a progressive economist of high standing, then indeed it is time to rush for the defense of righteous belief.

Professor Young's principal thesis is that when a public utility is newly brought under regulation and its property is valued for the purpose of rate control, to deduct accrued depreciation from cost new would be unjust to the investors. The rates to be fixed in any case will presumably be just so high that the revenues will cover operating expenses and bring a reasonable return upon the valuation. Professor Young assumes that in the great majority of instances, a public service company, before it was brought under active

1 "Depreciation and Rate Control," Quarterly Journal of Economics, vol. xxviii, pp. 630-663, August, 1914.

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