<h2>CHAPTER 42</h2>
<h3>DISTRIBUTION OF THE SOCIAL INCOME</h3>
<h4>§ I. THE NATURE OF PERSONAL DISTRIBUTION</h4>
<div class="sidenote">Definition of personal distribution reviewed</div>
<p>1. <i>Personal distribution, in economics, is the reasoned explanation of
the ways in which income is divided among the members of the community.</i>
Before noting more exactly the ways in which distribution can and does
take place, it may be well to review briefly some definitions that have
been given in other connections. Distribution is bound up in practice
with production, but it can be thought of as a more or less distinct
problem. Functional distribution is the attribution of value to agents
or classes of producers, to land, machinery, and labor considered
impersonally as groups of productive agents. Personal distribution is
the actual apportioning of income to living persons. This theme now to
be dealt with is the more important practically, for the abstract
discussion of rent and interest is of use only as it helps to an
understanding of this vital human problem. It is well to recall also the
distinction between wealth income, money income, and psychic income. The
first is the objective aspect, the last is the subjective aspect, of
income; the second, money income, may be an expression, in money form,
of either of the others, but commonly of the former. The money
expression of psychic income can be only approximately attained.</p>
<div class="sidenote">Personal affection and distribution</div>
<p>2. <i>The individual's income is determined by a number of forces, only
part of which are primarily economic.</i> Many persons derive income
directly neither from property nor<span class="pagenum"><SPAN name="Page_403" id="Page_403">[Pg 403]</SPAN></span> from labor. They neither toil nor
clip coupons, but they flourish in the favor of others—parent, husband,
wife, friends, patrons. So long as the good-will continues these persons
may be as well off as if they drew a salary or owned a bank. If a person
in control of goods shares them with another, it is a matter that
economists must recognize, but cannot well reduce to rules of value. It
is not the task of economists to explain why the impulses of generosity
arise, but only how they affect distribution. The economic problem of
distribution really ends where owner or worker secures his income.
Giving a part of it to some one else is essentially a form of
consumption, and only secondarily a mode of distribution; it is the way
chosen to spend the wealth income.</p>
<div class="sidenote">Complex source of psychic incomes</div>
<p>The psychic income of individuals, therefore, is often made up of many
elements. Some parts are due to services performed by the person
himself. When one combs his own hair he is adding to his income.
Benjamin Franklin said it was better to teach a boy to shave himself
than to give him a thousand dollars. Other goods are the uses and fruits
of legally controlled wealth: chance finds, as gifts of value or lost
and abandoned goods; goods assigned to one by authority; wealth
inherited; illegal gains by robbery; goods secured on credit; gifts
either of things or of services. The uses of this university are a gift
forming a part, first, of the student's income, and, finally, of the
social income. Such gifts can be traced back to large-hearted,
public-spirited men like Ezra Cornell, but they must be looked upon as
coming from some one. This list, incomplete as it is, suggests that the
real income of most individuals has manifold sources. Let us undertake
to examine and analyze the various methods in actual use in the
distribution of income to the persons making up society.</p>
<p><span class="pagenum"><SPAN name="Page_404" id="Page_404">[Pg 404]</SPAN></span></p>
<h4>§ II. METHODS OF PERSONAL DISTRIBUTION</h4>
<div class="sidenote">Compulsory distribution; violence</div>
<p>1. <i>Distribution is sometimes compulsory, by force or fraud.</i> This crude
and primitive mode of distribution, the negation of personal liberty,
never has been quite eliminated. In every country an unhappily large
number of men from time to time break over into crime, from violence and
highway robbery down to sneak-thieving, pocket-picking, and bunco games.
Not more than ten per cent. of this criminal element is at any one time
in prison. This method of personal distribution, not hinted at in most
theories of distribution, determines a large part of the income of tens
of thousands of men in this country and concerns the distribution of
millions of dollars. These enemies of society appropriate whatever they
can, and the law stops them if it is able.</p>
<div class="sidenote">Chattel slavery</div>
<p>Slavery is distribution by legalized force, but the force is not
legalized by the consent of the victims. The evolution of the harsher
slavery may be traced through various forms of milder serfdom. There is
found an element of this in the freest existing societies; men unwilling
are forced to do things. A patent example is the convict on a
chain-gang, a slave to society as a penalty for his violation of its
commands. But some radical reformers to-day claim that present society
is wholly based on legalized force, and that the workingman is
essentially a slave. Their ideal cannot be realized without dissolving
social bonds and destroying civilization; yet the presence, even in our
society, of this forced, unwilling submission on the part of some of its
members cannot be ignored.</p>
<div class="sidenote">War indemnities</div>
<p>A similar example of forcible taking is seen in case of war. Savage
tribes plunder and take captive their weaker neighbors. Conquering
modern nations usually exact tribute from defeated enemies. Germany got
a billion dollars from France, Japan a quarter of a billion from China.
The<span class="pagenum"><SPAN name="Page_405" id="Page_405">[Pg 405]</SPAN></span> terms of peace at the close of our great Civil War were the most
liberal ever granted by conqueror to vanquished; and yet the federal
pensions granted to Northern soldiers are a form of tribute, being paid
by taxes falling alike upon the North and the South. In all these cases
the distribution by force is unwillingly suffered. In none of them is it
reducible to economic rules or capable of a strict economic explanation.</p>
<div class="sidenote">Charitable distribution within the family</div>
<p>2. <i>Distribution may be charitable, that is, determined by
considerations of benevolence and affection.</i> Charitable is here used in
its original sense, as synonymous with love or affection. First to be
mentioned is the love of parents, the root and type of all the forms of
charity. The lack of economic equivalence in the relation of parent and
child is complete in early years. The helpless infant gives nothing
economic to the parent, the parent gives all to the child. Gradually,
however, the balance is regained; as the years go on, not only does the
child repay in affection but in many cases he repays in material ways.
In the factory districts and on the farm the child in early years begins
to reëstablish the balance, becomes a worker, and contributes as much as
the cost of his support, and finally more. A student of modern English
town life has traced the curve of poverty traversed by the average child
of the poor, as the family moves, now below, again above, the level of
minimum income required for physical efficiency. In the middle or
propertied classes the children do not for many years take the burden
from the parents, and it is doubtful whether in most cases the economic
balance is ever reëstablished. It is not to the parents, but to the
succeeding generation, that the debt is vicariously paid.</p>
<div class="sidenote">And in larger circles</div>
<p>Friendship widens the range of generosity and multiplies the mass of
gifts. Broad sentiments of humanity lead to gifts outside the range of
personal affection and personal interest, to the beggar on the street,
to institutions devoted to charity. In New York state about twenty
million dollars<span class="pagenum"><SPAN name="Page_406" id="Page_406">[Pg 406]</SPAN></span> a year is given to charity, and in the country at large
many times as much. In the year 1901 over one hundred million dollars
was given to education in the United States by private donors; and that
high mark will no doubt soon be passed. Gifts in cases of great
disasters, as the Irish and Indian famines, the Chicago fire, the
Galveston flood, the eruption of Mount Pelée, bespeak a widening
generosity. Religion impels to the building of churches, to the support
of priests, missions, and manifold religious undertakings. Charity in
this connection is the expression of a sentiment that varies from the
broadest and most general humanitarian sentiment to the most intense and
ardent personal affection.</p>
<div class="sidenote">Authoritative distribution in the despotic state</div>
<p>3. <i>Distribution may be by an authority willingly acknowledged.</i> The two
preceding forms of distribution, force and love, shade off into this
form. In them the ones from whom goods are taken or to whom they are
given have no power to change the conditions; here is to be considered
the case where the person bows willingly to the superior power and takes
what that power accords him. There are few despotisms in which the
government is not based on the wishes and average capacities of the
governed. If the citizens as a body really desired and were deserving of
better government, in most cases they could get it. Much is heard, for
example, of despotism in Russia, and of the abject condition of the
people; but travelers testify that while many in the educated student
classes are filled with the greatest discontent, and the intelligent
subject peoples, such as the Finns, detest their rulers, such sentiments
are far from general throughout the empire. The power of the Czar could
not exist for a single moment if the mass of the people did not look to
him as the great father whom they venerate and love. If this is true,
the despotism in Russia, though abhorrent to our ideals of freedom, is
fitted to the aspirations of the mass of the people. So far as
government determines income, the authority distributing income there,
as elsewhere, is one willingly acknowledged.</p>
<p><span class="pagenum"><SPAN name="Page_407" id="Page_407">[Pg 407]</SPAN></span></p>
<div class="sidenote">In communities and families</div>
<p>In patriarchal tribes, in communal societies, in monastic and other
religious orders distribution is by an accepted authority. Each person
works at what he is commanded to do, and some one in authority (the
patriarch, head of the community, the father of the monastic order)
portions out the work and the reward. In the family this rule largely
prevails, and even after the children have come to years of discretion
they not infrequently accept, from habit or affection, the will of the
parents, and give up their entire wages to receive back a portion. The
method of charitable distribution while the child is young gradually
changes to authoritative distribution after the child becomes a worker.
The untrained and indocile youth, however, is made the subject of
compulsory distribution.</p>
<div class="sidenote">In much governmental action</div>
<p>The collection and distribution of taxes is by public authority. No
attempt is made to give back an exact equivalent to the tax-payer. The
money is taken and spent by authority for the public good. This method
is exemplified in the work of certain commissions appointed by law to
fix rates or settle disputes, as boards of conciliation and arbitration
and railway commissions. The courts sometimes find themselves obliged to
enter this field, although they do so most unwillingly. They try to
confine their efforts to interpreting the contracts men have voluntarily
entered into, and they avoid, so far as possible, the making of
contracts or the fixing of rates.</p>
<div class="sidenote">In various contests</div>
<p>In many cases, little thought of as economic distribution, the
authoritative method is followed. Literary and oratorical contests are
passed upon by a set of judges whose opinion of merit determines the
award. It is a poor method, often resulting in injustice (as every
defeated candidate will admit); but it is the only way practicable for
deciding such contests. Yet there are literary and oratorical contests
decided very differently. If a man advertises himself as an orator and
charges fifty cents admission to his lecture, everyone who goes to hear
the man votes that he is an orator;<span class="pagenum"><SPAN name="Page_408" id="Page_408">[Pg 408]</SPAN></span> everyone having money but staying
away votes that he is not of such value. The one is judgment by the
authoritative, the other by the competitive, method. The essence of the
method of distributing by authority is that one individual (or group of
individuals) judges of the deserts or duties of others, decides what
others must get or must pay, not what he himself is willing to pay.
Authoritative distribution is necessary in many cases, but it is fraught
with dangers. It is the essence of socialism that it would make this
plan universal.</p>
<p>4. <i>Distribution of psychic income may be in part by the collective use
of social wealth.</i> By collective use in the full sense is meant the
continuing enjoyment at the same time by all caring to partake and
without limit as to amount.</p>
<div class="sidenote">Distribution by collective enjoyment</div>
<p>Now it is evident that, because of difficulties that arise, not all
things are capable of this kind of enjoyment. Free water for private use
from public waterworks is wasted; free meals and clothing to
school-children are open to still greater abuses. Men cannot thus
collectively enjoy rare wines or good confectionery; they cannot partake
without limit of a limited supply. But libraries and schools may
practically be managed in this way. They require both certain
qualifications and certain sacrifices on the part of the user.
Collective enjoyment is most completely possible where the use of a
permanent form of wealth, such as a park, can be made free to the
public. All individuals may enjoy equal privileges, though general rules
may limit the kind of use; for example: no one may be permitted to pull
flowers or to walk on the grass, but all who make use of the park enjoy
equal privileges. Henry van Dyke in one of his essays puts into the
mouth of his boy the question, "Father, who owns the mountains?" and the
answer is, He who can enjoy them. Every man without covetousness, as he
stands on this hilltop, owns the mountains, the lake, and this beautiful
valley.</p>
<p>In some ways the amount of public enjoyment is decreasing,<span class="pagenum"><SPAN name="Page_409" id="Page_409">[Pg 409]</SPAN></span> as by the
growing density of population, by the loss of open spaces and commons
for playgrounds, by the destruction or fencing in of natural scenery;
but in other ways it is growing and must grow rapidly. The spirit of
civic improvement spreads. The streets are better paved than formerly;
there are more public buildings, art galleries, and noble monuments.
Every cross-road in the land will some day have its fountain and its
statue. The coöperation of the whole community gives to collective use
many of the advantages of large production, and the maximum of
enjoyment.</p>
<div class="sidenote">Distribution by custom and status</div>
<p>5. <i>Distribution may be by status or set rules and customs.</i>
Distribution by status fixes the shares of men independently of their
effort and without their control. It is guided neither by their personal
merit nor by the economic value of their services, but by the merits and
acts of men not living. This method has prevailed and still prevails to
a great extent, though in our society this is hardly realized. Feudal
society was built on status. Men were born to certain privileges and
positions; they inherited property which could neither be bought nor
sold; they followed trades which could rarely be entered by any outside
of favored families. Caste in India and in other Oriental countries
regulates by status a large part of the life. In western countries
to-day inheritance of property is the main legal form of status and it
shades off into other forms of distribution. While in some cases
inheritance may be looked upon as a gift to the heir, in other cases,
elsewhere noted, it is partly earned by the heir who has helped to
produce it. By public opinion and by prejudices, status is still
maintained even where the law has formally abolished it, as is seen in
modern race problems.</p>
<div class="sidenote">Competitive distribution the dominant form</div>
<p>6. <i>Distribution is usually competitive in accordance with the value of
the product.</i> This is the dominant form of distribution in modern
society. It is the essentially economic form, as contrasted with the
legal and personal forms just described, because it is impersonal and
reducible to a rule of value. Distribution under competition is made
not<span class="pagenum"><SPAN name="Page_410" id="Page_410">[Pg 410]</SPAN></span> with reference to abstract ethical principles or to personal
affection, but to the value of the product so far as it is honestly
controlled. Monopoly, it may be noted, never has ceased to rest under
the ban of Anglo-Saxon law, hence to exemplify compulsory, as opposed to
competitive, distribution. A striking feature of the competitive method
is its decentralization. Each helps to value the economic services of
each. If one pays more for the services of the singer than for those of
the cook, it is not because he would rather listen to the singing than
to eat, but because by apportioning his income he can get the singing
and the eating too. In the existing circumstances, the singer's services
seem to him worth paying for, and he backs his opinion with his money.
So each is measuring the services of all others, and all are valuing
each. It is the democracy of valuation, while the method of authority is
an oligarchy or monarchy.</p>
<div class="sidenote">Various ideals of distribution</div>
<p>7. <i>The best distribution in practice must be sought in union and
harmony of these various methods.</i> Various social reforms propose simply
the extreme application of one kind to the exclusion of the others.
There are two opposing views of competition: one, that it is the ideal
to be sought; the other, that it is inherently bad, and therefore should
be abolished. Extreme individualists, believing that everything would be
settled for the best by free competition, wish to make it universal.
They ignore the many cases where it does not, should not, and cannot
exist.</p>
<p>Socialists, ill content with the share secured by the less skilled
laborer, say that the competitive plan is unsound at the core. They say
that distribution should be not in proportion to value, but in
proportion either to needs or to deserts (they are not agreed which),
judged by a vague ethical standard. But this involves the principle of
authority in its extremest form. It intrusts to some men the function of
passing upon the economic merits or desires of all others. Yet that
alone is not a conclusive argument against all use of authoritative
distribution. In many practical cases the<span class="pagenum"><SPAN name="Page_411" id="Page_411">[Pg 411]</SPAN></span> intrusting of power and
authority to men to judge of the value of others cannot be avoided.
Whatever is indispensable, whatever is the best possible, is, humanly
speaking, just. Assessors, judges, jurors, must be employed. Interstate
commerce commissioners determine whether rates are reasonable, boards of
arbitration settle disputes, the strike commission adjudicates
difficulties in the coal regions. Doubtless these methods will be
increasingly used.</p>
<div class="sidenote">Need of a wise blending of methods</div>
<p>There is no other kind of distribution than those enumerated. The
strongest contrast is between the competitive and the authoritative
principles; the others are minor and modifying. None of them alone is
sufficient; each has its merits and each has its defects; they must
supplement each other. Actually they are employed in modern society side
by side; each seems essential and best in some special application. But
it does not follow that exactly the proper use is now made of each. No
two generations have followed the same rule, and the proportions in
which use has been made of them has constantly shifted. It must be
recognized that the principle of diminishing utility applies to each
method of distribution as it does to the productive processes. Each may
be best under certain conditions and circumstances, but, extended in
application, each reveals its weaknesses. In any productive process the
best method depends upon the proper proportion and combination of
elements. Progress toward the best possible distribution is to be sought
in the wise adjustment of the various methods to human nature and to
human needs.</p>
<hr class="chap" />
<p><span class="pagenum"><SPAN name="Page_412" id="Page_412">[Pg 412]</SPAN></span></p>
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