THE WAR, PROFITS AND PROPERTY
The Attack Is Unjustified And Harmful
1 WRITE these lines before the terms of the new Budget are known. No-one is likely to complain of the principle of still higher taxation, although almost everyone will object to those particular provisions of the new Finance Bill which hurt him most. This Is quite reasonable. The defect of all schemes of taxation is that the results are inevitably unfair as between individuals. Governments try to modify these inequalities by special allowances but nothing can equate good health and bad, good fortune and ill. and the countless other factors which go to determine our circumstances at any given moment. All of which is so obvious, many will say. that it is hardly necessary to say it. I should like to agree, but, alas, the war is bringing to the front a great deal more both of envy and greed than is pleasant. It is becoming common for us to talk of " the rich " and " the poor," as if these two categories represented two social classes, the one evil and predatory, the other humble and virtuous. As for " profits," the very word has become, and not merely in Left-wing circles, a term of positive abuse. The result is that a great many people are looking forward to this and the next few war budgets, to penalise " the rich." to abolish " profits," and to prepare the way for a new social order in which these evil persons and things will have no place. And he who objects is no patriot. I have no objection to those who sincerely profess egalitarianism. It is, as an eccentricity, as good as any other. What is objectionable is the attempt to impose an egalitarian society while pretending to fight for freedom, and to use the genuine sacrifices of those who are really fighting for freedom as an instrument in the campaign. Of all the many things that can be said for and against egalitarianism one alone is unchallengeable. It cannot be reconciled with freedom. As Mr. Garvin would say, of two things, one. Egalitarians do not say " To him that hath not let it be given and then let us all start fair and live freely." They do not say " Let us so organise society that opportunities will be equal for all." They say " Let us give every one an equal opportunity and then take away from those who make the best use of their opportunity in order to reward those who make a poorer use of it or no use at all." I am not going to say—I have no claims to be a moralist—that it would be in any way wrong to do that. I do say that in order to do it, the life and work of every man and woman would have to be controlled by the State and minutely checked at every turn, and that such a social order would deny all that we mean by freedom, and that it is wholly wrong to try and bring it about when the whole country is united to defend freedom and to ensure that it shall not only tr. preserved for this generation but handed on to our descendants.
THE RICH ARE NOT A CLASS YOU can usually judge a workman by his tools and those who are conducting the campaign against " the rich " to-day do not come well out of this test. We are being asked continually to regard " the rich " as a class. Statistically, of course, they are a class. So are the red-haired, the brown-eyed and the people over six feet tall. The im plication. however, is quite false. The rich are not a social class. They are a very small minority of each class. The two richest men in England in this generation have both belonged to what the extremely class-conscious propagandists of the Left would call the working class. The greatest aggregates of wealth in the country are those vast funds held not by individuals at all but by those organisations who derive their assets from the savings of people with very small incomes indeed. A surprisingly large percentage of the higher incomes, those over £5,000 a year let us say, are earned either by professional men, who are very rarely born of rich parents, or by shopkeepers and proprietors of small businesses most of whom have built up their businesses from nothing at all. There is one obvious exception. The owners of urban land would remain wealthy from generation to generation were it not for death duties, income-tax and surtax, • which are gradually forcing the break-up of all but the very largest estates. Nevertheless the hereditary ownership of land does create the nucleus of a very small but comparatively wealthy hereditary class, which is only very gradually being taxed out of existence and which is unlikely ever to disappear completely without some measure of confiscation.
PROFITS—TWO FALSE ASSUMPTIONS BUT the attack on " the rich " is not in fact directed at this particular class, and for a very good reason. The transfer of established business undertakings to the State is an attractive idea to many townsmen, but the transfer of agricultural land to the Ministry of Agriculture is a proposal which would lose its author every rural constituency in the country. The apostles of revolution learnt this lesson in 1910, when Mr. Lloyd George's half-hearted attacks on the landlords cost the Liberal Party nearly a hundred country seats. The attack on " the rich " is therefore now aimed at those who got rich out of profits, and it is based on two assumptions, both of them false. The first is that great fortunes mainly come out of industrial profits and the second that profits themselves are a Form of exploitation. The greatest fortunes to-day are not made out of profits but as a reward for services, and it is the much wider distribution of private wealth and the necessary aggregation of certain forms of property in the hands of big combines or corporations which have led to this result. In other words, the richest class to-day is the class brought into existence by the advocates of social reform. The enormous expansion in the activities of building societies, insurance companies, and the creation of industrial combines have created a demand for a vast class of professional organisers, advisers and trustees to safeguard and administer what have become, in effect, public interests. Again, the opportunities open to public entertainers, be they cinema stars, novelists, journalists or newspaper proprietors, are vastly greater than ever before owing to the immense and wholly desirable expansion of the public able to pay for such entertainments. Meanwhile, at the other end of the scale, the old-time rennet. class are being driven by taxation to sell their investments and buy annuities, and arc thus in process of being painlessly liquidated. As to " profits," it is difficult to impute good faith to those who attack this form of wealth. Let us, however, be charitable and impute the fault to our languAge, which is certainly confusing. For the term profits is used for two wholly separate things. It is used, and most frequently, for the difference between the cost of an article to the manufacturer or distributor and the price at which he sells it. It is also used for the difference between the whole expenses of a manufacturer or distributor and his receipts. If a book costs a publisher three shillings a copy in an edition of two thousand and he sells it to the bookseller for five shillings, he makes, in one sense of the term, a profit of 2s. a copy, assuming he is fortunate enough to sell all his edition. But out of that so-called profit he has to pay his office expenses, his sales staff, his packing and distribution costs, his rates and taxes, his bank and debenture interest, and his insurance. He also has to protect himself against the losses which he, like every other business man, is hound to incur in the manufacture or purchase of goods which for some reason or other beyond his control become unsaleable. In other words, a very high proportion indeed of what are loosely called " profits," and, technically, profits on trading account, are not profits at all. The only moral questions arising about the validity of profits concern net profits, which are the property of the shareholders in expectation of which they have subscribed and risked the money invested in the business. Is there a limit in morality to the return which a shareholder should get, and if so, what is it? I am quite prepared to say that there is a limit, but not to say what the limit should be. Most certainly, however, that limit is not generally exceeded and the tax of 100 per cent. on excess war profits ensures that it will not be exceeded in the case of war profits.
NO MORAL JUSTIFICATION FOR ATTACK j CONCLUDE without hesitation that there is no justification in I morals for an attack on profits as such at this time, and that there is no justification for any attack on " the rich " which implies the existence of a privileged and hereditary rich class exploiting the community. The only thing which can be said about the rich is that there should be a maximum income; that no man's services are worth more than a certain amount, and that if the State fixed a reasonable maximum the services of the new aristocracy of the desk and the pen and the circus would still be available. The answer to that is that the State has long ago arrived, under a succession of Conservative Governments, at roughly this conclusion, that the carefully graduated system of income tax and surtax is directed to that end, and that further steps along the same path can be taken by the electorate when ever they so desire. If the present rate of taxation is too low, it is certainly not the fault of the rich.
Yet the attack on " the rich " and on " profits " is going to grow in volume and in venom. It is going to grow because it is part of the campaign for socialism in our time. It is a necessary part, because unless the public temper can be raised to anger, unless the generality of citizens can be persuaded that there is among them a privileged class of wealthy people who are battening on the community and taking advantage of their country's plight, the natural demand for a general sharing of the burden by all classes in proportion to their ability to pay would be irresistible. And such a policy would avoid the bankruptcy of the existing industrial and commercial system which is the prime objective of Left-wing policy to-day. I do not doubt that those who pursue this policy sincerely believe that it is compatible with winning the war. I do not profess to understand, however. how otherwise intelligent people can hold a belief which seems manifestly repugnant to common sense. To those of my readers who disagree with me, I would say only this. If we are to divide our fellow-countrymen, at the height of a great conflict in which they are united, let us at least do so openly and not seek to inflame them by appeals to envy and rancour. If anyone sincerely believes that our present economic order needs not to be reformed (everyone outside Bedlam is agreed on that) but to be reformed along the lines of substituting public ownership for private enterprise, and of substituting State regulation of our lives and fortunes for the freedom which we at present enjoy, the freedom for which we are supposed to be fighting, let him say so openly. And let him, while we remain a free democracy, urge the need for a general election to find out how many of his fellow-countrymen agree with him. If that be judged impracticable, let him then be sufficiently true to his democratic principles to realise that a revolutionary reform repeatedly rejected at the polls cannot be carried through without a mandate, nay, in face of a mandate overwhelmingly in the contrary sense. To those who do not wish for socialism in our time, I would urge that the language of our socialist and communist friends in regard to riches and profits should be much more persistently challenged. It is the sincere belief of many that some unnecessary tax called " profits " is being levied, in the interests of an idle and privileged class, on the food, amusements and security of the public that is the root cause of the social unrest which although it is still inconsiderable is increasing rather than diminishing. That belief is fundamentally false. Its falsity should be much more effectively demonstrated.