MANY PEOPLE NOWADAYS MAKE PROFIT WITHOUT STANDING RISK
I THE DYING ORDER 1
Lax.erares■Aimmelemnolreform. IN the winding-up debate on the Defence Loan in the House of Commons last week, Captain Euan Wallace made a remark which, though not particularly noteworthy, illustrated a change in the trends of certain kinds of thought.
He spoke of profit as the chief raw material of taxation and as the means of creating the savings out of which new development is financed.
Apart from inviting the rather obvious comment that if the profit earner is really a tax collector, then 14s. in the pound, which he is allowed to retain, is an excessively generous com mission, the remark illustrates a way of defending profits that seems now to be becom ing more prevalent. For the fact is that the old conception of a reward of risk is becoming less and less applicable.
' * * * * To understand this we must understand the peculiar nature of the accumulations on which profits are paid. These accumulations are becoming more and more identical with the reserves of large companies, and these reserves are themselves the accumulated profits of the past.
But what constituted the original profits that are now being reinvested ? Catholic thought still tends to adhere to the old metaphor of the " fructification " of capital. But I am convinced that this can have little application to modern conditions.
Modern profits do not represent new creations of value so much as losses inflicted on other people.
The technique of modern commerce is to introduce some small and generally purely notional improvement in service and then (often with the help of a barrage of publicity) to engross the livelihoods and revenues of other people. Since, moreover, all conception of a just price has been lost, the gains so made are wholly appropriated by capital.
* 10........■■••••■•41.4.1.■•••■••■••■••••••.• " Modern profits do not repro.
Now the only justification for this process is to treat the legal owner of such funds as a sort of trustee of public savings. But once you do that the whole con ception of a reward of risk becomes nonsensical. You cannot possibly compensate a person for risk, if the thing risked does not completely and unconditionally belong to him but is, so to speak, shared between him and the actual payer of the premium (in this case the general public). If you asked a solicitor to look after your money and he said, " You must pay me £10 a year for every f100 you deposit with me because I might make an imprudent investment and lose your money," we should surely say that this was a very funny sort of bargain and that the solicitor was a very funny sort of solicitor.
* * * * The truth is that, as things are, it is becoming more and more difficult to say what positive moral title the recipient of profits has to the payments he receives. This does not mean that profits are immoral, but merely that the old titles have ceased to mean very much, and that we have so far not been sufficiently interested to think out new ones. I hope to explore this subject further in a subsequent article.