Thomas Nixon Carver, How Ought Wealth to Be Distributed? (1906)1

AMERICAN POLITICAL THOUGHT Keith E. Whittington

Supplementary Material

Chapter 8: The Progressive Era – Political Economy

Thomas Nixon Carver, How Ought Wealth to be Distributed? (1906)1

Born on an Iowa farm at the end of the Civil War, Thomas Nixon Carver entered college late and completed a Ph.D. in economics at Cornell University in 1894. He spent most of his career at Harvard University, where he taught a blend of economic theory and social philosophy influenced by Herbert Spencer and emerged as a vocal critic of socialism in the early twentieth century.

. . . [A]lthough there is so much unanimity in the opinion that wealth ought not to be distributed as it now is, there is still a wide diversity of opinion, where there is any definite opinion at all, as to how it really ought to be distributed. These opinions may, however, be reduced to three fundamentally distinct theories, which I shall call the aristocratic, the socialistic, and the democratic, or liberalistic, theories. The aristocratic theory is that the good things of the world belong more particularly to certain groups or classes than to others, by virtue of some circumstances connected with their birth or heredity, and independently of their individual achievements. The socialistic theory is that wealth ought to be distributed according to needs, or according to some similar plan arranged beforehand, and independently of the individual’s ability to acquire wealth in the rough-and-ready struggle of life. The democratic, or liberalistic, theory is that wealth ought to be distributed according to productivity, usefulness, or worth. Though no one definitely affirms the aristocratic theory, there are many who tacitly assume it, and show by their general attitude that they accept it, in one form or another...... In this connection appears the only rational basis for the doctrine of the minimum wage. It sounds well to say that no laborer ought to receive less than six hundred dollars a year. Certainly that sum is none too large. But this does not explain what is to be done with those whose services are not worth six hundred dollars a year. Enforced colonization, the multiplication of almshouses, or the liberal administration of chloroform, might be necessary in order to dispose of a considerable fraction of our population, in order that the remainder might earn the minimum wage. Though it is evident that modern society will adopt none of these heroic measures, yet it is interesting to speculate, academically, upon the results of the principle of the minimum wage if it was strictly enforced. In the first place, it is apparent that such a policy would tend to weed out the least competent members of the community, so that, in the course of time, there would be none left who would not earn at least the minimum wage. In the second place, after this was accomplished, the community would be superior to the present one, because it would be peopled by a superior class of individuals. . . . Nonetheless, it would be inherently inequitable, because it would sacrifice one part of the community in the interest of another, though it might not be more inequitable than nature herself, who ruthlessly sacrifices the weak in favor of the strong.

1 Excerpt taken from T. N. Carver, “How Ought Wealth to be Distributed?” Atlantic Monthly (June 1906): 727.

“From every one according to his ability, to every one according to his needs,” in a formula which fairly well summarizes the socialistic theory of distribution. As an ideal this has at least two distinct merits. First, if we could get everyone to produce, according to his ability, there would be the maximum of wealth produced. Second, any given amount of wealth would yield the maximum amount of satisfaction to the community if it could be distributed in proportion to needs. . . . But it is one thing to say that the individual ought to do thus and so, and quite another to say that the state ought to make him do it. There are many things which the individual ought or ought not to do, which it would be futile for the state to try to regulate...... In view of the utter futility of trying to determine by legal process either the relative needs or the relative abilities of different individuals, the formula, “From everyone according to his ability, to everyone according to his needs,” must be turned over to the preacher of righteousness, whose appeal is to the individual conscience, rather than to the legislator, whose appeal must be to legal sanctions. In strictness, this formula ought to be modified to, “Let everyone produce according to his ability and consume according to his needs.” ...... Now there are two widely different notions as to what constitutes a wide diffusion of wealth. One is that the ownership of the productive wealth should be concentrated in the hands of the state, and administered by public officials, only the consumable goods being diffused. This is the socialistic ideal. The other is that the ownership of the productive wealth itself should be widely diffused. If this were the case, the consumable wealth also would of necessity be widely diffused. This is the democratic, or liberalistic, ideal. It is the belief of the liberal school that this system gives greater plasticity and adaptability to the industrial system than any other. . . . The democratic, or liberalistic, theory puts everyone upon his merits. The worthless and the inefficient are mercilessly sacrificed, the efficient are proportionately rewarded. It frankly renounces, for the present, all hope of attaining equality of conditions, and confines itself to the problem of securing, as speedily as possible, equality of opportunity. In fact, under the rigid application of this theory, there would be room for the greatest inequality of conditions, because some would be forced into poverty by their own incapacity, and others would achieve great wealth through their superior ability to produce wealth or to perform valuable services. . . . Equality of opportunity means liberty, to be sure, but it means liberty in performing and seeking rewards of service. The ideal of liberty is fully realized when every individual is absolutely free to pursue his own interest by any method which is in itself serviceable to society, and when he is absolutely debarred from pursuing it by any method which is itself harmful to society. . . . In short, service, and not industry nor intelligence, is the touchstone by which to determine what opportunities should be open and what closed under the principle of liberty. . . . In spite of the glaring weaknesses of the competitive system, and its undoubted waste of effort, it is the belief of the liberal school that it is the most effective system yet devised for the building up of a strong community. This belief rests upon a few well-known propositions which only need to be stated. (1) Every individual of mature age and sound mind knows his own interest better than any set of public officials can. (2) He will, if left to himself, pursue his own interest more systematically and successfully than he could if compelled to pursue it under the direction and supervision of any set of public officials. (3) He will pursue his interest by performing service for others, provided all harmful or non-serviceable methods are effectually closed by law. (4) Where each is free to pursue his own interest in serviceable ways, and where his well-being depends upon the amount of his service, all will be spurred on to perform as much service as possible, and the community will thus be served in the best possible manner, because all its members will be striving with might and main to serve one another.

. . . A society which thus makes service the basis of individual reward, and at the same time the test of fitness for survival, will inevitably be a progressive society, because it will tend to weed out the useless individuals—that is, those who are not capable of promoting the process of adaptation—and to produce a race highly capable in this direction. In addition to this it will call out in the fullest degree the capabilities of the individuals by appealing to their self-interest, plus—and not instead of—whatever altruistic feelings they may possess. . . . It only remains to decide who shall determine the value of the individual’s service in industry. Shall it be determined by public officials who have no direct interest in the matter, or shall it be left to the judgment of those who receive the service? As to which is the safer method, there can scarcely be a moment’s doubt......