fact that the capitalist possesses the machinery and organization, and that the laborer does not, is not a proof of the former's rightful possession. If they are to be used to impoverish and enslave the worker, then this situation, instead of proving the capitalist's right to social protection in appropriating the products of the laborer, only proves the laborer's right to social protection while he constructs for his own use the tools of his own industry.

424. The Reward of Tyranny.-That the manager contributes labor, energy, or life, in the management of industry is not denied. The Socialist asks that all such necessary labor shall be justly rewarded. But the manager does not contribute what the workers cannot better contribute. He does not provide the management in the manner most economical and beneficial to the workers themselves. And finally, he does exercise personal, tyrannical control in the management of the industry of others, holding the workers in the relation of servants. Whereas, industrial democracy will not only produce better industrial results, but will immediately make the workers free men and women. The managers ought not to be rewarded by the workers with any share of the products for managing the enterprise in such a manner as secures the smallest returns for the workers and holds them as the victims of the relation of mastery and servitude as the condition of their existence.

425. Summary.-1. The value of any article means the amount of its purchasing power in exchange for other articles in the market.

2. If value is created by labor, it follows that the laborers who create the value ought to have the values their labor creates.

3. If value is not created by labor alone but by "social conditions," by "mental attitudes," by ma

chines, by "social factors" other than labor, then sound public policy demands that all social factors shall serve all mankind alike and the least society can do is to provide equal economic opportunities for all. 4. All theories of value fail in the presence of monopoly, and monopoly controls the means of producing the means of life. Vast organizations of industry make possible great economies, but if privately con⚫trolled involve monopoly.

5. Services cannot be rendered nor goods produced without the waste of human energy, or life. Whoever refuses to contribute of his energy, or life, to the service of others can have no just claim to the service or to the goods which are produced with the waste of energy, or life, of others.

6. If under current conditions goods are so pro'duced and services are so rendered that those who produce goods, or render service, or are ready to render service, cannot secure the service or the goods of others in the same proportion as they are ready to serve others, then sound public policy demands such a change as shall create such conditions as will make this possible, but that is Socialism.

REVIEW QUESTIONS.

1. Why is the exchange of goods necessary?

2. What single thing is possessed in common by all exchangeable

goods?

3. What is value?

4. Who first taught the labor theory of value?

5. Who afterward taught it?

6. What advantage did the Socialists take of this theory?

7. Name other theories of value.

8. Who first taught the utility theory?

9. Show that labor has an important place in all theories of value. 10. Who teach the marginal utility theory? What is this theory?

11. If labor and machinery are joint producers, what then?

12. How is labor related to supply and demand?

13. How does monopoly affect all theories of value?

14. What is meant by charging all the traffic will bear? What is surplus value?

15. What is the only rational remedy for monopoly?

16. Compare what with who, in the inquiry for the cause of value.

17. Who contribute to production? Who should share?

18. Can the service of the private manager be better provided for? 19. Why is private management objectionable?

CHAPTER XXVI

JUSTICE IN EXCHANGE THE MONEY QUESTION

426. The Origin of Money.-In the earlier forms of society, when each tribe produced, stored and used, under common ownership, by co-operative labor and for the common use of all the tribe, there was no money because there was no private exchange for profits and so no call for any general medium of exchange. There was no system of credits, and hence, no debts, and therefore no call for a means by which the debtor could pay and discharge the claims of the creditor. There was no general market, and hence, no demand for any single measure by which the power of any article in the market, to exchange itself for any other article, could be easily determined.

427. The Necessity for Money.-With the development of private ownership in the means of production, and the coming of the market, it became necessary to provide something which could be used in all of these several ways. The occasion for money did not exist until private ownership in the means of production and individual enterprise in the management of exchange had first come, and with the displacement of these it will again disappear in all of the main functions which

it now performs. But with private ownership and individual enterprise in the work of production and exchange once in force, or so long as they remain in force, there can be no subject in economics of more importance than that of money.1

It is the purpose of this chapter to show just what the service of money is, how great its importance now is, why some of its functions-and those the ones always in dispute-will not be needed under Socialism, and hence, how the whole money question, which is incapable of just solution under capitalism, will vanish with the coming of the co-operative commonwealth.

428. Not at First the Creature of Law.-Money was not created by legislation. It existed before legislation and independent of the legislator. It came into existence not by political action, good or bad. It came into existence along with the market and solely because of its economic necessity.

429. Earliest Forms of Money.-All sorts of things have been used as money. Cattle were an old form of money. The word "pecuniary," meaning of, or relating to money, is derived from "pecus," meaning cattle, and so there is preserved to us, in this word, an allusion to the fact that among all European peoples the money was once cattle. Sheep, wheat, dates, rice, cocoa, olive oil, rock salt, tea, tobacco, whiskey, beaver skins, iron, tin, lead, copper, platinum, and gold and silver, are among the things which have been used as money. The American Indians had a method of making records by the use of beads so strung on strings and woven together as to make a hieroglyphic representation of things and events. They were made into belts and other ornaments. The beads were made of

1. "The division of labor converts the product of labor into a commodity, and thereby makes necessary its further conversion into money." -Marx: Capital, p. 81.

variously colored shells and embodied a good deal of labor. The finished product was called wampum and was used as money.

430. Necessary Qualities.-It was found by experience that whatever was to be used for money should possess in the highest degree possible five qualities: (1) It should be imperishable; (2) have large value in small compass and weight; (3) be capable of being divided into very small quantities, and be reunited if necessary without injury; (4) easy to recognize, and (5) all samples should be alike. It is because silver and gold so largely possess these qualities that they were finally adopted as the money of the world.2

While money was at the first established by the economic necessities of the market, when once established, political intrigue and legislative action in the manipulation of the money metals, and in making national notes or bonds for payment in one or the other, or both of them, have at one time protected and at another defrauded the public through all the years of their history.

431. Its Functions.-According to the economists there are three functions of money: (1) a medium of ex

2. "The ideal requisites for a perfect money material have been well stated, among others, by Jevons; but it is necessary to separate these, accordingly as they apply to a standard, or to a medium of exchange: I. Standard (1) Value; (2) Standard of value.

II. Medium of Exchange; (3) Portability; (4) Indestructibility; (5) Homogeneity; (6) Divisibility (and reunion); (7) Cognizibility.

"It will be seen at a glance that, where the medium of exchange is different from the standard, the requisites can not be indifferently applied to both. Articles whose prices are expressed in terms of the standard, may be actually exchanged by means which do not call the standard into use. * * As soon as legal conditions permitted any permanence of contracts, and as soon as the time element entered materially into industrial relations (especially with the extension of division of labor), the third function of money as a standard of deferred payments assumed importance. This function, however, is not different from that of a simple standard, except that the former covers comparisons in which the time element appears. By some it might be regarded only as a case of the standard function. It is not important, however, how it is distinguished, provided only that the problems arising from the time element in contracts shall receive full attention."-Laughlin: The Principles of Money, pp. 21-22.