The Unsolved Riddle of Social Justice | Page 8

that it can be presented within the briefest compass.
It began with certain postulates, or assumptions, to a great extent
unconscious, of the conditions to which it applied. It assumed the
existence of the state and of contract. It took for granted the existence
of individual property, in consumption goods, in capital goods, and,
with a certain hesitation, in land. The last assumption was not perhaps
without misgivings: Adam Smith was disposed to look askance at
landlords as men who gathered where they had not sown. John Stuart
Mill, as is well known, was more and more inclined, with advancing
reflection, to question the sanctity of landed property as the basis of

social institutions. But for the most part property, contract and the
coercive state were fundamental assumptions with the classicists.
With this there went, on the psychological side, the further assumption
of a general selfishness or self-seeking as the principal motive of the
individual in the economic sphere. Oddly enough this assumption--the
most warrantable of the lot--was the earliest to fall under disrepute. The
plain assertion that every man looks out for himself (or at best for
himself and his immediate family) touches the tender conscience of
humanity. It is an unpalatable truth. None the less it is the most nearly
true of all the broad generalizations that can be attempted in regard to
mankind.
The essential problem then of the classicists was to ask what would
happen if an industrial community, possessed of the modern control
over machinery and power, were allowed to follow the promptings of
"enlightened selfishness" in an environment based upon free contract
and the right of property in land and goods. The answer was of the
most cheering description. The result would be a progressive
amelioration of society, increasing in proportion to the completeness
with which the fundamental principles involved were allowed to act,
and tending ultimately towards something like a social millennium or
perfection of human society. One easily recalls the almost reverent
attitude of Adam Smith towards this system of industrial liberty which
he exalted into a kind of natural theology: and the way in which Mill, a
deist but not a Christian, was able to fit the whole apparatus of
individual liberty into its place in an ordered universe. The world "runs
of itself," said the economist. We have only to leave it alone. And the
maxim of laissez faire became the last word of social wisdom.
The argument of the classicists ran thus. If there is everywhere
complete economic freedom, then there will ensue in consequence a
régime of social justice. If every man is allowed to buy and sell goods,
labor and property, just as suits his own interest, then the prices and
wages that result are either in the exact measure of social justice or, at
least, are perpetually moving towards it. The price of any commodity at
any moment is, it is true, a "market price," the resultant of the demand

and the supply; but behind this operates continually the inexorable law
of the cost of production. Sooner or later every price must represent the
actual cost of producing the commodity concerned, or, at least, must
oscillate now above and now below that point which it is always
endeavoring to meet. For if temporary circumstances force the price
well above the cost of producing the article in question, then the large
profits to be made induce a greater and greater production. The
increased volume of the supply thus produced inevitably forces down
the price till it sinks to the point of cost. If circumstances (such, for
example, as miscalculation and an over-great supply) depress the price
below the point of cost, then the discouragement of further production
presently shortens the supply and brings the price up again. Price is
thus like an oscillating pendulum seeking its point of rest, or like the
waves of the sea rising and falling about its level. By this same
mechanism the quantity and direction of production, argued the
economists, respond automatically to the needs of humanity, or, at least,
to the "effective demand," which the classicist mistook for the same
thing. Just as much wheat or bricks or diamonds would be produced as
the world called for; to produce too much of any one thing was to
violate a natural law; the falling price and the resulting temporary loss
sternly rebuked the producer.
In the same way the technical form and mechanism of production were
presumed to respond to an automatic stimulus. Inventions and
improved processes met their own reward. Labor, so it was argued, was
perpetually being saved by the constant introduction of new uses of
machinery.
By a parity of reasoning, the shares received by all the participants and
claimants in the general process of production were seen to be
regulated