51
DOMESTIC CAPITAL
AFTER talking so long about Capitalism in the lump, let us take a few chapters off to examine it as it affects you personally if you happen to be a lady with a little capital of your own: one who, after living in the style customary in her class, still has some money to spare to use as capital so as to increase her income. I will begin by the simple case of a woman earning money, not as an employer, but by her own work.
Let us assume that her work involves doing sums (she is an accountant), or writing (she is an author or scrivener), or visiting clients instead of waiting in an office to receive them (she is a doctor). It is evident that if she can spare money enough to buy an adding-machine which will enable her to do the work of three ordinary bookkeepers, or a sewing-machine, or a typewriter, or a bicycle, or a motor car, as the case may be, the machine will enable her to get through so much more work every day that she will be able to earn more money with them than without them. The machine will be carelessly called her capital (most people muddle themselves with that mistake when they discuss economics); but the capital was the money saved to pay for the machine, and as it was eaten up by the workers who made the machine, it no longer exists. What does exist is the machine, which is continually wearing out, and can never be sold secondhand for its price when new. Its value falls from year to year until it falls to nothing but the value of the old iron of which it is made.
Now suppose she marries, thus changing her profession for that of wife, mother, housekeeper, and so forth! Or suppose that the introduction of an electric tram service, and the appearance of plenty of taxis in the streets, enable her to do all the travelling she wants as well and more cheaply than her private car! What is she to do with her adding-machine or sewing-machine, her typewriter or her car? She cannot eat them or wear them on her back. The adding-machine will not iron shirt fronts: the sewing-machine will not fry eggs: the typewriter will not dust the furniture: the motor car, for all its marvels, will not wash the baby.
If you shew what I have just written to the sort of male who calls himself a practical business man, he will at once say that I am childishly wrong: that you can eat an adding-or sewing-machine; dust the furniture with a typewriter; and wash a hundred babies with a motor car. All you have to do is to sell the sewing-machine and buy food with the price you get for it; sell the typewriter and buy a vacuum cleaner; sell the motor car and hire a few nurses after buying a bath and soap and towels. And he will be so far right that you certainly can do all these things provided too many other people are not trying to do them at the same time. It is because the practical business man always forgets this proviso that he is such a hopeless idiot politically. When you have sold the sewing-machine and bought food with the price, you have not really turned the sewing-machine into food. The sewing-machine remains as uneatable as ever: not even an ostrich could get a tooth into it or digest it afterwards. What has happened is that you, finding yourself with a sewing-machine which you no longer want, and being in want of food, find some other woman who has some spare food which she does not want, but who wants a sewing-machine. You have a sewing-machine for which you have no use, and an unsatisfied appetite. She has food for which she has no appetite, and wants a sewing-machine. So you two make an exchange: and there you are! Nothing could be simpler.
But please remark that it takes two to make the bargain, and that the two must want opposite things. If they both want the same thing, or want to get rid of the same thing, there will be no deal. Now suppose the Chancellor of the Exchequer took it into his head as a practical business man to raise money by a tax on capital instead of on income. Suppose he were to say that as thousands of women have capital in the form of sewing-machines which they can sell for, say, £5 apiece, they can each afford to pay a tax of £3. Suppose he actually induced the House of Commons to impose such a tax under the title of a Capital Levy or some such practical business nonsense, and that every woman had to sell her sewing-machine to pay the tax! What would be the result? Each woman trying to sell her machine would find all the other women trying to sell their machines too, and nobody wanting to buy them. She could sell it as old iron for a shilling perhaps, but that would not enable her to pay the tax. The tax collector, not being paid, would distrain on her goods: that is, he would seize the sewing-machine. But as he also could not sell it, he would have to hand it over unsold to the Chancellor of the Exchequer, who would find himself heaped up with thousands of unsellable sewing-machines instead of the thousands of pounds he was looking forward to. He would have no money; and the women would have no sewing-machines: all because the practical business men told him that sewing-machines could be turned into bread.
If you consider this a little you will see that the difference between private affairs and State affairs is that private affairs are what people can do by themselves, one at a time and once in a way, whereas State affairs are what we are all made to do by law at the same moment. At home you are a private woman dealing with your own private affairs; but if you go into Parliament and perhaps into the Cabinet, you become a stateswoman. As a private woman all you have to consider is, “Suppose I were to do this or that”. But as a stateswoman you must consider “Suppose everybody had to do this or that”. This is called the Kantian test.
For instance, if you become Chancellor of the Exchequer, your common sense as a private woman will save you from such a folly as supposing that a sewing-machine in the house is the same as £5 in the house. But that very same private common sense of yours may persuade you that an income of £5 a year is the same as £100 ready money, because you know that if you want £100 your stockbroker can get it for you in exchange for £5 a year of your income. You might therefore be tempted to lay a tax of £30 on everyone with £5 a year, and imagine that you would not only get the £30, but that the taxpayer would have £70 left to go on with. Let me therefore explain the nature of this business of £5 a year being worth £100 cash to you privately, and worth just £5 a year to the Chancellor publicly and not a rap more.
When we were dealing with the impossibility of saving I pointed out that there are certain everyday transactions that are like saving and that are called saving, very much as selling a sewing-machine and buying food with the price may be called eating the sewing-machine. Do not bother to try to remember this now: it is easier to go over it again. Suppose you have £100 and you wish to save it: that is, to consume it at some future time instead of immediately! The objection is that as the things the money represents will rot unless they are used at once, what you want to do is impossible. But suppose there is in the next street a woman who has been left by the death of her parents with nothing but an income of £5 a year. Evidently she cannot live on that. But if she had £100 in ready money she could emigrate, or set up a typewriting office, or stock a little shop, or take lessons in some moneymaking art, or buy some smart clothes to improve her chances of getting respectable employment, or any of the things that poor women imagine they could do if only they had a little ready money. Now nothing is easier than for you to make an exchange with this woman. She gives you her right to take £5 every year fresh-and-fresh out of each year’s harvest as it comes; and you give her your hundred pounds to spend at once. Your stockbroker or banker will bring you together. You go to him and say that you want him to invest your £100 for you at five per cent; and she goes to him and says that she wants to sell her £5 a year for ready money. He effects the change for a small commission. But the transaction is disguised under such fantastic names (like the water and breadcrumb in doctors’ prescriptions) that neither you nor the other woman understands what has really happened. You are said to have invested £100, and to be “worth” £100, and to have added £100 to the capital of the country: and she is said to have “realized her capital”. But all that has actually occurred is that your £100 has been handed over to be spent and done for by the other woman, and that you are left with the right to take £5 out of the income of the country without working for it year after year for ever, or until you in your turn sell that right for £100 down if you should unhappily find yourself in the same predicament as the other lady was in when you bought it.
Now suppose you brought in your tax of £30 on every £5 a year in the country! Or suppose a Conservative Government, led by the nose by practical business men who know by experience that people who have £5 a year can sell it for £100 whenever they want to, were to do it! Or suppose a Labor Government, misled by the desire to take capital out of private hands and vest it in the State, were to do it! They would call it a levy of thirty per cent on capital; and most of them would vote for it without understanding what it really meant. Its opponents would vote against it in equal ignorance of its nature; so that their arguments would convince nobody. What would happen? Evidently no woman could pay £30 out of £5 a year. She would have to sell the £5 a year for £100, and then reinvest the odd £70. But she would not get the £100 because, as the tax would not fall on her alone, but on all the other capitalists as well, her stockbroker would find everybody asking him to sell future incomes for ready money and nobody offering ready money for future incomes. It would be the story of the sewing-machines over again. She would have to tell the tax collector that she could not pay the tax, and that he might sell her furniture and be damned (intelligent women use recklessly strong language under such circumstances). But the tax collector would reply that her furniture was no good to him; for as he was selling up all the other capitalists’ furniture at the same time, and as only those who were too poor to have any capital to be taxed were buying it, Chippendale chairs were down to a shilling a dozen and dining room tables to five shillings; so that it would cost him more to take her furniture away and sell it or store it than it would fetch. He would have to go away empty handed; and all the Government could do would be to take her £5 a year from her for six years and four months, the odd months being for the interest to pay for waiting. In other words it would find that her income was real, and her capital imaginary.
But even this would not work if the tax were imposed every year, like the income tax, because at the end of the six years she would owe £180, incurring a debt of £30 every year and getting only £5 to pay it with; so that it would be much better for her to give up her £5 a year for ever and support herself entirely by work. And the Government would have to admit that a tax on capital is an impossibility, for the unanswerable reason that the capital has no existence, having been eaten up long ago.
There is a tax on capital actually in existence which is often referred to as proving that such taxes are possible. When we die, taxes called Death Duties (officially Estate Duties) are levied on the fictitious capital value of our estates, if we leave any. The reason people manage to pay them is that we do not all die simultaneously every year on the 5th April and thus incur death duties payable on the following 31st December. We die seldom and slowly, less than twenty out of every thousand of us in one year, and out of that twenty not more than two at the outside have any capital. Their heirs, one would think, would find it easy to sell part of their income for enough ready money to pay the duties, the purchasers being capitalists whose fathers or uncles have not died lately. And yet the Government has to wait for its money often and long. The tax is a stupid one, not because it confiscates property by making the State inherit part of it (why not?) but because it operates cruelly and unfairly. One estate, passing by death from heir to heir three times in a century, will hardly feel the duties. Another, passing three times in one year (as happens easily during a war), is wiped out by them, and the heirs reduced from affluence to destitution. When you make your will, be careful how you leave valuable objects to poor people. If they keep them they may have to pay more for them in death duties than they can afford. Probably they will have to sell them to pay the duty.
This is so little understood, that men not otherwise mad are found estimating the capital of the country at sums varying from ten thousand millions before the war to thirty thousand millions after it (as if the war had made the country richer instead of poorer), and actually proposing in the House of Commons to tax that thirty thousand millions as available existing wealth and to pay off the cost of the war with it. They all know that you cannot eat your cake and have it too; yet, because we have spent seven thousand millions on a frightful war, and, as they calculate, twenty thousand millions more on mines and railways and factory plant and so on, and because these sums are written down in the books of the Bank of England and the balance sheets of the Companies and Trusts, they think they still exist, and that we are an enormously rich nation instead of being, as anyone can see by the condition of nine-tenths of the population, a disgracefully poor one.