This section is from the "Economics In Two Volumes: Volume I. Economic Principles" book, by Frank A. Fetter. Also available from Amazon: Economic
§ 10. Conflict of individual and general interests. The social welfare has no reality apart from the abiding happiness of individuals and progress toward a higher, nobler form of social life. The individual members of society are guided mainly in their business activity by value, as that determines their incomes, and the value of the services rendered is a very inaccurate index either of the welfare of the individual consumer or of the social group. Both labor-claims and capital-claims on income reflect values; they do not always reflect the true welfare of individuals or of society. Labor and wealth sometimes are applied to nerve-destroying and life-destroying pleasures, because the panderer to vices can get a larger income in that way than in any other. Gamblers provide means for the indulgence of a common weakness that gives a pleasurable excitement but that undermines the foundations of social prosperity. Able lawyers render highly paid services to enable individual criminals to escape the penalty of the law or wealthy corporations to destroy competitors, establish illegal monopoly, and secure anti-social gains. Employers have profited through defeating, with superior legal talent and powers of endurance, the claims of workmen. Manual laborers often shirk work when not under the master's eye and draw their wages for dishonest service. The primary purpose of most men in industry is to acquire income, and they leave the purchaser to look after his own welfare. Fortunately, however, in many cases acquisition of income is conditioned on production of welfare, and some worthy standards of business honor are found in every class of society.
In this regard what is true of income from labor-services is true of capital. Capital is the saleable value-expression of expected incomes, no matter what the source of the incomes may be, whether rentals of vice, gains of monopoly, mendacious advertising, or the growing scarcity of natural agents. To identify growth of capital with national prosperity is fallacious. Capital is a private business concept, and tho in many cases it is the present worth of real productive agents, in others it reflects the claim of one individual against another rather than a claim upon objective goods, relative scarcity rather than abundance, a summation of value rather than of welfare.
§ 11. Business economy and social economy. Not without reason it has been made a reproach to economic writers that they often have confounded business incomes (and especially those of a limited, influential, class in society) with general social welfare, and have identified individual acquisition with social production. Business economy has been mistaken for true political economy, commercial profits for social welfare.
The right understanding of the nature of value and of capital makes possible a clearer distinction than before between business economy and social economy. Men can not to-day, in view of the truths set forth above, cherish the error that "whatever is, is right" in the distribution of incomes. We must recognize the fact that in all times and countries and still to-day there is in public and private business more or less favoritism, bribery, monopoly, and dishonesty, which give to some men more than the economic law of value would explain or warrant. We must recognize further that the law of value itself is not necessarily the law of justice, that the incomes resulting from values in the world as it is do not always meet an ethical test. The problem of the social control of industry is largely that of determining when incomes that accrue to individuals are in harmony with, and when they are adverse, to the general weal. A number of these questions will be considered and an attempt will be made to answer them in accord with fundamental economic principles, in a later volume on "Modern Economic Problems."