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food and other highly protected goods is greater in proportion to their income than that of the wealthy.

Of a diminished aggregate income, resulting from protection, a larger proportion goes to the landowning and the capitalist employers in the protected manufactures. The other classes suffer; employers and investors in the unprotected or low-protected manufactures, the transport and distributive trades, suffer through enhanced expenses of production and a fall in the purchasing power of their profits; the professions, the public services, the entire body of the salaried and wage-earning classes suffer through a rise of prices, which they are unable fully to counteract by a corresponding rise of money income.

§ 10. This loss, due to the diminished productivity of the national industry under protection, will not, of course, fall equally upon the losing classes; in proportion to their economic strength as bargainers, and their power of effective combination, they will succeed in recouping themselves for enhanced expenses and higher prices of commodities by raising the prices of the goods or services they sell, and thus throwing the stress of the burden of protection upon the classes who are weaker and less effective in bargaining. The small manufacturers, the struggling traders, the lowest-salaried officials and clerks, the lowest-skilled, worst-paid, manual labourers will

sustain the heaviest loss. Their loss will be heaviest in two senses. They will, on the one hand, be least capable of pressing for a rise of money wage to compensate the higher cost of living; on the other hand, since their former standard of living was the lowest, any reduction of that standard causes more actual misery and inflicts a greater injury upon their economic efficiency than in the case where a higher "standard" has hitherto obtained. Thus a protective tariff upon agricultural and manufactured imports, benefiting most the wealthiest classes of the community, injuring most the poorest grades of workers, alters for the worse the distribution of wealth. It increases "rents," surplus profits, and other "unearned increment" of the incomes of the wealthy classes, while it reduces the income of the working classes. Now our earlier analysis disclosed the fact that maldistribution of wealth, inducing over-saving and under-consumption, was the direct source of unemployment and depressed trade. Protection by worsening the distribution of wealth must evidently aggravate this malady: more unearned income will accumulate as capital, seek investments in productive enterprises, stimulate business, congest markets, induce a slump of prices followed by a stoppage of production which will mean more unemployment of capital and labour. In other words, a protective system must aggravate under-consumption by increasing the proportion of the aggregate income

of the community which goes to those who wish to apply much of that income to furthering more production and not to demanding consumable commodities, and by diminishing the proportion which goes to the classes which would use their incomes in raising their current standard of consumption.

§ 11. A protective system, then, far from furnishing a remedy, or even a genuine palliative, of unemployment, must exasperate the disease. Except in the peculiarly favoured industries for whose benefit the tariff is established, the rate of real wages and the volume of regular employment of labour must fall. Indeed, even in the favoured industries, though capital may be protected and able to earn higher profits, there is no reason to suppose that labour will earn any corresponding rise of wages. Almost the entire gain derived by agriculture from protection must pass to the landowner, the tenant-farmer benefiting only during the remainder of his lease; though more agricultural labour might be employed, if a considerable import duty were imposed, the wages of that labour could not rise, or, if they rose for a short time, they must sink afterwards to conformity with the reduced standard of comfort of ordinary labour which we have seen to be a necessary result of protection. For no strong trade-union organisation is possible for agricultural labour, and any stimulus to agricultural employment, by checking the exodus from the country to the towns, and by

calling back to the land rural labourers who had recently passed into the mining industry or into town work and who now suffered from the reactions of "protection" on these occupations, would adjust the supply of agricultural labour to the increased demand at a wage which, translated into purchasing power, would be lower than before. The same will hold of the protected manufactures; protection generates no economic force to enable the workers. in these trades to share the gain of the employers, and where, as in the case of a few skilled, wellorganised unions, they did stand to gain, this gain is purchased by a corresponding depression in general outside wages. In other words, there exists far more stability in protected land and protected capital than in protected labour; hence while the former can hold the subsidies which a tariff gives them, the latter cannot make good its claim to share the subsidies. It is easier for outside labour to enter the area of a protected industry than for outside capital. So even in the protected trades labour can have little hope of gain so far as wages are concerned; there will be more employment in these trades, a more than corresponding diminution of employment in other trades.

§ 12. Protectionism, thus interpreted, is one of the political defences instinctively thrown up by the proprietary classes against attacks upon their vested interests. The growing demand for equality

of economic opportunities which, as education spreads, becomes a more definite and conscious policy in modern democracy, if it is to be effective, requires the cancelment of the advantages which scarcity of certain sorts of land, immobility of certain sorts of capital, restricted competition for certain sorts of highly remunerative and honourable employment, confer upon what, for convenience, we have termed the proprietary classes. These classes, when their privileges have been attacked, have always used in their defence whatever weapons political predominance placed in their hands.

Two closely co-operant weapons of defence are found in Imperial Expansion and Protection. The former appears at first sight to be distinctively political, the latter distinctively economic; in reality both represent the exploitation of political power by economic forces. Neither Imperialism nor Protectionism is, of course, a purely economic movement; in both instances the dominant directive economic interest utilises and assumes the protective colours of patriotism and humanitarian progress. The connection between the two consists in the fact that they both seek to achieve a readjustment between the political and the economic area of national life.

§ 13. The most important change in modern history has been the growing severance between the political and the industrial limits of national life; as a political unit a British citizen is confined

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