wastefully will deserve to stand among the greatest of statesmen and nation builders. Nations are built by the wise expenditure of human energy. The less it is wasted, and the more it is used up in productive or useful work, the greater the progress of the nation.

We have chosen to discuss, in this chapter, a theme which is not ordinarily treated in works on economics. It has generally been assumed that economics has nothing to do with morals and religion. With certain sentimental and conventional aspects of these human interests, perhaps, the economist has nothing to do. But in so far as they are factors, or may become factors, in national wealth, prosperity, and power, nothing can be of more interest to the economist. Even religion, if it stimulates the productive virtues and discourages the vices which waste and dissipate human energy, may become one of the greatest factors in the building of a great, prosperous, and powerful nation. The nation which possesses such a religion will eventually outgrow in all these particulars the nation which does not, or which possesses a religion which enervates, which lulls to sleep, or which represses the productive virtues.1

1 For a fuller discussion of this topic, see the author's book entitled "The Religion Worth Having." Houghton Mifflin Company, Boston, 1912.

CHAPTER VI

ECONOMIC INSTITUTIONS

I. VOLUNTARY AGREEMENT

Compulsion and government. The most important characteristic of the economic life of civilized people is its freedom from compulsion. Nearly every economic act of the average individual is one which he does voluntarily. Even when he is under compulsion, it is usually found to be for one of a very few reasons. It may be to prevent him from using violence or fraud against someone else. It may be to compel him to carry out an agreement into which he has voluntarily entered. He may be compelled to pay taxes, and he is sometimes compelled to perform military and other service. The striking fact about all these and all other cases of compulsion which are tolerated by civilized people is that they are all exercised by the government. Among all free people one private citizen is forbidden to exercise compulsion over any other. That is a work which is reserved exclusively for the government through its officers. "Compulsion is mine; I will compel," says the government.

Dangers of compulsion. The power of compulsion is dangerous, and its exercise is generally regarded with disfavor. It seems impossible, however, for large numbers of people of all kinds, classes, and degrees of intelligence and reasonableness to get along together without some umpire to decide disputes and enforce his decisions. This means that there must be somewhere a power of compulsion; that is, the power to compel men, by physical force if necessary, sometimes to do some things which they would prefer not to do, and to leave undone things which they would prefer to do. This power, however, is very carefully safeguarded. It is safeguarded first by being with

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held from everybody except the authorized agents of government. Even they are very carefully hedged about and compelled to proceed in careful and orderly ways in exercising compulsion. We have an elaborate system of rules for the settlement of disputes and especially for the collection and weighing of evidence in cases of alleged crime. The accused person is so carefully safeguarded that it is very difficult to convict him unless the evidence of his guilt is beyond reasonable question.

The ballot as a necessary check upon the power of compulsion. Back of all these rules and regulations of court procedure and of government administration we have the system of balloting as a check upon those who govern us. With the ballot in our hands, even the government itself cannot use more compulsion than the majority of us are willing that it should use. The ballot is our ultimate safeguard against abuses of that power of compulsion which must be exercised by governments. It is a most important weapon of defense, but its importance is due to the fact that government officers possess the power of compulsion, and, though it is a necessary power, it is the most dangerous power that any human being can possess. It is so dangerous that in a free country it is positively forbidden to private individuals, and even the government officers, who exist partly for the purpose of preventing private individuals from exercising compulsion, are permitted to exercise it only under the most careful safeguards.

Contract. One of the greatest discoveries of the human intellect is that large enterprises can be carried out by voluntary agreement among free citizens. Where enterprises can be carried out by this method they are found to be carried out more effectively and economically than under compulsion. It is true, however, that there are some things that cannot be done by voluntary agreement. In order that the government, a compulsory organization, may pay its bills, it cannot rely wholly upon voluntary gifts; it must use compulsion to collect taxes. If a great war is to be fought, it is not only necessary to levy

compulsory contributions to pay the expenses of the war, it may be necessary to resort to conscription to recruit its armies. The army itself in the actual process of fighting has to act under a centralized command. Authority and obedience, therefore, rather than voluntary agreement among equals, is the basis of all military organizations. It would be quite possible to organize industry on the same basis; that is, to levy compulsory contributions to support the industries, to conscript labor to man them, and to have everything done by authority and obedience rather than by contract or voluntary agreement. The experience of the world, however, has shown that those countries that have tried to run their industries primarily or even largely on a basis of authority and obedience have not prospered quite so much as those that have given a large measure of freedom from compulsion and have permitted industries to be organized on the basis of voluntary contracts and agreements. Even people who, in the abstract, disapprove of the system of voluntary agreement usually prefer to live in those countries where this is the rule and are glad to emigrate from those where authority and obedience are the rule.

Repression of violence. In order that there may be the largest possible opportunity for voluntary agreements among free citizens, it is absolutely necessary that no private citizen shall be allowed to compel any other citizen to do anything against his will. If that were permitted, the system of voluntary agreement would suffer a great setback. But if you are prevented from exercising any compulsion over your neighbor, you will not be able to get him to do anything for you, to produce anything which you would like to have, or to give you anything in his possession except by his full and free consent. You are then reduced to the necessity of persuading him to do voluntarily what you otherwise might, if you were strong enough, compel him to do.

Property follows freedom from violence. It cannot be too much emphasized that property exists automatically and necessarily in any group where the individual is safeguarded against

violence. If he is safeguarded against violence, he may hold anything in his possession until he sees fit to give it up of his own free will. If anyone who tries to dispossess him by violence is promptly repressed by the group, that very act on the part of the group safeguards him in his possession,-it transforms his possession into property. In short, the essence of property exists instantly, automatically and necessarily, as soon as violence is repressed. Nothing but force or violence either destroys private property or seriously limits it. Practically every limitation that exists or ever can exist in the absolute right of property is due either to the failure of the group to protect the individual against some infringement or to the exercise of force or authority by the group itself to limit the individual's power over his possessions. If we once get this point clearly in mind, and never forget it, it will save us from much confusion of thought later on. It is the most important fact in the institutional background of our present economic organization.

The extent to which violence is repressed is a fairly good test of the quality of our civilization. The most important difference between civilization and savagery is this: the civilized man tries to prosper by making himself so useful that others will be glad to reward him for his usefulness, while the savage tries to prosper by making himself so dangerous that others will be afraid to refuse his demands. When all citizens try to prosper by the method of usefulness we have the highest state of civilization, but when all try to prosper by the method of dangerousness we have the lowest state of savagery, and when a part of the citizens try one method and a part try the other we have something between. Not many people can live together under savagery, because dangerousness destroys rather than supports life; many can live together under civilization, because usefulness supports rather than destroys life.

Property of some kind, belonging to groups or to individuals, necessarily belongs to civilization and grows with civilization, because civilization is characterized by the absence of violence one toward another and the prevalence of voluntary agreement