Lincoln on Labor and Capital

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It is the effort to place capital on an equal footing with, if not above, labor in the structure of government. It is assumed that labor is available only in connection with capital; that nobody labors unless somebody else, owning capital, somehow by the use of it induces him to labor. This assumed, it is next considered whether it is best that capital shall hire laborers, and thus induce them to work by their own consent, or buy them and drive them to it without their consent. Having proceeded so far, it is naturally concluded that all laborers are either hired laborers or what we call slaves. And further, it is assumed that whoever is once a hired laborer is fixed in that condition for life.

Now there is no such relation between capital and labor as assumed, nor is there any such thing as a free man being fixed for life in the condition of a hired laborer. Both these assumptions are false, and all inferences from them are groundless.

Labor is prior to and independent of capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration. Capital has its rights, which are as worthy of protection as any other rights. Nor is it denied that there is, and probably always will be, a relation between labor and capital producing mutual benefits. The error is in assuming that the whole labor of community exists within that relation. A few men own capital, and that few avoid labor themselves, and with their capital hire or buy another few to labor for them. A large majority belong to neither class–neither work for others nor have others working for them. In most of the Southern States a majority of the whole people of all colors are neither slaves nor masters, while in the Northern a large majority are neither hirers nor hired. Men, with their families–wives, sons, and daughters–work for themselves on their farms, in their houses, and in their shops, taking the whole product to themselves, and asking no favors of capital on the one hand nor of hired laborers or slaves on the other. It is not forgotten that a considerable number of persons mingle their own labor with capital; that is, they labor with their own hands and also buy or hire others to labor for them; but this is only a mixed and not a distinct class. No principle stated is disturbed by the existence of this mixed class.

Again, as has already been said, there is not of necessity any such thing as the free hired laborer being fixed to that condition for life. Many independent men everywhere in these States a few years back in their lives were hired laborers. The prudent, penniless beginner in the world labors for wages awhile, saves a surplus with which to buy tools or land for himself, then labors on his own account another while, and at length hires another new beginner to help him. This is the just and generous and prosperous system which opens the way to all, gives hope to all, and consequent energy and progress and improvement of condition to all. No men living are more worthy to be trusted than those who toil up from poverty; none less inclined to take or touch aught which they have not honestly earned. Let them beware of surrendering a political power which they already possess, and which if surrendered will surely be used to close the door of advancement against such as they and to fix new disabilities and burdens upon them till all of liberty shall be lost.

From Lincoln’s Annual Message to Congress, December 3, 1861

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  1. “Capital is only the fruit of labor, and could never have existed if labor had not first existed.”

    This is certainly true. Every human production results from labour, of hand or brain, applied to the free gifts of nature. Tools, plant, machinery and buildings are, so to speak, labour stored up or saved, to be drawn on in the process of further production. The same is true of infrastructure, roads, railways, harbours that allow both raw materials and manufactures goods to be transported and distributed.

  2. Of course labor by itself is insufficient to produce advanced economies. For example no amount of labor would have produced the Egyptian state of antiquity without a whole host of developments that had little or nothing to do with labor.

  3. Donald R McClarey wrote, “a whole host of developments that had little or nothing to do with labor.”

    If we include the mental labour of devising, planning, organizing that went into their development (not to mention the domestic labour that went into rearing the planners, feeding them, clothing them, housing them) it can all be resolved into the labour of hand or brain applied to raw materials furnished by nature.

    It is merely the enormous complexity of the web or network bringing them together that obscures this fact.

  4. That is too broad a definition of labor. For example, the religion of Egypt had an enormous impact upon how the Egyptian state functioned but the various gods of the Egyptian pantheon were not invented due to considerations of labor. Military developments from outside Egypt had a huge impact on Egypt, but once again were not developed with Egyptian labor in mind. The unique geography of Egypt had the decisive impact on how the Pharoahnic state was organized, and no amount of labor could have changed that factor. Egypt in antiquity fed the world and now Egypt cannot feed itself, once again factors of which labor is only one producing this about face.

  5. Here we go.
    Economics is the study of how are allocated relatively scarce goods/resources – Supply – among relatively larger wants – Demand. In pre-post modern economics Price was the means of allocation for Demand and Supply.
    All economic activity revolves around three inputs: land, labor and capital. All three must be present for functionality. And, they overlap. In this discussion capital and labor can be seen to coincide when we examine the relation of entrepreneurship to the equation. Here the entrepreneur uses both his labor (not manual but still a form of labor – creative, human input) and capital to bring about the economic good.
    To make the paradigm out to be envy and hatred between labor and capital is not economics. It’s progressivism. And, it serves no good purpose.

  6. T Shaw wrote, “All economic activity revolves around three inputs: land, labor and capital”
    That is true, if we expand the definition of “land” to include all natural resources, indeed, the whole given environment.

  7. MP-S: Precisely. I reiterated education and training concepts from real estate appraisal courses and textbooks which are often provided to students (bankers and real estate professionals) without extensive, formal economics education.
    Ernst, Likely Karl and Freddie would fall in with Democrats at any time since the party was established: consistent corruption, class envy and hatred since (what?) 1832. .

  8. T. Shaw, I;m stealing that line from you. It will go something like this on the bumper sticker. “The Democrat party: Consistent corruption, class envy and hatred since 1832!”

  9. The thing to remember though is that Jackson is Trump with a better record of achievement.
    I’m partial to Democrats; the party of slavery, segregation, sodomy and sedition, myself.

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