uw^ f SOol'lZ'NVriVd FEB 9 1^^/ TOLSTOY S INTEUPRKTATION OF MONKY AND PROPERTY By Mni\nv S. STANOYIiVICH ^' ' nivertitu of Caii/omia) Reprinted from *'Liberty", December, 1916. Liberty PublUhlnft Co. Oakland, Cal. TOLSTOY'S INTERPRETATION OF MONEY AND PUOPERTV By MILIVOY S. STANOYEVICH, M.L. ( Un%9er*Uy qf California) Reprinted from ^'Liberty", December, 1916. Liberty Publishing Co. Oakland, Cal. PRES£«V.«!lON COPV ADDED ORIGKwALTOBE .1 v^ TOLSTOY'S INTERPRETATION OF MONEY AND PROPERTY A. Interpretation of Money. Assuming that our society may exist without positive laws it could also exist without money. The Russian reformer, Leo N. Tolstoy, is consistent with his doctrine of social reform (1). According to him enacted law is violence, private property is evil, and subsequently "money as a centre around which economic science clusters"(2) cannot be anything else, but a medium of oppression (3). Describing the economic nature and offices performed by money, he dissents widely from the politico-economists and disapproves of their teachings on the same subject-matter. At the outset of the seventeenth chapter of his notable work, What Shall We Do Then, Tolstoy inquires. What is money? And further on he proceeds: "I have met educated people who asserted that money represents the labor of him who possesses it. I must confess that formerly I in some obscure manner shared this opinion. But I had to go to the bottom of what money was, and so to find this out, I turned to science. Science says that there is nothing unjust and prejudicial about money, that money is a natural condition of social life — necessary: L for convenience of exchange; 2. for the establishment of measures of value; 3. for saving; and 4. for payments"(4). Are these theories true? According to the teaching of economics they are; according to Tolstoy they are not. Many writers even those of the earliest time argued that ]1 ] "If Tolstoy's teaching is not systematic, two facts may be urged in extenuation: his doctrines, so far as he expounds them, are consistent in themselves" — says T. S. JKnowlson in his biographical and critical study on Leo ToUioy, ch. VII, d. 143. [London, 1904]. (21 See J. W. Harper, Money and Social Problem, ch. V, sec. I, p.98. 3 What ShaU We Do Then, ch. XIX, p. 127. [Wiener's ed. 1904]. [A]Loc.cU., ch. XVII, p. 100. 347 i 50 money is a medium of exchange (5). The founders of classi- cal economics, Smith (6), Ricardo (7), Mill (8), Carey (9), socialist reformers, Lassalle (10), and Marx (11), all agree in the main that money is an exchangeable commodity by means of which people measure the value of other commo- dities. Professor Fisher shortly and precisely defines money as What is generally acceptable in exchange for goods (12). More acute determination of the nature of money is given by Prof. Kinley in his elaborate study on Money (13). According to this author no definition of medium of exchange can be framed on the basis of the material of which it is made but on the basis of its services, and its essential services are three fold: » First, money is sometimes used to describe all media of exchange — gold, silver, paper, checks, bank drafts or the deposits which they represent, commercial bills of exchange, and even corporarion stocks. These things all effect exchan- ges; in a way they all relieve the difficulties of barter. But this definition, however, is too inclusive, Prof. Kinley contends. It is inclusive because all mentioned articles do not attain the character of media of exchange because there is a demand for them for that purpose primarily. The me- dium of exchange includes money but its content is greater than that of money. All money can be a medium of exchange but all medium of exchange is not money (14). Second, at the other extreme is a set of definitions which would restrict money to what may be called commodity money. Those who hold this view insist that money is an article of direct utility with specific value based on its direct services for consumption. They hold that it must have value due to a demand for other than a monetary system. [5] Cf . for instance, Plato, Laws, ch. XI, and Aristotle's Politics, bk. I, ch. 9; Nicomachean Etics, by Aristotle, bk. V, ch. 5. — Roman authors defined money as a "just medium and measure of commutable things" Moneta est justum medium et m^nsura rerum commviahUium, quoted in H. C. Black, Dictionary of Law, p. 785. [1891]. [6] WeaUh of Nations, bk. II, ch. II. [7] Principles of Political Economy and Taxation, ch. XXI. [8] Principles of Political Economy, bk. Ill, ch. VII. [9] Principles of Social Science, vol. II, ch. XXX, 1. [10] Die Philosophic Heracleitos des Dunkeln, vol. I, p. 22. [1845]. [11] Capital, English ed. part I, ch. III. [12] The Purchasing Power of Money, ch. II, ces. 1. [New York, 1911]. [13] D. Kinley, Money, a Study of the Theory of the Medium of Ex- change, ch. V, 6. [New York, 1913]. [14] Some excellent hints as to the money-commodity, compare H. White, Money andBanking, bk. I, ch. I. [New York, 1908]. 3 The implication is that in the absence of this other demand the article would not have any value and therefore could not properly serve as a measure of value. This view of the nature of money is definite and clear-cut, but it is not cor- rect because the article has value if there is a demand for it, whatever the reason for that demand. Third, between these two extremes fluctuates the view that all media of exchange and payment, whose acceptance the law requires in discharge of debts, may properly be called money. This definition confines to standard money, or inconvertible paper, if it were legal tender. Both kinds of money circulate without reference to the possibility of recovering their value from the payer if they should fail to pass, and their value as money depends entirely on the fact that they are generally acceptable in exchange (15). Taking now in view these three standpoints of the nature of money, we could define it in these words : Legal tender, inconvertible paper, and all commodities which are used as general circulating and paying media, are properly called money. This is one of the most typical definitions including nearly all others supported by current political economy. Tolstoy as always disagrees with the teaching of economics and he simply says that money is a new and terrible form of slavery (16).^ His full definition is as folows: Money is a conventional token which gives the right, or more correctly, the possibility, to exploit the labor of other people (17). To explain this inadequate definition of money more approp- riately and in its fuller extent, it is necessary to turn our attention to the functions of money as they are enunciated by Leo Tolstoy. One of many other functions which money performes, according to Tolstoy, is the representation of labor. There [15) Valuable suRgestions on standard money, see W. A. Scott, Money and Banking, ch. iTsec. I. — J. L. Laughlin, The Principles of Money, ch. III. — J. B. Clark, The Ultimate Standard of Value, in Yale Review, Nov. 1892, vol. 1, p. 258-74. — The same subject is well treated by C. Manger in an article entitled "Geld" in the Handwoerterhuch der Staatswisaenechaften, bd. IV. (1900], and L. Nasse, "Das Geld und Muenzwesen" in Schoenberg, Handbuch der Politiachen Oekonomie, bd. I. (1896). [16] WhatShaU We Do Then, ch. XXI, p. 164. [Wiener's ed.j [17] Id. Ibid. ch. XXII, p. 161. exists a common opinion that money represents wealth, but money is the product of labor, and so money represents labor (18).*' This opinion, says Tolstoy sneeringly, is as correct as that other opinion that every political organiza- tion is the result of a pact (contrat social). Yes, money re- presents labor (19); there is no doubt about that, but whose, labor of the owner of the money, or of the other people? In that rude stage of society, Tolstoy goes on, when people voluntarily bartered the fruits of their products, or exchan- ged them through the medium of money, substantially money represented their individual labor. That is incontes- tably true, and this was only so long as in society where this exchange took place, has not appeared the violence of one man over another in any form: war, slavery, of defence of one's labor against others. But as soon as any violence was exerted in society, the money at once lost for the owner its significance as a representative of labor, and assumed the meaning of a right which is not based on labor, but on violence (20). This is one of the functions of the medium of exchange in the pages of Tolstoy. The second function of money is the representation of the standard value. ''Catallactics" admits this function of money. Tolstoy himself should recognize it in an ideal state of society, in a society where extortion has not made its appearance (21). If people exchanged directly commodity for commodity; if they themselves determined the standards of values by sheep, furs, hides, and shells(22), then one could speak of money as an instrument of exchange, as an ideal standard of value in an ideal state of society. But in such a society there would be no money as such, as a common standard of values, as it has not existed and cannot exist(23). The standard value of money is determined by law and government, and these institutions are based chiefly on deceit (24), or represent the organized force (25). What in recent time receives a value is not what is more convenient for exchange, but what is demanded by government. If gold 18] What Shall We Do Then, ch. XXI, p. 158. 19[ Op. cU.y p. 160. 20]Loc. ci<. ch. XXI, p. 159. [21] Id. lb. ch. XIX, p. 126. 22] Op. cii. ch. XVIII, p. 122. 23] Id. ib. ch. XIX, p. 126. 24] Patriotism andGcvemment. Complete Works, vol. XXIII, p. 538. [Wiener's ed. 1904]. [25] The Slavery of Our Times. Comp. Works, vol. XXIV, p. 128. is demanded gold will be a common denominator, if knuckle-bones are demanded, knuckle-bones will have value (26). If this were not so why has the issue of this medium of exchange always been the prerogative of the government? In such a state of society in which we live, the standard of values ceases to have any significance, because the standard of value of all articles depends on the arbitrary will of the oppressor (27). By this reason we could speak only on arbitrary and conventional value of money, not of its intrinsic, nor of its standard value. Passing now to the third function of money, enumerated by Tolstoy, we see that he attributes to it a new contingent service which is not mentioned as such in any political eco- nomy. In modern civilised society, he says, all the govern- ments are in extreme need for money, and always in insol- vable debt (28). Wherefore they issue monetary tokens in the different countries (29). These tokens: legal tender, inconvertible paper, coin, bills, and other governmental fiats, are distributed among the people, in order that later they could be collected as direct, indirect, and land taxes(30). The debts of the present monetary state grow from year to year in a terrifying progression. Even so grow the budgets(Ji). A state which should not levy taxes, for a com- paratively short time would go to bankruptcy. The taxes and imposts required from people may be paid in form of cattle, corn, furs, skins, and other natural products, but this "natural economy'' never practices in a civilised state. Governments force people to pay those taxes usually in "hard" or "soft" cash, because this kind of money best suits the purposes of rewarding the military and civil offi- cials, of maintaining the clergy, the courts, the construction of prisons, fortresses, cannon (32), and supporting those men who aid in the seizure of the money from the people (33). So we have the third function of money as the third method (261 What ShaU We Do Then, ch. XVIII, p. 122. [271 Id. Ibid. ch. XIX, p. 127. (28) Loc. cit. ch. XVIII, p. 121. [29] Op. cU. ch. XX, p. 145. (301 Loc. cU. ch. XX, p. 145. 1311 Id. Ibid. ch. XVIII, p. 121. [32] The Kingdom ofOod i8 Within You, «lir English translation by B. Tucker, 1876, First Memoir, ch. I. (7) What ShaU We Do Then, ch. 39. Wiener's ed. p. 318. 14 be interested in the defence of the country (8). This com- munism of Plato was vigorously combated by Aristotle in a brief passage of The Politics, which contains many of the best arguments since used on that side of the contro- versy (9). However, Aristotle was not an exclusive indivi- dualist. He wants in a state, Private property and common use. In Plato's judgment, the state should be governed in the reverse way, Common property and private use. In Greek history we find a constant srtuggle about these questions of inequality among people and private dominion of land. But the ideas of communism and social possessions among ancient nations are prevalent. The learned historian, Theo. Mommsen, in his Roemische Geschichte stated that in the earliest times the arable land was cultivated in common, and it was not till later that land came to be distributed among the burgesses as their own property (10). Mommsen's thesis is based on the quotations of Cicero ( 1 1), Dionysius of Halicarnassus, and Plutarch. In later time it is supported by the historian, P. Viollet (12), economist E. de La- veley (13), sociologists Ch. Letourneau (14), Sir Henry Main (15), and almost all socialist writers (16). During the Middle Ages the idea of common ownership was theoretically maintained by church Fathers and their [8] Plato's view on property is expressed in The Republic, bk. Ill, IV, V and VIII. Then in The Laws, bk. Ill, where he speaks of distribution of land and equalizing of property. In the same work, he further on says that property does not belong to the individual but to the whole family, and property and family alike belong to the State, The Laws, h.X.l [9] "I do not think", says Aristotle, "that property ought to be com- mon". [The Politics, bk. VII, ch. 10]. On the other place he argues that there are two things which principally inspire mankind with care and affection, namely, the sense of what is one's own, and exclusive pos- session. [The Politics, bk. II, ch. IV] [10] In aeltester Zeit das Ackerland gemeinschaftlich, wahrsch- einHch nach den einzelnen Geschlechtsgenossenschaften bestellt und erst der Ertrag unter die einzelnen dem Geschlecht angehoerigen Haeuser vertheSt ward... erst spaeter das Land unter die Buerger zu Sondereigenthum aufgetheilt ward. [ Roemische Geschichte, 2te A- uflage, 1856, bd. I, st. 171-72.] [11] Tum [zur Zeit des Romulus] erat res in pecore et locorum pos- sessionibus, ex quo pecuniosi et locupletos vocabantur. — [Numa] pri- mum agros, quos bello Romulus ceperat, divisit viritim civibus. [Cited by Mommsen from De Republca, 2, 9, 14.] [12] Du Caractere Collectif des Premieres Proprietis Immohilieres, 1872. [13 [14 [15 [16 De la ProprieteetdesesFormese Primitives, 1874. [EngUsh tr. 1878] UEvolution de la Propriete, 1888. [English translation, 1892]. Ancient Law, ch. VIII. London, 1861. Especially P. Lafargue, The Evolution of Property, 1908. 15 followers, on the basis of Christ's teaching which perpetu- ally sympathized with the poor. St. Fathers regarded com- munity of goods as the ideal order of society, private pro- perty as a necessary evil, trade as an occupation hardly compatible with the character of a devout Christian, and the receipt of interest for the use of money as altogether sinful. They said that individual property is contrary to the Divine Law. therefore Omnia debent esse communia. These princi- ples could never be applied with logical severity. Eccle- siastics theoretically preached equality of men, and in practice they were the wealthiest class among other classes. Roderigo Borgia, later Pope Alexander VI, was one of the richest men of his time (17). The luxury, immorality and privileged wealth of clergy caused the Reformation, but the Reformation could not restrain the clergy from acquiring immense private possessions. Communism of the Middle Ages was then a pure utopia, as it is today. In the philosophy of the 17th, 18th, and 19th centuries the institution of private property was justified by many jurisconsults, reformers, and philosophers who, based their teachings on human nature. Among these are significant the- ories of Grotius, Locke, Hobbes, Thiers (18), and Coulan- ges (19). In opposition to these writers we find, throughout the French Revolution and later on, the writers who as- sailed private property as pernicious. Rousseau expressed himself with all his fervid eloquence upon this theme, and he found a large public to sympathize with his de- clamations. Rousseau was the inspirer of those revolutio- nary writers, inferior in genius but equally daring, who helped to diffuse his doctrines. Mirabeau and Robespierre were also Rousseau's adherents. Even the socialists, though they have dropped some of his first principles and have adopted some of the conclusions of modern science, have inherited no small portion of his spirit (20). {17] On this Pope, Professor P. Villari says: "One of his strongest passions was an insatiable greed for cold... he accumulated the immense fortune that served to raise him to the papacy"... See Storia diGirolamo Savonarola, e de* suvi tempi, 1869. English by Ll. Villari, 1909, ch. IX, 152. [18] The Rights of Property, by A. Thiers, London. 1848. [19] The Origin of Property in Land, by F. de Coulanges. English translation, London, 1891. [20[ On the private property during the French Revolution see Le Socialisme et la Revolution Francaise, par Dr. A. Lichtenberg, Paris, 1899, ch. VII, 1. Another valuable book on this subject is TheFrench Revolution and Modem French Socialism, by Dr. J. B. Peixotto, New York, 1901, ch. I, 4; ch. Ill, 3; and ch. VI, 2. 16 In America we find many of Rousseau's followers who were inspired by philosophers of the French Revolution. Among these followers is Henry George (21), and in Russia, Tolstoy. The difference between these two reformers is that George would put the rent of real property in the hand of government for better and more righteous taxation than is now the case. Tolstoy, meanwhile, is against all taxation, because it can only be collected by force, and all force is for- bidden by Christ. George is for nationalization of land, Tolstoy for full communalization, against all government and all state ownership (22). Tolstoy is, indubitably, influenced by Rousseau, Proud- hon, and anarcho-communistic writers of the nineteenth century. His teaching of property has many elements of chi- merical schemes, sometimes confounded with mediaeval communism and Christian primitive Utopias, sometimes with anarchistic principles which reject both private and social property. The labor question is solved by Tolstoy simply in the destruction of private ownership and in the distribution of land to the people who work manually. Mental labor and intellectual production are ignored and disdained. In many books printed during Tolstoy's life we find "no rights reserved". Literary property, accor- dingly, is the common property of mankind. Ideas and facts are free to all men. There are no patents and copyrights of mental exertions cum privilegio. The author of a work has no right of property in the book he has made; he took the common stock and worked it over, and one man has just as good a right to it as another. If the author is allowed to be the owner of his works, the public are deprived of their rights. The immaterial property in writing is in the same degree a robbery as it is material. Finally, literary labor does not belong to this question. According to Tolstoy's interpretation, inventions, arts, lite- rature, and science, are privileged only to the higher classes. The clasB of people exclusively occupied with physical labor [21[ See Progress and PropeHy, by H. George, 1879, bk. VII-VIII. Tolstoy mentioned George in several of his political articles, and wrote Two Letters on Henry George, 1893. In Wiener's translations of the Com- plete Works of Count Tolstoy, these Two Letters are published in volume XXIII, pp. 396-401. [22] A parallel drawn between George's and Tolstoy's theory of pro- perty may be found in C. B. Fillebrown, T/ie ABC of Taxation, App. B. pp. 168-170. [New York, 1909]. 17 nowhere read books, neither have the masses learned from books to plough, to make kvas, to weave, to make shoes, to build huts, to sing songs, or even to pray. Of this Tolstoy's criticism of literature, science, and private property, were cogent objections. He was called an Utopian, a sophist, an inconsistent author who speaks one thing and works something else. Some called him charlatan, destroyer of sacred institutions, and a man who did not know what he was preaching. These epithets remind one of that which Jean Bodin gave to Machiavelli calling him a "butt of invective", and "wretched man", or of those names which Voltaire gave Rousseau honoring him as a "Punchinello of letters", "the fanfaron of ink", "arch- madman", "scoundrel", "mountebank", and other choice epithets. Such criticism might be valuable and apropos to a certain sort of newspapers, but not to serious investigators and critics. Throwing this kind of adjectives at an author, does not mean that he is really wrong. Indeed, Tolstoy's doctrine of abolishing individual ownership constitutes no valid grounds for criticism of the historic right of private pro- perty in land. Most of his great expectations would not be realized. The problems of wealth distribution, land, and money, are much deeper and more complex than he presu- med. They cannot be explained solely by a theory, nor solved by refusing to serve in military and state obligations. They are the inheritance of the present generation from a long past, the resultant of a complex of forces, material and spiritual, political, economic, moral, and social. They can only be unraveled by a most minute and careful study of historical records, interpreted by the aid of the best re- sults of the thought of economists, sociologists, and politi- cians. And yet, in many ways, Tolstoy aided the solution of these problems. He helped to accelerate it by the example he set of earnestness, altruism, and intense devotion to ide- als which he made the creed of future society. RETURN TO the circulation desk ot any University of California Library or to the NORTHERN REGIONAL LIBRARY FACILITY BIdg. 400, Richmond Field Station University of California Richmond, CA 94804-4698 ALL BOOKS MAY BE RECALLED AFTER 7 DAYS • 2-month loans may be renewed by calling (510)642-6753 • 1-year loans may be recharged by bringing books to NRLF • Renewals and recharges may be made 4 days prior to due date. DUE AS STAMPED BELOW JAN 27 1997 12.000(11/95) U.C. BERKELEY LIBRARIES I CD^773Ehflfi UNIVERSITY OF CAUFORNIA UBRARY l