THE CASH NEXUS

AUSTRALIAN ECONOMIC ASSOCIATION.

The second session of the Australian Economic Association was commenced last night,. . . .
Professor W. SCOTT, M.A., read a paper upon "The Cash-nexus." This was the name applied by Carlyle to the relation between man and man which he singled out as the most striking peculiarity of modern society—the relation of mere temporary and occasional contract, as opposed to the more permanent, closer, and more personal bonds by which men were united into organised social groups in earlier times. The system of the cash-nexus is that under which, as Carlyle himself, with some characteristic exaggeration, describes it, " Man's duty to man resolves itself into handing him certain metal pieces, and then shoving him out of doors." This state of economic individualism, under which the social organism was for most purposes disintegrated into its component atoms, seemed to us who live in it so natural that we took it as a matter of course ; and it required an effort of thought to realise that it had come into being in the course of little more than the last hundred years, and was a state of things absolutely unprecedented in the history of the civilised. world. Under the feudal system of the middle ages, every man, from king and baron to serf, with rare exceptions, had his place and function in society, his rights and duties, economic and other, determined for him from his birth ; his relations to those above, below, and around him were permanent and personal, and his whole life was regulated for him by the traditions of the community of which he was a member. And long after feudalism in the strict sense had died out, much of its spirit survived, and the industries of England were still carried on by men organised into small and compact social groups—the manor or parish in the country, the trade-corporation in the town—the economic relations of whose members were determined partly by custom, partly by minute regulations, but only to a small extent by voluntary and occasional contract. In the transplantation of English civilisation to a new country, even those remains of the old traditions which lingered on in England, in the agricultural districts especially, had necessarily disappeared ; so that in the English colonies the relations between employer and wage-earner were probably less permanent, and more entirely limited to the cash-nexus than in any other countries in the world, with the sole exception of the United States.
Now, what had been the effects for, good or ill, of this far-reaching change ? In the first place it was evident at once that the question bore a very different aspect according as we regarded the new countries or the old. In the first place, Professor Scott discussed what took place in England. They had learned to produce wealth, and found themselves none the better for it; they had now to set themselves a fresh problem—how to distribute wealth in such a way that all who were willing to work might got their share. This was the new riddle of the Sphynx : England must solve it or be strangled.
 So much for the economic conditions of the time. But as it seemed to Carlyle, the economic distress was, after all, only the symptom of a more deeply-rooted disease. He found the true cause of all this misery in the dissolution of social organism, the isolation of the individual, which the industrial revolution had brought with it. Men had lost all sense of mutual duties; the old bonds uniting men and men were broken, and nothing but the nexus of cash payment remained to hold society together. That, he thought, was the root of all the mischief. This was Carlyle's diagnosis of England's disease. Let them see what remedies he would prescribe. It was curious that, in spite of his invectives against laissez faire, the first step which he rightly saw to be necessary as an immediate palliative was, after all, the removal of one of the remaining restrictive regulations. The corn laws—the tax on imported corn, which had starved the people to raise the landlords' rents—must be abolished. That, he said, would give the nation a respite of 10 or 20 years in which to set its affairs in order. But was it possible to discover a true and permanent remedy ? As to this, Carlyle spoke with some hesitation. Of one thing he was sure, that no mere Morrison's pill—no quack medicine of an Act of Parliament, or manipulation of votes and ballot-boxes— could effect a cure. What the deceased social organism needed was nothing less than a thorough change of regimen. It better times were to come at all they must be brought about by a recovery of the lost sense of social duty in all classes, but especially in the rich and governing classes. But how that recovered sense of duty may direct them to act in detail, he hardly ventured to predict. This much was clear, that they would have to find some way of organising labour. "The feudal ages were organic ; the industrial ages are as yet inorganic, and in a quite pulpy condition, requiring desperately to harden themselves into some organism." The palliative mentioned by Carlyle was applied. In 1846, three years after Carlyle wrote, the corn-laws were abolished ; the artificial barrier, by which foreign food supplies had been excluded, was broken down ; the population of England was no longer compelled to subsist on the produce of its own land, but was left free to buy food in the world's market. And the "respite" thus gained had proved far more lasting than could be anticipated at the time. Through improved means of communication, the corn lands of England had for economic purpose been virtually increased by the addition of those of North America, and the pressure of the law of diminishing returns, which was almost strangling England a generation ago, had been so far averted. The England of to-day grows only half its food supply, and gets its bread at a cheaper rate than ever.
Now, what was the explanation of the improvement in the English labourer's condition effected by admitting foreign corn ? It was, that his labour as a breadwinner was rendered more efficient ; it was indirectly applied to the production of corn in whatever part of the world most corn could be produced by a given application of labour. Consequently, his labour had yielded more bread, and so, in the division of the produce between labourer and employer, the labourer got more. The truth was that the economist's doctrine of despair, " No hope but in restriction of population," was, after all, a false doctrine, and had been proved false alike by experience and theory. The reasoning was unimpeachable, but the premises happened to be defective. We had learnt to see now where the error lay, and a truer political economy taught us that the way of escape was by increasing the efficiency of labour. In whatever way the result of the labourer's work was increased—whether by external circumstances, by improved instruments, or by his own intelligence and perseverance—his share in the wealth produced, other things being equal, would be greater. And this was certainly a more cheerful, as well as a truer doctrine than the other.
But, besides this, something at least had been done in the direction in which Carlyle looked for the true remedy, though not quite on the lines which he laid down. It was true that one of the first remedies which the people themselves demanded was one of a kind which Carlyle himself contemptuously rejected—Parliamentary reform. He said to the governing classes, " Do your work, and learn to govern." But the wage-earners would not have this. What they said to the ruling classes was, " We have had enough of you and your government. You have proved yourselves incapable of governing, and shown you will and can do nothing for us. It is time for you to make room for us. We will try our hand at governing ourselves." This was the demand placed in the front, for instance, in the agitation of the Chartists. The growth of political liberty, or rather, perhaps, the great general movement of which that was only one aspect, could, and did determine the terms under which, if at all, the disintegrated fabric of society was to reorganize itself.
It became certain that that form could not be such as Carlyle conceived ; but if the facts were examined it would be found that some progress had actually been made towards reorganizing the industrial and economic relations of society on the new basis, though little, perhaps, in comparison to what remained to be done. When Carlyle said that the individual is isolated, all that he really meant was that society had become an aggregate of isolated families. The bread winner, and not the individual, was the unit. In the family, at least, was always retained a social group organised on purely socialistic principles, and the most doctrinaire economists have hardly gone to the length of seriously proposing that the principles of free competition and laissez faire, and the cash nexus should be applied to the relations of husband and wife, and of father to children. The State, even at its worst, never entirely ignored its duty to the individual. There was at least the Poor Law. It was a terrible symptom of the times, as Carlyle insisted, where out of a labouring population of 15 millions "some two millions, it is counted, sit in work-houses (houses, that is, in which no work is done), or have outdoor relief flung over the wall to them," but even that fact proved that the State recognised the duty of preventing its members from actually dying of starvation. Step by step the State had found and practised other and better ways of recognising its responsibilities. By Factory Acts, Education Acts, Adulteration Acts, and in a multitude of other ways, it has given practical expression to the growing conviction that a man had not a right to "do what he liked with his own," when what he liked happened to be inconsistent with on endurable existence for his fellow-citizens. It might be true that but little had yet been done, and that little in some matters not very wisely; but we were moving rapidly in that direction, and the voice of Mr. Herbert Spencer crying in the wilderness only served to remind us that as far as State action was concerned, laissez-faire had had its day.
Still, State regulation alone could not go far ; and even when the State had done its best, the vague and indefinite relation of the individual to the State, represented in the concrete mainly by the inspector and the policeman, was a poor substitute for that personal loyalty between man and man, the loss of which made Carlyle look back regretfully to the feudal ages. The organisation of labour, the enlisting and disciplining of the armies of industry, which he demanded, had been brought about by other means. Employers and wage earners alike were now rapidly learning by experience, and accommodating themselves to the new conditions of industry; and we were beginning to see the possibility of a time when the organisation of labour, now in its infancy, would be so far perfected that the contract between employer and labourer need involve no more hostility or bitterness of feeling than the purchase of a bale of wool. The cash-nexus would still be there, in some shape or other; but that need not prevent the formation of other social ties as well, ties no less strong, perhaps, than the old ones, though of a different character, based on voluntary association rather than on fixed status and tradition, and uniting men as equals and comrades rather than as protector and protected. Happy the nation that had no economic history. These colonies were placed in the fortunate position of being able to acclimatise the results of European civilisation, without having to purchase them at the cost of painful experience. Settled, as we were, on the edge of a vast extent of almost unoccupied territory, the pressure of the law of diminishing returns was still too far ahead of us to be taken into our calculations ; and labour in such a country was so productive that it yielded an ample shore for employer and wage-earner alike.
In fact, we were so happily situated that for the present we could afford the luxury of making mistakes with comparative impunity. Whether we adopted protection or free trade, good or bad land laws, there was still plenty for all who could work and would work ; and, if we should choose to content ourselves with the cash-nexus, there was no immediate prospect for us, as there seemed to be for England, of famine ; and in consequence, in our immunity from great industrial struggles and trials, we were driven to make the most of small ones.
 We had our difficulties. There was the difficulty of the unemployed. But if that turned out on investigation to be in the main a difficulty in getting satisfactory employment at a wage of 6s. a day, he thought we might face greater difficulties than that and survive them. In our case, the respite of which Carlyle spoke was prolonged to an indefinite period in the future; and if, by the time when pressure came at last, we had not succeeded in building ourselves up into a social fabric strong enough to meet it, in that case it could only be said that we should deserve the worst that might happen to us.

Sydney Morning Herald (NSW : 1842 - 1954), Wednesday 22 February 1888, page 12