Another institution which arises in very early stages of social development is that of property. The primary distinction between mine and thine lies at the root of so large a part of our eco .
nomic life, that it would be difficult for us with out it to picture any sustained effort to increase the number and useful qualities of goods. It is an essential element in our present ideas of property that this distinction should be main tained by general consent, and by the official recognition of the state, rather than by individ ual force. What is recognized is the right of the one who is called the owner of the property, so far as its nature will permit, to have the sole use and control of it. He may transfer this right to another with or without a consideration. He may do with it what he will, so that he do not trespass upon recognized rights of other persons.
A distinction between private and public (or collective) property becomes sharply drawn in the course of the development of free enter prise. The great mass of wealth becomes the private property of individuals. The title, how ever, is not an absolute one, but is limited by the rights of the public to a share for public purposes, and by any considerations of public interest which the state may see fit to prescribe.
Taxation, the process by which the right of the state to a regular share in the proceeds of industry is realized, may be looked upon as one of the conditions of the social environment. Taxation is not, in the long run, a deduction from income, but an investment. A canal is built in order that the industrial product may be increased ; and the necessary taxation is a pre liminary investment. Short-sighted critics of public enterprises of this sort often find fault because the moderate fees usually charged do not yield on their face a good return upon the investment, entirely losing sight of the increase of fees that would be necessary to pay satisfac tory returns under private management. The Post Office furnishes a good illustration. If the Post Office department reports a deficit, there is at once an outcry at the failure of the govern ment, whereas the real test is whether the public has received a due return for its total investment, which is to be ascertained by add ing the amount of the deficit to be raised by taxes to the amount realized by the sale of stamps. The years in which there has resulted
a surplus are by no means necessarily to be con sidered the years of best management.
Taxation is thus the initial stage in a particu lar method of carrying on industry. But in order that that method may be effective it is necessary that a comprehensive system of tax ation should be established, that there should be a ready acquiescence in the imposition of various kinds of taxation, that taxation should fall less upon individuals than upon the individ ual proceeds of the national industry, that the system of taxation should be uniform and stable, so that industry may adapt itself to it as it does to any obstacle in the physical environment. It is in this way only that inequality in the treatment of individuals can be avoided, and an equitable and useful system of taxation main tained. Attention has been concentrated upon the effort to find an equitable system of taxation. This is no doubt desirable, but it is still more de sirable to find one which is economically useful. Until such a system is reached, the taxation which exists in any society cannot be intelli gently reckoned with as a normal feature of the social environment. When it has once been realized, taxation may be utilized for social ends as readily as any other social institution.
Credit is so fundamental a condition of eco nomic society that our whole system of economic activity is sometimes said to rest upon it ; — and this is not far from the truth. Confidence of the members of society in their political govern ment permits the use of money as a tool of exchange. Confidence in each other permits them to make many exchanges without the in tervention of money. When such exchanges are between two persons directly they are called barter, and if neither party postpones payment no credit is involved. If, however, either party does postpone payment, or if, as more frequently happens, the exchanges are indirect, involving three or more parties with a lapse of time be tween the transactions, then credit becomes an important element. Where there is mutual con fidence in the business integrity of those who are brought into such relations, the making and the exchange of goods may assume a form with essentially different characteristics from those of the primitive industry which prevails where it is absent.