Let us restate the ideas that have been touched upon. The fallacy of waste is due to a narrow and incomplete view of the effects resulting from a particular use of wealth. In many cases it is possible that some one person may benefit by another's mishap or folly in the use of wealth. The complex interrelations of men in society make this inevitable. But, to appreciate the dynamic effects of such action upon society in general, one needs but to go back to the essential thought of wealth and its pur poses. As the average efficiency and bounty of the world fall, so fall the income and welfare of men. As it rises, the social and economic levels rise also. Economic wealth has poten tially two kinds of uses, direct or indirect : to gratify desire —thus fulfilling its destiny—or to be converted into higher and more efficient agents. That the possibilities of the latter are boundless is overlooked in the fallacies here criticized. A bountiful and efficient world would be the result of abstinence and saving; a barren and used-up world, the result of the fallacy of waste.
Closely related to the problem of waste, but still more difficult, is the problem of luxury. It is not possible to define luxury absolutely ; it is a relative term. The conception of luxury, however defined, involves always the thought of great consumption of wealth for unes sential pleasures. Those opposed to it condemn it in their definition of it, as, for example: "an excessive consumption of wealth," or "devoting a relatively large amount of wealth to the satisfaction of a relatively superfluous want." Those who take a more moderate and favorable view say : "It is the enjoyment of forms of wealth not obtainable by the mass of men." Luxury is not entirely a matter of riches. Many a person of moderate income has relatively superfluous and ex pensive tastes. One spends more for music than many a mil lionaire does; another more for books. The difficulty in the definition as well as in the problem of luxury is that it in volves a mixture of economic and of ethical questions.
§ 8. Luxury to give employment. Luxury, like waste, is justified by some as giving employment to labor. Typical in stances are extravagant dress and elaborate balls where fine and costly flowers, decorations, music, and coaches require the expenditure of a large amount of money. It is said of the Empress Eugenie, wife of Napoleon III, that, in order to help the glove industry of France, she wore a pair of gloves but once; in order to help other French industries, she purchased many silks and laces. It is a very comfortable doctrine to some people that the oftener they change their dress, the greater benefactors to society they are. From time to time a great society "ball" is given in the metropolis, possibly little more elaborate and expensive than many another ball; but if it chances to be a dull time for news the papers all over the land give columns to its discussion. The newspapers at such
times usually print many interviews with citizens of varied occupations, and the thought appears over and over that such balls have at least the merit of giving employment to labor, evidently meaning employment additional to the total amount which otherwise would have been possible.
The fallacy of luxury. The fallacy of this is essen tially the same as that in the argument for waste and destruc tion. From the fact that these particular tailors, musicians, and florists would have less employment if this ball were not given, it is falsely concluded that, but for this ball, this par ticular income, or capital, would not be used at all. The average of employment in those special industries which min ister to luxury is the result of and is determined by the average level of demand. There are more caterers and florists in a large city than in a crossroads village. It is true that a more than ordinarily gay season gives unusual profits to these enterprises, whereas an abrupt and extreme falling off in de mand would cause them large losses and leave many workers lacking employment for that one season. But, if this limited demand became usual, capital and labor would shift to the other industries to which expenditure had shifted. Other modes of expenditure than twenty-five thousand dollar balls are possible, as, for example, twenty-five thousand dollar pub lic libraries. Mr. Carnegie has preferred to take his dissipa tion in that form. That gives employment also; not less does investment in new houses, in new railroads, and in new fac tories. More employment of a particular kind of labor is caused in one case than in another, but not more employment of labor as a whole and on the average.
§ 10. Sudden changes in standards of luxury. Luxury may be in various degrees and correspondingly may have various effects upon the state of wealth and income, and upon their movements. It might accompany a general condition of conservative abstinence, where only the clear surplus of in come is given to luxury, preserving a static equilibrium. The degree of luxury may, however, change dynamically toward either extreme. First, it might increase so that it exceeded each spender's clear income, encroached upon capital, and became a policy of prodigality. The result of this must be to stimulate for a time all the trades serving to provide the superfluities, but eventually to leave them without a market for their wares. Thereupon the factors would have to be returned to the use for necessities. The community as a whole would be impoverished as well as the individuals.