Leo Tolstoy is well-known as a novelist. It is less well known that he also studied economics, conducting empirical research and field work on the causes of poverty. His writings on economics yield an insightful critique of modern economics.
In the book “What Shall We Do Then?” he writes on the role of money in exploit and enslave populations, analyzing the case of Fiji Islands.
On the following you can read some “enlightening excerpts” from his book.
The Science of Economics, the Factors of Production and Money
Money! What is money? Money represents labour. I have met educated people who asserted that money represents also the labour 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:
(1) for convenience of exchange
(2) for the establishment of measures of value
(3) for saving
(4) for payments
The obvious phenomenon that, if I have in my pocket three superfluous roubles which are of no use to me, I need only to whistle in order to collect in every civilized city hundreds of men who are prepared for these three roubles to do at my will the hardest, most detested, and most humiliating work, is not due to money, but to very complex conditions of the economic life of the nations. The control exercised by one set of men over another is not due to money, but to this, that the labourer does not receive the full value of his labour; and he does not get the full value of his labour on account of the properties of capital, interest, wages, and of the complex relations between them and between the production, distribution, and employment of wealth themselves.
To express myself in Russian fashion, it turns out that people who have money have the right to twist those who have no money into ropes. But science says that this is a different matter. Sci- ence says that in all kinds of productions three factors take part: land, stored-up labour (capital), and labour. From the different relations of these factors of production among themselves, – from the fact that the first two factors – land and capital – are not in the hands of the working men, but in these of other people, – from this and from the very complex combinations which arise from it there follows the enslavement of one set of men by another.
It is asserted that in every production three factors take part, – land, capital, and labour, – and in this division it is understood that wealth (or its valuation, money) is naturally subdivided among those who own this or that factor: the rent (the value of the land) belongs to the landowner, the interest to the capitalist, and the wages for the labour to the working man.
Is this true?
In the first place, is it true that three factors take part in every production? Here, right about me, the production of hay is taking place, while I am writing this. Of what does this production consist? I am told: of the land which made the grass grow; of the capital, – the scythes, rakes, forks, wagons, necessary for the making of the hay; and of the labour. But I see that this is not true. In addition to the land, other factors take part in the production of the hay: the sun, the water, the social order, which kept this grass from being trespassed upon, the knowledge of the working men, their ability to speak and understand words, and many other factors of production, which for some reason are not recognized by political economy.
I could fill a whole volume with such omitted factors of production. Why, then, have they cho- sen just those three factors and put them at the basis of science? There is no other basis, and so I see, in the first place, that the division of the factors of produc- tion into three factors only is quite arbitrary and does not lie in the essence of things itself.
We are told that in European society the division of the factors of production has taken place; that is, that some people own the land, others the tools of labour, and others again are deprived both of the land and the tools of labour. The labourer is deprived of the land and of the tools of labour. We are so accustomed to this assertion that we are no longer startled by its strangeness.
By its division of the factors of production, science affirms that the natural condition of the labourer is that unnatural condition in which he is; just as in the ancient world they affirmed, in dividing people into citizens and slaves, that the unnatural condition of the slaves is a natural property of man.
We ask why people who have land and capital enslave those who have none, and we are told: Because they have land and capital. But that is precisely what we want to know: How people have stolen land and capital from other people, depriving them?
The role of money – that is not not simple mean of exchange – is central to explain the status quo.
THE CASE OF ENSLAVEMENT FIJI ISLANDS
Whence does money come? Under what condition does a nation always have money, and under what conditions do we know nations who do not use money?
A tribe lives in Africa, or in Australia, as anciently the Scythians or Drévlyans lived. The tribe lives, ploughing, raising cattle, planting gardens. We hear of it only when history begins; but history begins with the incursion of conquerors. The conquerors always do one and the same thing: they take from the tribe everything they can, – its cattle, its grain, its stuffs, and even cap- tives, and carry it all off. A few years later the conquerors return, but the tribe has not yet recovered from its desolation, and there is nothing to take away, so the conquerors invent another, a better method for exploiting the forces of this tribe.
The first method is personal slavery. This method has the inconvenience of demanding the management of all the working forces of the tribe, and the feeding of all, and so there naturally presents itself a second method, of leaving the tribe on its land, but recognizing it as belonging to the conquerors and distributing it to the retainers, in order to exploit the tribe’s labour through the retainers. But this method has also its inconveniences. The retainers have to look after all the productions of the tribe, and a third method, just as primitive as the first two, is introduced: it is the peremptory demand of a term tribute which the conquered have to pay.
The aim of the conquerors consists in taking from the conquered as many productions of their labour as possible. It is evident that, in order to be able to take as much as possible, the con- queror must take such objects as are of the highest value among the people of this tribe, and which, at the same time, are not bulky and inconvenient to store, — pelts, gold. And so the conquerors generally impose a term tribute in pelts or in gold on each family or gens, and by means of this tribute in the most convenient way exploit the tools of labour of this tribe. The pelts and the gold are nearly all taken from the tribe, and so the conquered have to sell to one another and to the conqueror and his retainers everything they have for gold.
In a volume of literary productions there is an article by Professor Yanzhul, which describes the latest history of the Fiji Islands. If I tried to invent a most telling illustration of how in our time the peremptory demand of money has become the chief instrument for the enslavement of one class of people by another, I could not discover one which would be more glaring and more convincing than this true story, which is based on documentary evidence and took place recently.
On certain islands of the South Sea, in Polynesia, there lives the Fiji nation. The whole group of the islands, says Professor Yanzhul, consists of tiny islands which approximately cover a territory of forty thousand square miles. Only half of the islands are inhabited, by a population of 150,000 natives and fifteen hundred whites. The natives have long since come out of their savage state, excel in ability all the other natives of Polynesia, and represent a nation capable of work and of development, which they have proved by having lately become good farmers and stock-raisers.
The inhabitants were prosperous, but in 1859 the new kingdom found itself in a desperate state. The people of the Fiji Islands and their representative, Cacabo, needed money. The sum of $45,000 was wanted by the Fiji kingdom, in order to pay a contribution or damages, which the United States of North America demanded for certain violence which, it was claimed, the Fijians had shown to some citizens of the American republic. For this purpose the Americans sent a squadron, which suddenly seized a few of the better islands as a pledge, and even threatened to bombard and destroy the colonies, if the contribution should not be handed to the representatives of America at a certain time.
The Americans were among the first colonists to appear, with the missionaries, in Fiji. Selecting or seizing, under one pretext or another, the best plots of ground on the islands, and there laying out cotton and coffee plantations, the Americans hired whole crowds of natives, binding them by contracts, which were not familiar to the savages, or acting upon them through especial contractors or purveyors of live chattel. Conflicts between such planters and the natives, upon whom they looked as slaves, were inevitable, and it was some of these that served as a cause for the demand of a contribution by America
No money was in circulation among the natives, and the whole commerce had exclusively the character of barter; commodity was exchanged for commodity, and the few public and governmental levies were made in country produce. What were the Fijians and their king Cacabo to do, when the Americans categorically demanded $45,000, under threat of the most summary consequences in case of their non-compliance? For the Fijians the figure itself was something inaccessible, to say nothing of the money, which they had never seen in such a large sum.
Cacabo took counsel with the other chiefs, and decided to turn to the Queen of England. At first he asked her to take the islands under her protection, and later simply to annex them. But the English were cautious in reply to this request, and were in no hurry to rescue the semi-savage monarch from his difficulty. Instead of a direct answer, they fitted out a special expedition in 1860, for the purpose of investigating the Fiji islands, so as to decide whether it was worthwhile to annex them to the British possessions, and to spend money in order to satisfy the American creditors.
In the meantime the American government continued to insist on payment, and retained as a pledge several of the best points in its actual possession, and, having gained an insight into the national wealth, increased the former $45,000 to $90,000 and threatened to increase even this sum, if Cacabo did not pay it at once. Hard pressed on all sides, poor Cacabo, who was unacquainted with the European methods of credit transactions, began, with the advice of European colonists, to look for money in Melbourne, asking it of the merchants, under any and all conditions, even if he had to yield the whole kingdom to private individuals.
Here, in Melbourne, a commercial company was formed in reply to Cacabo’s appeal. This stock company, which took the name of the Polynesian Company, made a pact with the rulers of the Fiji Islands, upon conditions which were exceedingly favourable to itself. Taking upon itself the debt to the American government and binding itself to pay it off in instalments, the company received for it, according to the first agreement, one hundred thousand, and later two hundred thousand, acres of the best land of its own choice, the freedom for all times from all taxes and revenues for all its factories, plants, and colonies, and the exclusive right for a con- siderable time to establish banks of issue, with the privilege of an unlimited issue of notes.
From the time of this pact, which was conclusively settled in 1868, the Fijians were confronted, side by side with their local government, with Cacabo at its head, by a powerful commercial organization, with extensive territorial possessions on all the islands, and with a decisive influence in the government. Heretofore Cacabo’s government had been satisfied, for its necessities, with those material means which consisted in all kinds of levies in kind, and an insignificant revenue from customs for imported goods. After the conclusion of the pact and the foundation of the powerful Polynesian Company, its financial condition was changed. A considerable part of the best land in the possessions passed over to the company, and so the taxes were diminished; on the other hand, as we know, the company had obtained a grant of a free import and export of all commodities, by which the revenue from customs was also reduced.
Since by the grant to the Polynesian Company the wealthier Europeans were freed from the customs revenue, the income of King Cacabo became completely insignificant, and he had to bethink himself of its increase.
And so Cacabo began to take counsel with his white friends as to how he might avert the calamity, and these advised him to introduce the first direct levy in the country, and, no doubt in order to make it as little cumbersome for himself as possible, it was to be in the shape of a monetary contribution. The levy was established in the form of a universal or head tax, to the amount of one pound for each man and four shillings for each woman on all the islands.
As we have said, payment in kind and barter even now persist in the Fiji Islands. Very few natives possess any money. Their wealth consists exclusively in all kinds of raw products and flocks, and not in money. But the new tax demanded that, at certain stated periods of time, money be paid, which, when added up, amounted to a considerable sum for a head of a native family. Heretofore the native had been accustomed to no individual imposts in favour of the government, except personal obligations; all the levies that were made were paid by the Commune or the village to which he belonged from the common fields, from which he received his main income. There was but one way left for him, — to seek money from the white colonists, that is, to turn either to the trader, or the planter, who had what he needed, — money.
To the first he was compelled to sell his products at any price, since the collector of taxes demanded the money by a given time; or he had to borrow money against some future product, a circumstance which, of course, the trader made use of in order to demand unscrupulous interest; or he had to turn to the planter and sell him his labour, that is, turn labourer. But the wages, no doubt on account of the great simultaneous supply, turned out to be very low in the Fiji Islands, according to the statements of the present administration, at about one shilling a week, or two pounds twelve shillings a year; consequently, in order merely to pay the tax for himself, to say nothing of his family, a Fijian was compelled to abandon his home, his family, his own land, and his farm, and, often settling far away, on some other island, to sell himself to a planter for at least six months in order to gain the one pound necessary for the payment of the new tax; but for the payment of the taxes for his whole family he was compelled to look to other means.
The result of this order can be easily imagined. From the 150,000 subjects Cacabo collected only £6,000; and so there begins an intensified extortion of taxes, which was unknown before, and a series of compulsory measures. The local administration, incorruptible before, very soon made common cause with the planters, who began to manage the country. For arrears the Fijians were taken to court, and were sentenced, in addition to the payment of the costs, to incarceration for periods of not less than six months. The rôle of these prisons was played by the plantations of the first white man who was willing to pay the tax and the legal cost for the defendant. In this manner the whites had an abundant supply of cheap labour in any quantity desired. At first this compulsory farming out was permitted for the period of six months, but later on the venal judges found it possible to send a man to work for eighteen months, and then to renew their decree.
Very soon, in the period of a few years, the picture of the economic condition of Fiji was completely changed. Whole prosperous districts were half depleted of their population and extremely impoverished. The whole male population, except the old men and the feeble, were working away from their homes, on the plantations of the whites, in order to provide themselves with the money necessary for the payment of the tax or to satisfy the decree of the court. The women in Fiji do hardly any agricultural labour, and so, in the absence of their husbands, the farms were neglected or entirely abandoned. In a few years half the population of Fiji were turned into slaves of the white colonists.
To alleviate their condition, the Fijians once more turned to England. A new petition, covered with a large number of signatures of the most prominent persons and chiefs, and asking to be annexed to England, made its appearance and was handed to the British consul. By this time England, thanks to its learned expeditions, had had time, not only to study, but also to measure the islands, and in due manner to appreciate the natural wealth of this beautiful corner of the globe. On account of all this the negotiations were this time crowned with full success, and in 1874 England, to the great dissatisfaction of the American planters, entered into possession of the Fiji Islands, by annexing them to its colonies.
Cacabo died, and a small pension was decreed to his successors.
The government of the islands was entrusted to Sir Robinson, the governor of New South Wales. In the first year of its annexation to England, Fiji did not have its administration, but was under the influence of Sir Robinson, who appointed an administrator for it. On taking the islands into its hands, the Eng- lish government had to solve a difficult problem, — to satisfy the various expectations from it. The natives naturally expected first of all the abolition of the hateful head tax; but the white colonists (the Americans) looked upon the British rule partly with suspicion, and partly (those of British origin) expected all kinds of benefits, for example, the recognition of their rule over the natives, the approval of their land-grabbing, etc.
The English government, however, proved itself to be equal to the task, and its first action was the abolition for ever of the head tax, which had created the slavery of the natives to the ad- vantage of a few colonists. But here Sir Robinson was confronted with a difficult dilemma. It became necessary to do away with the head tax, to save themselves from which the Fijians had turned to the English government; at the same time, according to the rule of the English colonial policy, the colonies were to support themselves, that is, it was necessary to find local means to meet the expenditures of the administration. But, with the abolition of the head tax, all the income of Fiji (from the customs dues) did not exceed £6,000, whereas the expenditures of the administration demanded at the least £670,000 a year. And so Robinson, after having abolished the money tax, invented the labour tax, which the Fijians had to pay in work, but this did not net the £670,000 necessary for the support of Robinson and his assistants.
What Money Is
This tragic episode from the life of the Fijians is the clearest and best indication of what money is and in what its significance lies. Here everything was expressed: the first fundamental condition of the enslavement — the cannon, menaces, murder, and seizure of land, and the chief means — money, which has taken the place of all the other means. What in the historical sketch of the economic development of the nations has to be followed out in the course of centuries, is here, where the forms of the monetary violence are worked out completely, concentrated in one decade.
Money is a harmless medium of exchange, but certainly not when the shores of the country are lined with loaded cannon, which are directed upon the inhabitants. The moment money is levied by force, under the protection of guns, there is inevitably repeated what took place on the Fiji Islands, and what has taken place everywhere and at all times.
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