Nature of the capi talistic system. The beginnings of private property. Extension of property rights. We are accustomed to speak of capitalism as constituting an industrial "system." The term "system" is thus applied because capitalism not only exhibits a considerable regularity of outline, but in addition shows a strong tendency to function in conformity with the basic laws of economics. The capitalistic system, as it may be called, is based upon certain fundamental institutions and principles. Of these bases of capitalism, the right of private property is one of the oldest and most important. The evolution of private property is described by Professor Gide in the following passage: At the present time all wealth that can be appropriated — which excludes the air, the sea, running waters may become the object of private property rights. In civilized communities almost all wealth constitutes some one's private property. This, however, has not always been the case. There was a time when the scope of private property was confined to a few objects. There is no doubt that at first it comprised only those kinds of wealth that in civilized countries have long ago ceased to be the object of property rights, namely, slaves and women. It also included objects of immediate personal use, such as jewels, weapons, horses, the individual ownership of which was evidenced by the custom of burying them with their owner. Later, property came to include the home, not as individual property, but as family property, because the home was the abiding place of the household gods, and these gods belonged to the family. Still later, it extended to a portion of the land. . . . Different kinds of property have successively played a dominant 1 From Charles Gide, Principles of Political Economy. D. C. Heath & Co., 1903; pp. 430-436. part in the history of mankind. Among pastoral tribes, cattle is the most important property; under feudalism, land; and in the era of steam, coal mines. Private property has, in our own times, been extended to a multitude of new objects of which our ancestors knew nothing. Among these are: (1) So-called invisible property; that is, credit claims or shares in the stock of industrial enterprises, represented by mere pieces of paper that can be slipped into a pocketbook, and which to-day constitute a most convenient and desirable kind of wealth; (2) works of literature, science, and art, which have become the object of property rights under the name of copyrights and patents... -- ... which the attributes of erty may have been acquired: The right to exploit, the right of gift, the right to sell or rent, So far as we can conjecture, the order in which the right of private Order in property successively acquired its essential attributes was as follows: (1) Probably the first property right was that of exploiting one's private proppossessions, that is, making them yield something for the owner by means of the labor of others, formerly by the labor of slaves, and subsequently by the labor of free wage-workers (employees). (2) The right of gift, at least in the case of movable objects, seems to have been one of the oldest ways of making use of wealth and anterior even to the right to sell. . . . (3) The rights to sell and to rent seem to have sprung up much later. In the fourth century before Christ, Aristotle declared that these were necessary attributes of the right of property; but he does not seem to imply that they were generally recognized at that time. In fact, there are many reasons why they should not have been recognized. As long as property was vested in the family and bore the imprint of religious consecration and this was the marked characteristic of antique property the transfer of ownership was not sanctioned; at all events, it constituted an act of impiety on the part of any member of the family. Moreover, exchange and the division of labor did not yet exist; each family sufficed unto itself; movable objects of property were few in number. Hence every one kept these objects permanently; sometimes they were buried with the owner. Under these circumstances, sale could be regarded only as an exceptional and abnormal act. Accordingly, when sale is first introduced, we find it solemnized by extraordinary ceremonies, and partaking of the nature of a public event. . . and the right to bequeath. The con- Contracts may be oral or written. (4) The right to bequeath, which has always been regarded as the most important attribute and the crowning feature of the right of property. . . . [This attribute] was even slower in becoming a part of the right of property. This right, moreover, came into conflict with the right of family inheritability, to which we have already referred; and it obviously could not have been recognized until property had entirely lost its family character and become thoroughly individual. There is reason to believe that even at Rome, where individual property was ultimately so vigorously developed, the father of the family did not have the right to bequeath until the establishment of the Law of the Twelve Tables (450 B.C.). . . . When the right of property has acquired these four characteristics, it may be regarded as complete. . . 56. Types of business contracts 1 Another important basis of capitalism is the obligation to fulfill contracts entered into voluntarily and in legal form. The complex division of labor has obliged the average individual to rely upon others for numerous goods and services which he does not find it possible or economical to supply for himself. Now, if individuals are to rely upon one another, it often becomes necessary for them to enter into definite agreements or contracts. The chief purposes of the contract are to render clear and definite the terms of such agreements, and to protect responsible persons against the carelessness or dishonesty of the other parties to the contract. Because of the vital importance of contracts, all civilized countries have enacted laws which oblige persons to live up to the terms of contracts which they have agreed to voluntarily and in legal form. The following excerpts from a textbook on business law explains some of the more brief and simple forms of contracts: In ordinary business, most contracts may be oral in form, that is, by word of mouth. Such contracts are just as binding in law as if written in full. But with oral contracts mistakes are common and misunderstandings are numerous. They are always more or less 1 From Coleman Hall Bush, Applied Business Law. Henry Holt & Co., 1920; pp. 120, 121-125. essentials of a contract. difficult to prove in court. Therefore, to avoid misunderstandings and to make proof certain, all important contracts should, whether required by law or not, be in writing. The first essential of any contract is the presence of competent The six parties, and the second is the mutual agreement of these parties. Agreement arises from a meeting of the minds, or an assent to the same thing and in the same sense, and it must be with an intention of being bound by the obligation of the contract. The third essential is that the agreement must be free from fraud, mistake, or duress. Fourth, it must be based upon sufficient cause, price, or consideration, (fifth) to accomplish a lawful purpose. The sixth and last essential of a written contract is that it must be clearly stated. . . . Contracts arise from agreement, and agreements originate in some form of offer and acceptance. In oral contracts the offer and acceptance are by word of mouth; after the agreement is reached it may be reduced to writing, thus forming a written contract. Agreements may also be reached by correspondence. Where the negotiations are in this form, the agreement of the parties and the written form of the contract originate at the same time. A written offer followed by an acceptance in writing . . . results in a contract; these writings constitute the evidence of the agreement, and are, in fact, the written contract. How contracts arise. "I will sell you that cow for $500, and deliver her at your place not later than May 3d," said O to B, as he pointed out a cow in his dairy herd. 'Agreed," replied B, "I will take her at that price, and make payment on delivery.” An oral contract. This oral agreement may be reduced to writing; if so, it will be The oral somewhat as follows: "THIS AGREEMENT between O and B, both of Cowlitz, Oregon, witnesseth: "That O, in consideration of the agreement of B, contracts to sell and deliver to B one full-bred Jersey dairy cow, registered and known as 'Jersey Lil,' the delivery to be made on or before May 3d, 1919, at the dairy farm of B. contract reduced to writing. "That in consideration of the agreement of O, B agrees to pay to O the sum of Five Hundred Dollars, at the time of the delivery of the above described cow, this sum being in full payment of the purchase price. "IN WITNESS WHEREOF, we have hereunto subscribed our names, this 4th day of February, 1919." (Signed).. 0. I will sell you one hundred bushels of select seed wheat, No. 1 Dura, delivered at your farm for four dollars a bushel. Upon receipt of your letter of acceptance, I will consider the contract closed, and deliver as you may direct. I accept your offer of one hundred bushels of select seed wheat, No. 1 Dura, at four dollars a bushel, to be delivered at my place. March 4, 1919. Yours very truly, JOHN DOE.... The foregoing letters constitute a valid written contract, and taken together, contain all the essential elements of a valid contract. The basis of competition. 1 57. The forms of competition 1 It has often been pointed out that desirable goods and services are scarce, that is to say, their supply is small relatively to the de 1 From Thomas Nixon Carver, Principles of Political Economy. Ginn & Co., 1919; pp. 37-42. |