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THE
UNSOLVED RIDDLE
OF
SOCIAL JUSTICE
BY STEPHEN LEACOCK
=B. A., Ph. D., Litt. D., F. R. S. C.=
_Professor of Political Economy at McGill University, Montreal_
Author of "Essays and Literary Studies," Etc.
NEW YORK: JOHN LANE COMPANY
LONDON: JOHN LANE, THE BODLEY HEAD
TORONTO: S. B. GUNDY: MCMXX
BY STEPHEN LEACOCK
FRENZIED FICTION
FURTHER FOOLISHNESS
BEHIND THE BEYOND
NONSENSE NOVELS
LITERARY LAPSES
SUNSHINE SKETCHES
ARCADIAN ADVENTURES WITH THE IDLE RICH
ESSAYS AND LITERARY STUDIES
MOONBEAMS FROM THE LARGER LUNACY
THE HOHENZOLLERNS IN AMERICA
Copyright, 1920,
By John Lane Company
_CONTENTS_
CHAPTER PAGE
I. The Troubled Outlook of the Present Hour 9
II. Life, Liberty and the Pursuit of Happiness 33
III. The Failures and Fallacies of Natural Liberty 48
IV. Work and Wages 66
V. The Land of Dreams: The Utopia of the Socialist 88
VI. How Mr. Bellamy Looked Backward 103
VII. What Is Possible and What Is Not 124
THE UNSOLVED RIDDLEOF SOCIAL JUSTICE
_I.--The Troubled Outlook of the Present Hour_
THESE are troubled times. As the echoes of the war die away the sound of
a new conflict rises on our ears. All the world is filled with
industrial unrest. Strike follows upon strike. A world that has known
five years of fighting has lost its taste for the honest drudgery of
work. Cincinnatus will not back to his plow, or, at the best, stands
sullenly between his plow-handles arguing for a higher wage.
The wheels of industry are threatening to stop. The laborer will not
work because the pay is too low and the hours are too long. The producer
cannot employ him because the wage is too high, and the hours are too
short. If the high wage is paid and the short hours are granted, then
the price of the thing made, so it seems, rises higher still. Even the
high wages will not buy it. The process apparently moves in a circle
with no cessation to it. The increased wages seem only to aggravate the
increasing prices. Wages and prices, rising together, call perpetually
for more money, or at least more tokens and symbols, more paper credit
in the form of checks and deposits, with a value that is no longer based
on the rock-bottom of redemption into hard coin, but that floats upon
the mere atmosphere of expectation.
But the sheer quantity of the inflated currency and false money forces
prices higher still. The familiar landmarks of wages, salaries and
prices are being obliterated. The "scrap of paper" with which the war
began stays with us as its legacy. It lies upon the industrial landscape
like snow, covering up, as best it may, the bare poverty of a world
desolated by war.
Under such circumstances national finance seems turned into a delirium.
Billions are voted where once a few poor millions were thought
extravagant. The war debts of the Allied Nations, not yet fully
computed, will run from twenty-five to forty billion dollars apiece. But
the debts of the governments appear on the other side of the ledger as
the assets of the citizens. What is the meaning of it? Is it wealth or
is it poverty? The world seems filled with money and short of goods,
while even in this very scarcity a new luxury has broken out. The
capitalist rides in his ten thousand dollar motor car. The
seven-dollar-a-day artisan plays merrily on his gramophone in the broad
daylight of his afternoon that is saved, like all else, by being
"borrowed" from the morning. He calls the capitalist a "profiteer." The
capitalist retorts with calling him a "Bolshevik."
Worse portents appear. Over the rim of the Russian horizon are seen the
fierce eyes and the unshorn face of the real and undoubted Bolshevik,
waving his red flag. Vast areas of what was a fertile populated world
are overwhelmed in chaos. Over Russia there lies a great darkness,
spreading ominously westward into Central Europe. The criminal sits
among his corpses. He feeds upon the wreck of a civilization that was.
The infection spreads. All over the world the just claims of organized
labor are intermingled with the underground conspiracy of social
revolution. The public mind is confused. Something approaching to a
social panic appears. To some minds the demand for law and order
overwhelms all other thoughts. To others the fierce desire for social
justice obliterates all fear of a general catastrophe. They push nearer
and nearer to the brink of the abyss. The warning cry of "back" is
challenged by the eager shout of "forward!" The older methods of social
progress are abandoned as too slow. The older weapons of social defense
are thrown aside as too blunt. Parliamentary discussion is powerless. It
limps in the wake of the popular movement. The "state", as we knew it,
threatens to dissolve into labor unions, conventions, boards of
conciliation, and conferences. Society shaken to its base, hurls itself
into the industrial suicide of the general strike, refusing to feed
itself, denying its own wants.
This is a time such as there never was before. It represents a vast
social transformation in which there is at stake, and may be lost, all
that has been gained in the slow centuries of material progress and in
which there may be achieved some part of all that has been dreamed in
the age-long passion for social justice.
For the time being, the constituted governments of the world survive as
best they may and accomplish such things as they can, planless, or
planning at best only for the day. Sufficient, and more than sufficient,
for the day is the evil thereof.
Never then was there a moment in which there was greater need for sane
and serious thought. It is necessary to consider from the ground up the
social organization in which we live and the means whereby it may be
altered and expanded to meet the needs of the time to come. We must do
this or perish. If we do not mend the machine, there are forces moving
in the world that will break it. The blind Samson of labor will seize
upon the pillars of society and bring them down in a common destruction.
* * * * *
Few persons can attain to adult life without being profoundly impressed
by the appalling inequalities of our human lot. Riches and poverty
jostle one another upon our streets. The tattered outcast dozes on his
bench while the chariot of the wealthy is drawn by. The palace is the
neighbor of the slum. We are, in modern life, so used to this that we no
longer see it.
Inequality begins from the very cradle. Some are born into an easy and
sheltered affluence. Others are the children of mean and sordid want.
For some the long toil of life begins in the very bloom time of
childhood and ends only when the broken and exhausted body sinks into a
penurious old age. For others life is but a foolish leisure with mock
activities and mimic avocations to mask its uselessness. And as the
circumstances vary so too does the native endowment of the body and the
mind. Some born in poverty rise to wealth. An inborn energy and capacity
bid defiance to the ill-will of fate. Others sink. The careless hand
lets fall the cradle gift of wealth.
Thus all about us is the moving and shifting spectacle of riches and
poverty, side by side, inextricable.
The human mind, lost in a maze of inequalities that it cannot explain
and evils that it cannot, singly, remedy, must adapt itself as best it
can. An acquired indifference to the ills of others is the price at
which we live. A certain dole of sympathy, a casual mite of personal
relief is the mere drop that any one of us alone can cast into the vast
ocean of human misery. Beyond that we must harden ourselves lest we too
perish. We feed well while others starve. We make fast the doors of our
lighted houses against the indigent and the hungry. What else can we do?
If we shelter _one_ what is that? And if we try to shelter all, we are
ourselves shelterless.
But the contrast thus presented is one that has acquired a new meaning
in the age in which we live. The poverty of earlier days was the outcome
of the insufficiency of human labor to meet the primal needs of human
kind. It is not so now. We live in an age that is at best about a
century and a half old--the age of machinery and power. Our common
reading of history has obscured this fact. Its pages are filled with the
purple gowns of kings and the scarlet trappings of the warrior. Its
record is largely that of battles and sieges, of the brave adventure of
discovery and the vexed slaughter of the nations. It has long since
dismissed as too short and simple for its pages, the short and simple
annals of the poor. And the record is right enough. Of the poor what is
there to say? They were born; they lived; they died. They followed their
leaders, and their names are forgotten.
But written thus our history has obscured the greatest fact that ever
came into it--the colossal change that separates our little era of a
century and a half from all the preceding history of mankind--separates
it so completely that a great gulf lies between, across which comparison
can scarcely pass, and on the other side of which a new world begins.
It has been the custom of our history to use the phrase the "new world"
to mark the discoveries of Columbus and the treasure-hunt of a Cortes or
a Pizarro. But what of that? The America that they annexed to Europe was
merely a new domain added to a world already old. The "new world" was
really found in the wonder-years of the eighteenth and early nineteenth
centuries. Mankind really entered upon it when the sudden progress of
liberated science bound the fierce energy of expanding stream and drew
the eager lightning from the cloud.
Here began indeed, in the drab surroundings of the workshop, in the
silent mystery of the laboratory, the magic of the new age.
But we do not commonly realize the vastness of the change. Much of our
life and much of our thought still belongs to the old world. Our
education is still largely framed on the old pattern. And our views of
poverty and social betterment, or what is possible and what is not, are
still largely conditioned by it.
In the old world, poverty seemed, and poverty was, the natural and
inevitable lot of the greater portion of mankind. It was difficult, with
the mean appliances of the time, to wring subsistence from the reluctant
earth. For the simplest necessaries and comforts of life all, or nearly
all, must work hard. Many must perish for want of them. Poverty was
inevitable and perpetual. The poor must look to the brightness of a
future world for the consolation that they were denied in this. Seen
thus poverty became rather a blessing than a curse, or at least a
dispensation prescribing the proper lot of man. Life itself was but a
preparation and a trial--a threshing floor where, under the
"tribulation" of want, the wheat was beaten from the straw. Of this
older view much still survives, and much that is ennobling. Nor is there
any need to say goodby to it. Even if poverty were gone, the flail
could still beat hard enough upon the grain and chaff of humanity.
But turn to consider the magnitude of the change that has come about
with the era of machinery and the indescribable increase which it has
brought to man's power over his environment. There is no need to recite
here in detail the marvelous record of mechanical progress that
constituted the "industrial revolution" of the eighteenth century. The
utilization of coal for the smelting of iron ore; the invention of
machinery that could spin and weave; the application of the undreamed
energy of steam as a motive force, the building of canals and the making
of stone roads--these proved but the beginnings. Each stage of invention
called for a further advance. The quickening of one part of the process
necessitated the "speeding up" of all the others. It placed a premium--a
reward already in sight--upon the next advance. Mechanical spinning
called forth the power loom. The increase in production called for new
means of transport. The improvement of transport still further swelled
the volume of production. The steamboat of 1809 and the steam locomotive
of 1830 were the direct result of what had gone before. Most important
of all, the movement had become a conscious one. Invention was no longer
the fortuitous result of a happy chance. Mechanical progress, the
continual increase of power and the continual surplus of product became
an essential part of the environment, and an unconscious element in the
thought and outlook of the civilized world.
No wonder that the first aspect of the age of machinery was one of
triumph. Man had vanquished nature. The elemental forces of wind and
fire, of rushing water and driving storm before which the savage had
cowered low for shelter, these had become his servants. The forest that
had blocked his path became his field. The desert blossomed as his
garden.
The aspect of industrial life altered. The domestic industry of the
cottage and the individual labor of the artisan gave place to the
factory with its regiment of workers and its steam-driven machinery.
The economic isolation of the single worker, of the village, even of the
district and the nation, was lost in the general cohesion in which the
whole industrial world merged into one.
The life of the individual changed accordingly. In the old world his
little sphere was allotted to him and there he stayed. His village was
his horizon. The son of the weaver wove and the smith reared his
children to his trade. Each did his duty, or was adjured to do it, in
the "state of life to which it had pleased God to call him." Migration
to distant occupations or to foreign lands was but for the adventurous
few. The ne'er-do-well blew, like seed before the wind, to distant
places, but mankind at large stayed at home. Here and there exceptional
industry or extraordinary capacity raised the artisan to wealth and
turned the "man" into the "master." But for the most part even industry
and endowment were powerless against the inertia of custom and the
dead-weight of environment. The universal ignorance of the working class
broke down the aspiring force of genius. Mute inglorious Miltons were
buried in country churchyards.
In the new world all this changed. The individual became but a shifting
atom in the vast complex, moving from place to place, from occupation to
occupation and from gradation to gradation of material fortune.
The process went further and further. The machine penetrated everywhere,
thrusting aside with its gigantic arm the feeble efforts of handicraft.
It laid its hold upon agriculture, sowing and reaping the grain and
transporting it to the ends of the earth. Then as the nineteenth century
drew towards its close, even the age of steam power was made commonplace
by achievements of the era of electricity.
All this is familiar enough. The record of the age of machinery is known
to all. But the strange mystery, the secret that lies concealed within
its organization, is realized by but few. It offers, to those who see it
aright, the most perplexing industrial paradox ever presented in the
history of mankind. With all our wealth, we are still poor. After a
century and a half of labor-saving machinery, we work about as hard as
ever. With a power over nature multiplied a hundred fold, nature still
conquers us. And more than this. There are many senses in which the
machine age seems to leave the great bulk of civilized humanity, the
working part of it, worse off instead of better. The nature of our work
has changed. No man now makes anything. He makes only a part of
something, feeding and tending a machine that moves with relentless
monotony in the routine of which both the machine and its tender are
only a fractional part.
For the great majority of the workers, the interest of work as such is
gone. It is a task done consciously for a wage, one eye upon the clock.
The brave independence of the keeper of the little shop contrasts
favorably with the mock dignity of a floor walker in an "establishment."
The varied craftsmanship of the artisan had in it something of the
creative element that was the parent motive of sustained industry. The
dull routine of the factory hand in a cotton mill has gone. The life of
a pioneer settler in America two hundred years ago, penurious and
dangerous as it was, stands out brightly beside the dull and meaningless
toil of his descendant.
The picture must not be drawn in colors too sinister. In the dullest
work and in the meanest lives in the new world to-day there are elements
that were lacking in the work of the old world. The universal spread of
elementary education, the universal access to the printed page, and the
universal hope of better things, if not for oneself, at least for one's
children, and even the universal restlessness that the industrialism of
to-day have brought are better things than the dull plodding passivity
of the older world. Only a false mediævalism can paint the past in
colors superior to the present. The haze of distance that dims the
mountains with purple, shifts also the crude colors of the past into the
soft glory of retrospect. Misled by these, the sentimentalist may often
sigh for an age that in a nearer view would be seen filled with cruelty
and suffering. But even when we have made every allowance for the all
too human tendency to soften down the past, it remains true that in many
senses the processes of industry for the worker have lost in
attractiveness and power of absorption of the mind during the very
period when they have gained so enormously in effectiveness and in power
of production.
The essential contrast lies between the vastly increased power of
production and its apparent inability to satisfy for all humanity the
most elementary human wants; between the immeasurable saving of labor
effected by machinery and the brute fact of the continuance of
hard-driven, unceasing toil.
Of the extent of this increased power of production we can only speak in
general terms. No one, as far as I am aware, has yet essayed to measure
it. Nor have we any form of calculus or computation that can easily be
applied. If we wish to compare the gross total of production effected
to-day with that accomplished a hundred and fifty years ago, the means,
the basis of calculation, is lacking. Vast numbers of the things
produced now were not then in existence. A great part of our production
of to-day culminates not in productive goods, but in services, as in
forms of motion, or in ability to talk across a distance.
It is true that statistics that deal with the world's production of
cotton, or of oil, or of iron and steel present stupendous results. But
even these do not go far enough. For the basic raw materials are worked
into finer and finer forms to supply new "wants" as they are called, and
to represent a vast quantity of "satisfactions" not existing before.
Nor is the money calculus of any avail. Comparison by prices breaks down
entirely. A bushel of wheat stands about where it stood before and could
be calculated. But the computation, let us say, in price-values of the
Sunday newspapers produced in one week in New York or the annual output
of photographic apparatus, would defy comparison. Of the enormous
increase in the gross total of human goods there is no doubt. We have
only to look about us to see it. The endless miles of railways, the
vast apparatus of the factories, the soaring structures of the cities
bear easy witness to it. Yet it would be difficult indeed to compute by
what factor the effectiveness of human labor working with machinery has
been increased.
But suppose we say, since one figure is as good as another, that it has
been increased a hundred times. This calculation must be well within the
facts and can be used as merely a more concrete way of saying that the
power of production has been vastly increased. During the period of this
increase, the numbers of mankind in the industrial countries have
perhaps been multiplied by three to one. This again is inexact, since
there are no precise figures of population that cover the period. But
all that is meant is that the increase in one case is, quite obviously,
colossal, and in the other case is evidently not very much.
Here then is the paradox.
If the ability to produce goods to meet human wants has multiplied so
that each man accomplishes almost thirty or forty times what he did
before, then the world at large ought to be about thirty or fifty times
better off. But it is not. Or else, as the other possible alternative,
the working hours of the world should have been cut down to about one in
thirty of what they were before. But they are not. How, then, are we to
explain this extraordinary discrepancy between human power and resulting
human happiness?
The more we look at our mechanism of production the more perplexing it
seems. Suppose an observer were to look down from the cold distance of
the moon upon the seething ant-hill of human labor presented on the
surface of our globe; and suppose that such an observer knew nothing of
our system of individual property, of money payments and wages and
contracts, but viewed our labor as merely that of a mass of animated
beings trying to supply their wants. The spectacle to his eyes would be
strange indeed. Mankind viewed in the mass would be seen to produce a
certain amount of absolutely necessary things, such as food, and then to
stop. In spite of the fact that there was not food enough to go round,
and that large numbers must die of starvation or perish slowly from
under-nutrition, the production of food would stop at some point a good
deal short of universal satisfaction. So, too, with the production of
clothing, shelter and other necessary things; never enough would seem to
be produced, and this apparently not by accident or miscalculation, but
as if some peculiar social law were at work adjusting production to the
point where there is just not enough, and leaving it there. The
countless millions of workers would be seen to turn their untired
energies and their all-powerful machinery away from the production of
necessary things to the making of mere comforts; and from these, again,
while still stopping short of a general satisfaction, to the making of
luxuries and superfluities. The wheels would never stop. The activity
would never tire. Mankind, mad with the energy of activity, would be
seen to pursue the fleeing phantom of insatiable desire. Thus among the
huge mass of accumulated commodities the simplest wants would go
unsatisfied. Half-fed men would dig for diamonds, and men sheltered by
a crazy roof erect the marble walls of palaces. The observer might well
remain perplexed at the pathetic discord between human work and human
wants. Something, he would feel assured, must be at fault either with
the social instincts of man or with the social order under which he
lives.
And herein lies the supreme problem that faces us in this opening
century. The period of five years of war has shown it to us in a clearer
light than fifty years of peace. War is destruction--the annihilation of
human life, the destruction of things made with generations of labor,
the misdirection of productive power from making what is useful to
making what is useless. In the great war just over, some seven million
lives were sacrificed; eight million tons of shipping were sunk beneath
the sea; some fifty million adult males were drawn from productive labor
to the lines of battle; behind them uncounted millions labored day and
night at making the weapons of destruction. One might well have thought
that such a gigantic misdirection of human energy would have brought
the industrial world to a standstill within a year. So people did think.
So thought a great number, perhaps the greater number, of the financiers
and economists and industrial leaders trained in the world in which we
used to live. The expectation was unfounded. Great as is the destruction
of war, not even five years of it have broken the productive machine.
And the reason is now plain enough. Peace, also--or peace under the old
conditions of industry--is infinitely wasteful of human energy. Not more
than one adult worker in ten--so at least it might with confidence be
estimated--is employed on necessary things. The other nine perform
superfluous services. War turns them from making the glittering
superfluities of peace to making its grim engines of destruction. But
while the tenth man still labors, the machine, though creaking with its
dislocation, can still go on. The economics of war, therefore, has
thrown its lurid light upon the economics of peace.
These I propose in the succeeding chapters to examine. But it might be
well before doing so to lay stress upon the fact that while admitting
all the shortcomings and the injustices of the régime under which we
have lived, I am not one of those who are able to see a short and single
remedy. Many people when presented with the argument above, would settle
it at once with the word "socialism." Here, they say, is the immediate
and natural remedy. I confess at the outset, and shall develop later,
that I cannot view it so. Socialism is a mere beautiful dream, possible
only for the angels. The attempt to establish it would hurl us over the
abyss. Our present lot is sad, but the frying pan is at least better
than the fire.
_II.--Life, Liberty and the Pursuit of Happiness_
"ALL men," wrote Thomas Jefferson in framing the Declaration of
Independence, "have an inalienable right to life, liberty and the
pursuit of happiness." The words are more than a felicitous phrase. They
express even more than the creed of a nation. They embody in themselves
the uppermost thought of the era that was dawning when they were
written. They stand for the same view of society which, in that very
year of 1776, Adam Smith put before the world in his immortal "Wealth of
Nations" as the "System of Natural Liberty." In this system mankind
placed its hopes for over half a century and under it the industrial
civilization of the age of machinery rose to the plenitude of its
power.
In the preceding chapter an examination has been made of the purely
mechanical side of the era of machine production. It has been shown that
the age of machinery has been in a certain sense one of triumph, of the
triumphant conquest of nature, but in another sense one of perplexing
failure. The new forces controlled by mankind have been powerless as yet
to remove want and destitution, hard work and social discontent. In the
midst of accumulated wealth social justice seems as far away as ever.
It remains now to discuss the intellectual development of the modern age
of machinery and the way in which it has moulded the thoughts and the
outlook of mankind.
Few men think for themselves. The thoughts of most of us are little more
than imitations and adaptations of the ideas of stronger minds. The
influence of environment conditions, if it does not control, the mind of
man. So it comes about that every age or generation has its dominant and
uppermost thoughts, its peculiar way of looking at things and its
peculiar basis of opinion on which its collective action and its social
regulations rest. All this is largely unconscious. The average citizen
of three generations ago was probably not aware that he was an extreme
individualist. The average citizen of to-day is not conscious of the
fact that he has ceased to be one. The man of three generations ago had
certain ideas which he held to be axiomatic, such as that his house was
his castle, and that property was property and that what was his was
his. But these were to him things so obvious that he could not conceive
any reasonable person doubting them. So, too, with the man of to-day. He
has come to believe in such things as old age pensions and national
insurance. He submits to bachelor taxes and he pays for the education of
other people's children; he speculates much on the limits of
inheritance, and he even meditates profound alterations in the right of
property in land. His house is no longer his castle. He has taken down
its fences, and "boulevarded" its grounds till it merges into those of
his neighbors. Indeed he probably does not live in a house at all, but
in a mere "apartment" or subdivision of a house which he shares with a
multiplicity of people. Nor does he any longer draw water from his own
well or go to bed by the light of his own candle: for such services as
these his life is so mixed up with "franchises" and "public utilities"
and other things unheard of by his own great-grandfather, that it is
hopelessly intertangled with that of his fellow citizens. In fine, there
is little left but his own conscience into which he can withdraw.
Such a man is well aware that times have changed since his
great-grandfather's day. But he is not aware of the profound extent to
which his own opinions have been affected by the changing times. He is
no longer an individualist. He has become by brute force of
circumstances a sort of collectivist, puzzled only as to how much of a
collectivist to be.
Individualism of the extreme type is, therefore, long since out of date.
To attack it is merely to kick a dead dog. But the essential problem of
to-day is to know how far we are to depart from its principles. There
are those who tell us--and they number many millions--that we must
abandon them entirely. Industrial society, they say, must be reorganized
from top to bottom; private industry must cease. All must work for the
state; only in a socialist commonwealth can social justice be found.
There are others, of whom the present writer is one, who see in such a
programme nothing but disaster: yet who consider that the individualist
principle of "every man for himself" while it makes for national wealth
and accumulated power, favors overmuch the few at the expense of the
many, puts an over-great premium upon capacity, assigns too harsh a
punishment for easy indolence, and, what is worse, exposes the
individual human being too cruelly to the mere accidents of birth and
fortune. Under such a system, in short, to those who have is given and
from those who have not is taken away even that which they have. There
are others again who still view individualism just as the vast majority
of our great-grandfathers viewed it, as a system hard but just: as
awarding to every man the fruit of his own labor and the punishment of
his own idleness, and as visiting, in accordance with the stern but
necessary ordination of our existence, the sins of the father upon the
child.
The proper starting point, then, for all discussion of the social
problem is the consideration of the individualist theory of industrial
society. This grew up, as all the world knows, along with the era of
machinery itself. It had its counterpart on the political side in the
rise of representative democratic government. Machinery, industrial
liberty, political democracy--these three things represent the basis of
the progress of the nineteenth century.
The chief exposition of the system is found in the work of the classical
economists--Adam Smith and his followers of half a century--who created
the modern science of political economy. Beginning as controversialists
anxious to overset a particular system of trade regulation, they ended
by becoming the exponents of a new social order. Modified and amended as
their system is in its practical application, it still largely
conditions our outlook to-day. It is to this system that we must turn.
The general outline of the classical theory of political economy is so
clear and so simple that it can be presented within the briefest
compass. It began with certain postulates, or assumptions, to a great
extent unconscious, of the conditions to which it applied. It assumed
the existence of the state and of contract. It took for granted the
existence of individual property, in consumption goods, in capital
goods, and, with a certain hesitation, in land. The last assumption was
not perhaps without misgivings: Adam Smith was disposed to look askance
at landlords as men who gathered where they had not sown. John Stuart
Mill, as is well known, was more and more inclined, with advancing
reflection, to question the sanctity of landed property as the basis of
social institutions. But for the most part property, contract and the
coercive state were fundamental assumptions with the classicists.
With this there went, on the psychological side, the further assumption
of a general selfishness or self-seeking as the principal motive of the
individual in the economic sphere. Oddly enough this assumption--the
most warrantable of the lot--was the earliest to fall under disrepute.
The plain assertion that every man looks out for himself (or at best for
himself and his immediate family) touches the tender conscience of
humanity. It is an unpalatable truth. None the less it is the most
nearly true of all the broad generalizations that can be attempted in
regard to mankind.
The essential problem then of the classicists was to ask what would
happen if an industrial community, possessed of the modern control over
machinery and power, were allowed to follow the promptings of
"enlightened selfishness" in an environment based upon free contract and
the right of property in land and goods. The answer was of the most
cheering description. The result would be a progressive amelioration of
society, increasing in proportion to the completeness with which the
fundamental principles involved were allowed to act, and tending
ultimately towards something like a social millennium or perfection of
human society. One easily recalls the almost reverent attitude of Adam
Smith towards this system of industrial liberty which he exalted into a
kind of natural theology: and the way in which Mill, a deist but not a
Christian, was able to fit the whole apparatus of individual liberty
into its place in an ordered universe. The world "runs of itself," said
the economist. We have only to leave it alone. And the maxim of _laissez
faire_ became the last word of social wisdom.
The argument of the classicists ran thus. If there is everywhere
complete economic freedom, then there will ensue in consequence a régime
of social justice. If every man is allowed to buy and sell goods, labor
and property, just as suits his own interest, then the prices and wages
that result are either in the exact measure of social justice or, at
least, are perpetually moving towards it. The price of any commodity at
any moment is, it is true, a "market price," the resultant of the demand
and the supply; but behind this operates continually the inexorable law
of the cost of production. Sooner or later every price must represent
the actual cost of producing the commodity concerned, or, at least, must
oscillate now above and now below that point which it is always
endeavoring to meet. For if temporary circumstances force the price well
above the cost of producing the article in question, then the large
profits to be made induce a greater and greater production. The
increased volume of the supply thus produced inevitably forces down the
price till it sinks to the point of cost. If circumstances (such, for
example, as miscalculation and an over-great supply) depress the price
below the point of cost, then the discouragement of further production
presently shortens the supply and brings the price up again. Price is
thus like an oscillating pendulum seeking its point of rest, or like the
waves of the sea rising and falling about its level. By this same
mechanism the quantity and direction of production, argued the
economists, respond automatically to the needs of humanity, or, at
least, to the "effective demand," which the classicist mistook for the
same thing. Just as much wheat or bricks or diamonds would be produced
as the world called for; to produce too much of any one thing was to
violate a natural law; the falling price and the resulting temporary
loss sternly rebuked the producer.
In the same way the technical form and mechanism of production were
presumed to respond to an automatic stimulus. Inventions and improved
processes met their own reward. Labor, so it was argued, was perpetually
being saved by the constant introduction of new uses of machinery.
By a parity of reasoning, the shares received by all the participants
and claimants in the general process of production were seen to be
regulated in accordance with natural law. Interest on capital was
treated merely as a particular case under the general theory of price.
It was the purchase price needed to call forth the "saving" (a form, so
to speak, of production) which brought the capital into the market. The
"profits" of the employer represented the necessary price paid by
society for his services, just enough and not more than enough to keep
him and his fellows in operative activity, and always tending under the
happy operation of competition to fall to the minimum consistent with
social progress.
Rent, the share of the land-owner, offered to the classicist a rather
peculiar case. There was here a physical basis of surplus over cost.
But, granted the operation of the factors and forces concerned, rent
emerged as a differential payment to the fortunate owner of the soil. It
did not in any way affect prices or wages, which were rendered neither
greater nor less thereby. The full implication of the rent doctrine and
its relation to social justice remained obscured to the eye of the
classical economist; the fixed conviction that what a man owns is his
own created a mist through which the light could not pass.
Wages, finally, were but a further case of value. There was a demand for
labor, represented by the capital waiting to remunerate it, and a supply
of labor represented by the existing and increasing working class.
Hence wages, like all other shares and factors, corresponded, so it was
argued, to social justice. Whether wages were high or low, whether hours
were long or short, at least the laborer like everybody else "got what
was coming to him." All possibility of a general increase of wages
depended on the relation of available capital to the numbers of the
working men.
Thus the system as applied to society at large could be summed up in the
consoling doctrine that every man got what he was worth, and was worth
what he got; that industry and energy brought their own reward; that
national wealth and individual welfare were one and the same; that all
that was needed for social progress was hard work, more machinery, more
saving of labor and a prudent limitation of the numbers of the
population.
The application of such a system to legislation and public policy was
obvious. It carried with it the principle of _laissez-faire_. The
doctrine of international free trade, albeit the most conspicuous of its
applications, was but one case under the general law. It taught that
the mere organization of labor was powerless to raise wages; that
strikes were of no avail, or could at best put a shilling into the
pocket of one artisan by taking it out of that of another; that wages
and prices could not be regulated by law; that poverty was to a large
extent a biological phenomenon representing the fierce struggle of
germinating life against the environment that throttles part of it. The
poor were like the fringe of grass that fades or dies where it meets the
sand of the desert. There could be no social remedy for poverty except
the almost impossible remedy of the limitation of life itself. Failing
this the economist could wash his hands of the poor.
These are the days of relative judgments and the classical economy, like
all else, must be viewed in the light of time and circumstance. With all
its fallacies, or rather its shortcomings, it served a magnificent
purpose. It opened a road never before trodden from social slavery
towards social freedom, from the mediæval autocratic régime of fixed
caste and hereditary status towards a régime of equal social justice.
In this sense the classical economy was but the fruition, or rather
represented the final consciousness of a process that had been going on
for centuries, since the breakdown of feudalism and the emancipation of
the serf. True, the goal has not been reached. The vision of the
universal happiness seen by the economists has proved a mirage. The end
of the road is not in sight. But it cannot be doubted that in the long
pilgrimage of mankind towards social betterment the economists guided us
in the right turning. If we turn again in a new direction, it will at
any rate not be in the direction of a return to autocratic mediævalism.
But when all is said in favor of its historic usefulness, the failures
and the fallacies of natural liberty have now become so manifest that
the system is destined in the coming era to be revised from top to
bottom. It is to these failures and fallacies that attention will be
drawn in the next chapter.
_III.--The Failures and Fallacies of Natural Liberty_
THE rewards and punishments of the economic world are singularly
unequal. One man earns as much in a week or even in a day as another
does in a year. This man by hard, manual labor makes only enough to pay
for humble shelter and plain food. This other by what seems a congenial
activity, fascinating as a game of chess, acquires uncounted millions. A
third stands idle in the market place asking in vain for work. A fourth
lives upon rent, dozing in his chair, and neither toils nor spins. A
fifth by the sheer hazard of a lucky "deal" acquires a fortune without
work at all. A sixth, scorning to work, earns nothing and gets nothing;
in him survives a primitive dislike of labor not yet fully "evoluted
out;" he slips through the meshes of civilization to become a "tramp,"
cadges his food where he can, suns his tattered rags when it is warm and
shivers when it is cold, migrating with the birds and reappearing with
the flowers of spring.
Yet all are free. This is the distinguishing mark of them as children of
our era. They may work or stop. There is no compulsion from without. No
man is a slave. Each has his "natural liberty," and each in his degree,
great or small, receives his allotted reward.
But is the allotment correct and the reward proportioned by his efforts?
Is it fair or unfair, and does it stand for the true measure of social
justice?
This is the profound problem of the twentieth century.
The economists and the leading thinkers of the nineteenth century were
in no doubt about this question. It was their firm conviction that the
system under which we live was, in its broad outline, a system of even
justice. They held it true that every man under free competition and
individual liberty is awarded just what he is worth and is worth
exactly what he gets: that the reason why a plain laborer is paid only
two or three dollars a day is because he only "produces" two or three
dollars a day: and that why a skilled engineer is paid ten times as much
is because he "produces" ten times as much. His work is "worth" ten
times that of the plain laborer. By the same reasoning the salary of a
corporation president who receives fifty thousand dollars a year merely
reflects the fact that the man produces--earns--brings in to the
corporation that amount or even more. The big salary corresponds to the
big efficiency.
And there is much in the common experience of life and the common
conduct of business that seems to support this view. It is undoubtedly
true if we look at any little portion of business activity taken as a
fragment by itself. On the most purely selfish grounds I may find that
it "pays" to hire an expert at a hundred dollars a day, and might find
that it spelled ruin to attempt to raise the wages of my workingmen
beyond four dollars a day. Everybody knows that in any particular
business at any particular place and time with prices at any particular
point, there is a wage that can be paid and a wage that can not. And
everybody, or nearly everybody, bases on these obvious facts a series of
entirely erroneous conclusions. Because we cannot change the part we are
apt to think we cannot change the whole. Because one brick in the wall
is immovable, we forget that the wall itself might be rebuilt.
The single employer rightly knows that there is a wage higher than he
can pay and hours shorter than he can grant. But are the limits that
frame him in, real and necessary limits, resulting from the very nature
of things, or are they mere products of particular circumstances? This,
as a piece of pure economics, does not interest the individual employer
a particle. It belongs in the same category as the question of the
immortality of the soul and other profundities that have nothing to do
with business. But to society at large the question is of an infinite
importance.
Now the older economists taught, and the educated world for about a
century believed, that these limitations which hedged the particular
employer about were fixed and assigned by natural economic law. They
represented, as has been explained, the operation of the system of
natural liberty by which every man got what he is worth. And it is quite
true that the particular employer can no more break away from these
limits than he can jump out of his own skin. He can only violate them at
the expense of ceasing to be an economic being at all and degenerating
into a philanthropist.
But consider for a moment the peculiar nature of the limitations
themselves. Every man's limit of what he can pay and what he can take,
of how much he can offer and how much he will receive, is based on the
similar limitations of other people. They are reciprocal to one another.
Why should one factory owner not pay ten dollars a day to his hands?
Because the others don't. But suppose they all do? Then the output could
not be sold at the present price. But why not sell the produce at a
higher price? Because at a higher price the consumer can't afford to buy
it. But suppose that the consumer, for the things which he himself
makes and sells, or for the work which he performs, receives more? What
then? The whole thing begins to have a jigsaw look, like a child's toy
rack with wooden soldiers on it, expanding and contracting. One searches
in vain for the basis on which the relationship rests. And at the end of
the analysis one finds nothing but a mere anarchical play of forces,
nothing but a give-and-take resting on relative bargaining strength.
Every man gets what he can and gives what he has to.
Observe that this is not in the slightest the conclusion of the orthodox
economists. Every man, they said, gets what he actually makes, or, by
exchange, those things which exactly correspond to it as regards the
cost of making them--which have, to use the key-word of the theory, the
same value. Let us take a very simple example. If I go fishing with a
net which I have myself constructed out of fibers and sticks, and if I
catch a fish and if I then roast the fish over a fire which I have made
without so much as the intervention of a lucifer match, then it is I
and I alone who have "produced" the roast fish. That is plain enough.
But what if I catch the fish by using a hired boat and a hired net, or
by buying worms as bait from some one who has dug them? Or what if I do
not fish at all, but get my roast fish by paying for it a part of the
wages I receive for working in a saw mill? Here are a new set of
relationships. How much of the fish is "produced" by each of the people
concerned? And what part of my wages ought I to pay in return for the
part of the fish that I buy?