124. KARL MARX AND HIS INFLUENCE.--The germ of socialism can be traced
back as far as Plato, but the modern movement takes its main impetus
from the teachings of Karl Marx. Karl Marx was a German Jew, who lived
between 1818 and 1883. Marx early became known for his radical views
on political and economic subjects. In 1848, he published, in
collaboration with Frederick Engels, the well-known Communist
Manifesto. The Manifesto, which has been called the "birth-cry of
modern socialism," gives in concise form the essence of the socialist
doctrine. In 1864 Marx helped organize the "International," a
federation of radical thinkers, with affiliations in the different
countries of Europe. In 1867 he published the first volume of his
famous work, _Capital_, which elaborated the views set forth in the
Manifesto, and which has since been adopted as the "Bible of
Socialism." Due to the great influence which Marx has exerted upon
socialist doctrine, he may justly be called the founder and
inspiration of modern socialism.
125. THE SOCIALIST INDICTMENT.--The claims of socialism, as formulated
by Marx and elaborated by his followers, constitute a serious
indictment of present-day society. Socialists point out, for example,
that the capitalistic system has numerous faults. They call attention
to the fact that capitalism involves enormous wastes in materials and
men; they show that luxurious and injurious goods are produced; and
they maintain that in the past natural resources have often been
monopolized by a few. They believe the system of private property to
be unjust, and declare that free competition involves needless
duplication of effort. At the present time, it is contended, all the
good things of life go to a few, while the masses remain in poverty
and misery. Socialists declare that the fruits of capitalism are
unemployment, industrial accidents, crime, vice, poverty, disease, and
premature death. These charges are serious, and Chapter XVI will be
devoted to their critical examination. In this chapter we are
concerned chiefly with an exposition of the socialist doctrine.
126. ECONOMIC INTERPRETATION OF HISTORY.--Formerly a great principle
of socialism was the claim that all history has been determined by
economic forces. According to this view, our whole social and
political life, including our basic ideas concerning religion, art,
science, and government, are only the reflected result of economic
forces. History, Marx contended, is the record of how one class has
gained wealth and power at the expense of another class. The present
state of society, he asserted, is the result of the exploitation of
the masses by a few.
With this principle we need not further concern ourselves. It is an
academic appendage to the socialist doctrine, and at the present time
is not stressed by socialists. The majority of socialists now concede
that while economic forces have been important in history, social,
religious, and political forces are also important. In view of this
admission, the chief importance of the doctrine of the economic
interpretation of history is its theoretical connection with the two
great cornerstones of socialism: the theory of surplus value, and the
theory of class struggle.
127. THEORY OF SURPLUS VALUE.--Marx claimed that practically all
wealth has been created by the laborers alone, and that all persons
other than laborers are parasites. To those who have carefully studied
Chapter VIII the error of this claim must appear self-evident,
nevertheless, this concept of value is the basis of all socialist
attacks upon government and industry. Marx developed this theory as
follows:
The value of an article is determined solely by the amount of labor
expended upon its production. But although the laborer creates all
wealth, the capitalist is enabled, by virtue of his monopolistic
control over the instruments of production, to prevent this wealth
from going entirely to the laborer. [Footnote: By "capitalists"
socialism means not only individuals with money to loan, but
"employers" in general, whether middlemen, entrepreneurs, or true
capitalists. ] Socialism declares that the capitalist holds the
laborer in virtual slavery, the laborer receiving only enough of the
wealth created by him to enable him to keep alive, while the surplus
of this wealth goes to the capitalist. The capitalist is thus a
parasite who performs no useful task, but robs the laborers of the
fruits of their industry. Marx did not regard profits as reward for
business enterprise, but called them "plunder." Capitalism, according
to this view, is a system of theft, involving "misery, oppression,
slavery, degradation, and exploitation."
128. CLASS STRUGGLE.--Marx declared that the capitalistic system was
doomed to destruction. He maintained that as time went on, wealth
would tend to concentrate more and more in the hands of the capitalist
or employing class. Trusts and monopolies would become more common,
and gradually capitalism would become so unwieldy and so unworkable a
mechanism that it would finally fall to pieces of its own weight.
Crises, panics, and trade depressions were supposed to be indications
of this inevitable disaster.
The tendency for wealth to concentrate in the hands of a few was to be
accompanied by the growing poverty of the masses. Marx believed that
the middle classes would eventually disappear, leaving only the
wealthy employers and the miserable laborers. The individuals
comprising these two classes would steadily draw apart into two great
armies which were destined to battle to the death. Socialism denies
that employers and laborers have anything in common, and insists that
between these two groups a struggle must go on until the employing
class is abolished.
129. WHAT IS THE ULTIMATE AIM OF SOCIALISM?--Nothing could here be
more important than to know the ultimate aim of socialism,
nevertheless, there is among socialists no agreement as to the
framework of the system which they expect to substitute for
capitalism. All socialists desire collective ownership and direction
of the instruments of production, but beyond this there is practically
nothing in the way of a constructive socialist program. Generally, it
is declared that when capitalism has been abolished, the working
classes will organize industry on the basis of communal ownership. In
the socialist commonwealth there is to be no class struggle, for the
reason that there are to be no classes. There is to be a just
distribution of wealth, together with an abolition of poverty,
unemployment, and all forms of social injustice. But as to how this is
to be accomplished we have no proof. The so-called constructive
program of socialism is not so much a definite agreement as to aims
and methods, as it is a confused and disordered expression of the
attitude of different socialist groups toward capitalism. Indeed, when
socialists are asked to advance a concrete and definitely constructive
program, the reply is often made that the advent of socialism is so
far distant that the constructive side of its program is of no
immediate consequence.
130. NEGATIVE CHARACTER OF SOCIALISM.--But although the constructive
program of socialism is vague and unreal, its destructive or negative
program is definite and very real. Socialism is opposed to government
as it exists to-day, and to that extent, it disapproves of the
Constitution of the United States. The capitalistic system is to be
destroyed. The institution of private property is to be abolished.
Free competition and private initiative are to be abolished or greatly
restricted. All business is to be under the thumb of the government.
Personal liberty is to be narrowed down. Some socialists even go so
far as to declare war upon the family and the church, but though a
number of socialist leaders favor the abolition of the institution of
marriage, and are professed atheists, it should be borne in mind that
the great majority of socialists are not openly hostile to the home
and the church. Indeed, the average socialist is probably as friendly
to these institutions as is the average non-socialist.
131. SOCIALIST ATTITUTE TOWARD VIOLENCE.--It is important to
understand the methods of socialism. Throughout the greater part of
his life, Karl Marx openly advocated violence and revolution as a
means of securing the downfall of capitalism. Socialists, says the
Communist Manifesto, "disdain to conceal their views and aims. They
openly declare that their ends can be attained only by the forcible
overthrow of all existing social conditions." Toward the end of his
life, Marx changed this view somewhat, and apparently came to believe
that the overthrow of the capitalistic system might come gradually and
without bloodshed. In accordance with this later view, there is to-day
a considerable socialist group which disavows violence. Members of
this group are known as political socialists.
On the other hand, many socialists cling to Marx's earlier insistence
upon violence and bloodshed as a means of attaining socialist ends.
Members of the latter class are known as militant socialists, as
opposed to those who disavow violence and rely chiefly upon political
weapons. The two best-known groups of militant socialists are the
Industrial Workers of the World and the Russian bolshevists.
132. POLITICAL SOCIALISM.--Many political socialists are personally so
mild and agreeable that the thought of unlawful action would never be
associated with them. The political socialist relies chiefly upon the
growing political power of the working class to effect the abolition
of capitalism. This emphasis upon political weapons has been
particularly noticeable among socialists living in democratic
countries where the franchise is widely extended, and where the will
of the people is reflected through the action of their chosen
representatives. The political socialist makes a large use of
propaganda. He tries to stir up the workingman, to create in him a
feeling of solidarity with his fellow workmen, and to incite a feeling
of antipathy toward, and dislike for, the employing class. The
political socialist emphasizes or exaggerates the undesirable side of
the laborer's life, and endeavors by promises of an industrial
millennium to rouse him to political action. "Workingmen of the world,
unite, you have nothing to lose but your chains," is the slogan of the
political socialist.
133. ALL SOCIALIST TEACHINGS TEND TOWARD VIOLENCE.--Though large
numbers of political socialists are peaceful and responsible citizens,
it should be noted that all socialist teachings tend to result in
violence. The insistence of socialism upon the class struggle, the
deliberate encouragement of industrial ill-will and the general policy
of obstructing the activities of government, all lead inevitably to
violence. Strikes involving bloodshed have in many instances been
traced to the teachings of political socialism. During the World War,
many political socialists in the United States supported our cause,
but others of this group opposed the selective draft, attempted to
demoralize our military forces, and impeded the conduct of the war by
giving aid and succor to German agents. By a series of slight steps,
political socialism, theoretically law-abiding and harmless, may drift
into treasonable and revolutionary acts. The difference between
political and militant socialism is thus one of degree only.
QUESTIONS ON THE TEXT
1. Define socialism.
2. What is the relation between the terms "communism" and
"socialism."?
3. How are anarchism and socialism related?
4. Who was Karl Marx, and what has been his influence upon socialism?
5. Outline the socialist indictment.
6. What is meant by the "economic interpretation of history"?
7. Explain clearly Marx's theory of surplus value.
8. Just what is meant by the class struggle?
9. Discuss the character of the socialist program.
10. Explain the attitude of Marx toward violence.
11. Distinguish between political and militant socialism.
12. Name the two chief groups of militant socialists.
13. In what respect do all socialist teachings tend to result in
violence?
REQUIRED READINGS
1. Williamson, _Readings in American Democracy_, chapter xiii.
Or all of the following:
2. _International Encyclopedia_, vol. 21, article on "Socialism."
3. Le Rossignol, _Orthodox Socialism_, chapter i.
4. Marx and Engels, _The Communist Manifesto_, all.
5. Skelton, _Socialism, a Critical Analysis_, chapter ii.
QUESTIONS ON THE REQUIRED READINGS
1. Explain why increasing social discontent among certain groups may
be due to improvement in their social and economic condition.
(Skelton, page 17.)
2. What, according to socialists, has been the effect upon the workers
of the introduction of machinery into industry? (Le Rossignol, page
9.)
3. What, according to Marx, has been the effect of the factory system
upon the laborer? (Skelton, pages 33-34.)
4. What is meant by "wage slavery"? (Skelton, pages 30-32.)
5. What is meant by the "iron law of wages"? (Le Rossignol, page 9.)
6. What, according to socialism, has been the effect of capitalism
upon the moral tone of the workers? (Skelton, pages 37-40.)
7. Who are the bourgeoisie? (_Communist Manifesto._)
8. Who are the proletariat? (_Communist Manifesto._)
9. What, according to Marx and Engels, are the aims of socialism?
(_Communist Manifesto._)
10. What does Marx mean by "class consciousness"? (_International
Encyclopedia,_ vol. 21, page 235.)
11. What changes would occur in human character, in the opinion of the
socialists, if socialism were to supplant capitalism? (Le Rossignol,
page 10.)
TOPICS FOR INVESTIGATION AND REPORT
I
1. Ask each of a number of prominent citizens in your community to
define socialism. Compare the definitions secured with that given in
section 122. What do you conclude as to the indefiniteness of the term
"socialism"?
2. Make a brief study of the social classes in your community. Does it
appear that all of the community's citizens may be grouped into either
a wealthy employing class or into an impoverished laboring class?
Compare your conclusion with Marx's statement. (Section 128.)
3. Select for study a shop, factory or mill in your locality.
(a) Does it appear that the interests of the laborers and the employers
are identical or in opposition?
(b) Carefully observe the actual conduct of the business. Does it
appear to you that the laborers alone create the product? Give your
reasons.
(c) Do the laborers under observation appear to be getting barely
enough wages to enable them to keep alive? Check up your conclusion by
visiting the homes of some of the laborers in question.
4. Write to the Department of Justice, Washington, D. C., for
information regarding the activities of American socialists during the
World War.
II
5. Robert Owen and his work. (Consult an encyclopedia.)
6. Utopian socialism. (Skelton, _Socialism, a Critical Analysis_,
chapter iv; Carver, _Elementary Economics_, chapter xliii.)
7. Examples of Utopian communities in the United States. (Hinds,
_American Communities_. See also an encyclopedia under "Communism.")
8. The nature of anarchism. (Carver, _Elementary Economics_, chapter
xlvi.)
9. The life of Karl Marx. (Consult an encyclopedia.)
10. The law of capitalistic development. (Skelton, _Socialism, a
Critical Analysis_, chapter vii.)
11. The economic interpretation of history. (Skelton, _Socialism, a
Critical Analysis_, chapter v.)
CHAPTER XIV
MILITANT SOCIALISM: THE I. W. W.
134. ORIGIN OF THE I.W.W.--The letters I.W.W. are a convenient
abbreviation which is used to designate a group of militant socialists
calling themselves the Industrial Workers of the World. The I.W.W.
resemble a French socialist group known as syndicalists, and on that
account the I.W.W. are sometimes called the American syndicalists. As
a matter of fact, the I.W.W. are a distinct group, and are in no way
affiliated with the French syndicalists.
The I.W.W. movement can be traced to a miners' strike in Colorado in
1903. As the result of the labor unrest which this strike accentuated,
a conference of radical labor leaders was called in Chicago in 1904,
to discuss the question of forming a socialist organization which
should advocate methods more drastic than those of political
socialism. In the summer of 1905 a second convention was held in
Chicago, and a constitution was drawn up and subscribed to. Section 1
of Article I of this constitution reads: "This Organization shall be
known as the 'Industrial Workers of the World.'"
135. THE I.W.W. AND THE POLITICAL SOCIALISTS: SIMILARITIES.--Like the
political socialists, the I. W. W. go back to Karl Marx for their
basic teachings. William D. Haywood, one of the I. W. W. leaders,
accepted Marx's theory of surplus value in these terms: "The theory of
surplus value is the beginning of all socialist knowledge. It shows
the capitalist in his true light, that of an idler and a parasite. It
proves to the workers that capitalists should no longer be permitted
to take any of their product." The I. W. W. also stress the class
struggle. The preamble to their constitution declares that "the
working class and the employing class have nothing in common," and
asserts that "between these two classes a struggle must go on until
all the workers of the world organize as a class, take possession of
the earth, and the machinery of production, and abolish the wage
system." In these important particulars there is agreement between the
I. W. W. and the political socialists.
136. THE I.W.W. AND THE POLITICAL SOCIALISTS: DIFFERENCES.--The chief
difference between the two groups is one of method. The political
socialists prefer political action to violence; the I.W.W. prefer
violence to political action. The I.W.W. believe that political
methods are altogether too slow and unreliable, and accordingly they
have so far refused to affiliate with any political party. The extreme
limits to which the I.W.W. have gone in the matter of violence have
caused many political socialists to disavow this militant group. The
attempt has even been made to prove that the I.W.W. are not socialists
at all, though as a matter of fact they are as truly so as is any
other socialist group.
137. I.W.W. METHODS: THE STRIKE.--The I.W.W. use the strike, not as a
means of securing better working conditions, but as a method of
fomenting revolution. "Instead of the conservative motto, 'A fair
day's wages for a fair day's work,'" declares the preamble to their
constitution, "we must inscribe on our banner the revolutionary
watchword, 'Abolition of the wage system.'" In their use of the
strike, the I.W.W. accordingly oppose conciliation or arbitration of
any kind, and whether or not they gain their point, they go back to
work with the intention of striking again at the next opportune time.
This policy has been formulated by the I.W.W. in the following words:
"Strike; win as much as possible; go back to work; recuperate; strike
again... whatever concessions from capitalism the workers secure,
sooner or later they will strike again."
The principal strikes initiated in pursuance of this policy occurred
at McKees Rocks, Pennsylvania, in 1909; Lawrence, Massachusetts, in
1912; Butte, Montana, in 1914; and Bisbee, Arizona, in 1916. Violence
and lawlessness have been prominent features of each of these strikes.
138. I.W.W. METHODS: SABOTAGE.--The word sabotage is of French origin,
and is used to describe any sort of deliberate action on the part of
workmen which results in the destruction of the employer's property.
Sabotage is a species of guerrilla warfare, designed to foment the
class struggle. Louis Levine, an I. W. W. sympathizer, has said that
"stirring up strife and accentuating the struggle as much as is in his
power is the duty" of the I. W. W. Some of the commoner forms of
sabotage are injuring delicate machinery, exposing the employer's
trade secrets to rival employers, lying to customers about the quality
of the goods, crippling locomotives so that they cannot be operated,
slashing the harness of teamsters, shipping perishable goods to the
wrong destination, burning forests and wheat fields, sawing lumber
into unusual lengths, and allowing foodstuffs to spoil or deteriorate.
139. I.W.W. METHODS: DESTRUCTION OF LIFE.--In their effort to destroy
the existing order of society, some of the I.W.W. are frankly willing
to go as far as assassination. I.W.W. leaders have advised their
followers, both orally and through their writings, to extend the term
sabotage to cover the destruction of human life. During the World War
the I.W.W. caused a loss of life by putting poison in canned goods,
and by causing train wrecks. They have advocated the placing of ground
glass in food served in hotels and restaurants. Since the organization
was formed in 1905, several bomb outrages resulting in loss of life
have been charged against the I.W.W., but in justice to this group, it
must be observed that these crimes have never been proved to have been
committed by authorized I. W. W. agents.
140. NEGATIVE CHARACTER OF THE I.W.W.--The I.W.W. resemble the
political socialists in their failure to offer a definite system which
could be substituted for the capitalistic system. Some of the I. W.
W., it is true, have formulated a plan by means of which society is
some day to be organized primarily on an industrial basis. According
to this program, the workers of a given industry, say the railroad
industry, will be organized into a single union, rather than, as at
present, into a number of trade unions, such as an engineers' union,
as distinct from the firemen's union, the brakemen's union, etc. The
railroad union would in turn become a branch of a great transportation
union, and the transportation union would in turn become a division of
the "One Big Union," which is to include all workers in all countries
of the world.
If this plan were approved by the entire I. W. W. organization, it
would mean that the I. W. W. intended industry to be controlled by a
super-organization of workingmen, all other persons to be excluded
from any control whatsoever. As a matter of fact, this is the program
of only a faction of the I. W. W. The idea of "One Big Union" is
opposed by a second group, which insists that after the destruction of
capitalism, industry must be handed over to the exclusive control of
small units of laborers, unaffiliated with, and uncontrolled by, any
larger organization. Beyond the formulation of these two opposing
views, a constructive I. W. W. program has never been developed.
Attention continues to be centered upon the destruction of the present
system.
141. UNDEMOCRATIC CHARACTER OF THE I. W. W.--The I. W. W. oppose our
present democracy. They oppose our Constitution and its fundamental
guarantees of personal liberty, individual rights, and private
property. They seek revolution, not in order to secure justice for the
masses, but in order to place the laboring class in complete power in
industry and government. They announce their intention of continuing
the class struggle "until the working class is able to take possession
and control of the machinery, premises, and materials of production
right from the capitalists' hands, and to use that control to
distribute the product of industry _entirely_ among the workers."
142. LIMITED APPEAL OF THE I. W. W. PROGRAM.--It is a testimonial to
the common sense of American workmen that the I. W. W. have made
little headway. Until the Lawrence strike in 1912, the movement
centered in the Far West, and it is even now practically confined to
those parts of the West where industry is less well organized, and
where family life is less stable. Miners, lumbermen, and railway
construction workers are prominent in the movement. In general, the I.
W. W. theory appeals chiefly to the lower strata of unskilled labor,
to young and homeless workers, to transients, and to unassimilated
immigrants. The better trained and the more intelligent American
workmen reject the program of the I. W. W. These latter workmen
believe in bettering their condition through the gradual development
and enforcement of industrial standards, made possible by lawful
co÷peration with the employer. The truth of this statement is borne
out by the fact that whereas the I. W. W. number scarcely 30,000, the
American Federation of Labor has more than 4,000,000 members.
Numerically the I. W. W. are unimportant, and it is chiefly their
violent and spectacular tactics which attract attention.
QUESTIONS ON THE TEXT
1. What do the letters I. W. W. stand for?
2. How did the I. W. W. organization come into existence?
3. In what ways are the I. W. W. like the political socialists?
4. In what way do the I. W. W. differ from the political socialists?
5. What use do the I. W. W. make of the strike?
6. Define sabotage, and give some examples.
7. Discuss "destruction of life" as an I. W. W. aim.
8. Upon what basis do the I. W. W. expect to reorganize society?
9. What is meant by "One Big Union"?
10. What is the attitude of the I. W. W. toward democracy?
11. To what classes of the population does the I. W. W. theory make
its chief appeal?
REQUIRED READINGS
1. Williamson, _Readings in American Democracy_, chapter xiv.
Or all of the following:
2. Bloomfield, _Modern Industrial Movements_, pages 40-50 and 78-86.
3. Hoxie, _Trade Unionism in the United States_, chapter vi.
4. _International Encyclopedia_, vol. 12, article on "Industrial
Workers of the World."
5. Preamble to the Constitution of the Industrial Workers of the
World.
QUESTIONS ON THE REQUIRED READINGS
1. Name some of the unions represented in the I.W.W. convention of
1905. (_International Encyclopedia,_ page 150.)
2. What do the I.W.W. insist must be the outcome of the class
struggle? (Preamble to the constitution.)
3. What sort of an organization do the I. W. W. believe to be
essential if the condition of the workers is to be improved? (Preamble
to the constitution.)
4. What are the three reasons why the I.W.W. expect to take over
industry? (Bloomfield, page 80.)
5. What may be said as to the present attitude of the I.W.W. toward
political parties? (International Encyclopedia,_ page 151.)
6. What are some of the differences between the I.W.W. and the French
syndicalists? (Bloomfield, pages 49-50.)
7. What is the origin of the word sabotage? (Bloomfield, page 80.)
8. To what extent is the I.W.W. movement supplied with able leaders?
(Hoxie, pages 149-150.)
9. Discuss the membership of the I. W. W. (Hoxie, pages 139-140.)
10. Explain the attitude of the masses of American workmen toward the
I.W.W. (Hoxie, pages 157-161.)
TOPICS FOR INVESTIGATION AND REPORT
I
1. Interview, or write to, the officials of a trade union in your
community with reference to the attitude of the trade union toward the
I.W.W. (Many trade unions are bitterly opposed to the I.W.W.; others
are more tolerant of this form of militant socialism.)
2. Investigate the conditions surrounding any strike which has been
initiated in your neighborhood by the I.W.W. (Consult the officials of
a local trade union. Consult, also, the files of local newspapers and
the _Readers' Guide to Periodical Literature._)
3. A number of states have recently passed laws restricting the
destructive tactics of the I.W.W. Ascertain whether or not your state
has passed such laws. (Write to the state library at the state
capitol.)
Also write to the proper authorities in several other states, asking
for a copy of such laws, if any have been passed in those states.
II
4. Origin of the I.W.W. (Groat, _Organized Labor in America,_ chapter
xxvii.)
5. The theory of "direct action." (Bloomfield, _Modern Industrial
Movements_, pages 62-67.)
6. Conflict of aims and ideals within the I. W. W. organization.
(Hoxie, _Trade Unionism in the United States_, chapter vi.)
7. Sabotage. (Groat, _Organized Labor in America_, chapter xxviii.)
8. Theory of the "general strike." (Brooks, _American Syndicalism: The
I. W. W._, chapter x.)
9. Syndicalism. (_International Encyclopedia_, vol. 21, article on
"Syndicalism.")
10. Relation of the I. W. W. theory to anarchism. (Brooks, _American
Syndicalism: The I. W. W._, chapter xiv.)
CHAPTER XV
MILITANT SOCIALISM: THE BOLSHEVISTS
143. SIGNIFICANCE OF BOLSHEVISM.-The term "bolshevist" is used to
designate a group of militant socialists that seized power in Russia
in the fall of 1917. Strictly speaking, the bolshevists were purely a
Russian group, nevertheless, they are of interest to students of
American democracy. Until the outbreak of the World War socialism was
primarily a theory, the claims of which could not definitely be
settled for the reason that it had never been applied on a large
scale. Bolshevism is significant because it is the only instance in
the history of the world where nation-wide socialism has actually been
put into operation. The peculiar conditions surrounding the Russian
experiment may prevent any detailed conclusions as to the availability
of bolshevist experience for other countries; on the other hand, the
general results of that experiment must throw some light upon what we
might expect if a socialist experiment were made in other countries.
It is important, therefore, that we inquire into the nature of the
Russian socialist state.
144. ORIGIN OF THE BOLSHEVISTS.--There is a popular impression that
since the word bolshevist means "majority" in the Russian language,
the bolshevists represented or constituted a majority of the Russian
people. This is not true, as the history of the group shows. The
origin of the bolshevists dates from a convention of the Russian
Social-Democratic party in 1903, at which time a majority
(_bolshinstvˇ_) took an extreme stand upon the policies then being
discussed in convention. In the years that followed the bolshevists
became known as the radical or extreme wing of the Russian Social-
Democratic party, as opposed to the menshevists, or moderate wing.
It appears that as early as 1905 the bolshevists planned to secure
control of the Russian government. The opportunity presented itself
during the World War, which Russia had entered early in August, 1914.
In March, 1917, a non-bolshevist group initiated a revolution, which
overthrew the government of the Czar and established a provisional
government under the leadership of Alexander Kerensky. This government
immediately instituted a number of democratic reforms, including the
extension of the suffrage to all men and women who were Russian
citizens. These citizens elected delegates to a constituent assembly,
but at this point the bolshevists, seeing that the voters of Russia
were overwhelmingly against bolshevism, attacked the new government.
The constituent assembly was forcibly dissolved, its defenders
slaughtered, and on November 7, 1917, the bolshevists seized the reins
of government. Thus bolshevism as a government came into being as the
result of suppressing the lawfully expressed will of the Russian
people.
145. THE BOLSHEVIST CONSTITUTION: LIBERAL ELEMENTS.--On July 10, 1918,
the bolshevists adopted a constitution. This remarkable document was a
strange compound of liberal and despotic elements. It made a number of
important promises to the people of Russia, announcing, for example,
that the new government would "put an end to every ill that oppresses
humanity." In pursuit of this ideal, the church was separated from the
state, and complete freedom of conscience was accorded all citizens of
Russia. Citizens were to enjoy complete freedom of speech and of the
press. For the purpose of "securing freedom of expression to the
toiling masses," provision was made for the free circulation
throughout the country of newspapers, books, and pamphlets. Full and
general education to the poorest peasantry was also promised. Capital
punishment was declared abolished, and a solemn protest against war
and violence of every kind was adopted.
146. THE BOLSHEVIST CONSTITUTION: RESTRICTED SUFFRAGE.--These liberal
provisions were offset, however, by a number of important restrictions
upon the voting rights of the people. Article IV of the bolshevist
constitution declared that the right to vote should not be extended to
the following groups: all persons employing hired laborers for profit,
including farmers who have even a single part-time helper; all persons
receiving incomes from interest, rent, or profits; all persons engaged
in private trade, even to the smallest shop-keeper; all ministers of
religion of any kind; all persons engaged in work which was not
specifically defined by the proper authorities as "productive and
useful to society"; members of the old royal family; and individuals
formerly employed in the imperial police service. The constitution
further provided that representation in the various deliberative
assemblies (called soviets, or councils) should be arranged so that
one urban bolshevist would be equal, in voting strength, to five non-
bolshevist peasants. Lastly, the constitution significantly neglected
to provide any machinery whereby the voters, either as individuals or
in groups, could make nominations for any governmental office. The
power of nomination was assumed by various bolshevist officials.
147. THE BOLSHEVIST CONSTITUTION: PROVISION FOR A DESPOTISM.--The
bolshevist constitution frankly provided for a despotism. "For the
purpose of securing the working class in the possession of complete
power," reads the concluding section of chapter two of the
constitution, "and in order to eliminate all possibility of restoring
the power of the exploiters, (the capitalist or employing class), it
is decreed that all workers be armed, and that a socialist Red Army be
organized and the propertied class disarmed." These steps, the
constitution goes on to state, were to be taken for the express
purpose of introducing nation-wide socialism into Russia.
148. "DICTATORSHIP OF THE PROLETARIAT."--Shortly after the publication
of the constitution, Lenin and Trotzky, the two bolshevist leaders,
established what was called the "dictatorship of the proletariat." The
word proletariat refers vaguely to the working classes, but the
bolshevists interpreted the term to cover only that portion of the
workers which was pledged to the support of socialist doctrine. Lenin
admitted that a small number of bolshevized workingmen, the
proletariat, was maintaining, by force of arms, a despotic control
over the masses of the people. "Just as 150,000 lordly landowners
under Czarism dominated the 130,000,000 of Russian peasants," he once
declared, "so 200,000 members of the bolshevist party are imposing
their will on the masses." According to these figures, the controlling
element in Russia included less than one sixth of one per cent of the
people.
From the first, the great majority of the peasants stolidly resisted
the socialization of the country, but this did not discourage the
bolshevist leaders. "We have never spoken of liberty," said Lenin
early in 1921. "We are exercising the dictatorship of the proletariat
in the name of the minority because the peasant class in Russia is not
yet with us. We shall continue to exercise it until they submit. I
estimate the dictatorship will last about forty years."
149. SUPPRESSION OF DEMOCRACY.--The democratic tendencies evidenced
under the Kerensky regime, and apparently encouraged by some of the
provisions of the bolshevist constitution, were quickly checked by the
dictatorship. It became the policy of the government to deprive "all
individuals and groups of rights which could be utilized by them to
the detriment of the socialist revolution." The semblance of a
representative system was retained, but voting power was so
distributed as to allow an oligarchic group to control the
government's policies. This group had the power to disallow elections
which went against it, as well as the power to force the dismissal
from local Soviets of anti-bolshevist members. The right to vote could
be arbitrarily withdrawn by order of the central authorities. Free
speech and the right to enjoy a free press were suppressed. Lenin
admitted that bolshevism "does not represent the toiling masses," and
declared that "the word democracy cannot be scientifically applied to
the bolshevist party." Both Lenin and Trotzky declared that they had
no fixed policy except to do whatever at the moment seemed expedient,
regardless of previous statements or promises.
150. ABOLITION OF THE CAPITALIST SYSTEM.--Socialism, so long a theory,
became a practical concern at the moment that the bolshevists secured
control of the government. Private property in land was abolished, the
arable land of Russia being apportioned among agriculturists without
compensation to the former owners. All mines, forests, and waterways
of national importance were taken over by the central government,
while the smaller woods, rivers, and lakes became the property of the
local Soviets. Banking establishments were seized and looted by
bolshevist forces. Factories, railroads, and other means of production
and transport were taken over. Inheritance was abolished. Private
initiative in business was forbidden. Members of the capitalist or
employing classes were imprisoned, murdered, or driven from the
country. In a word, the capitalistic system was destroyed, and the
economic and political machinery of the country came under the full
control of a small socialist group, maintained in power by armed
force.
151. PARALYSIS OF INDUSTRY UNDER SOCIALISM.--The substitution of
socialism for capitalism in Russia was followed by disaster. The
workers were unable to carry on the industries which had been handed
over to them. Discouraged by repeated errors in administration, and
demoralized by their sudden rise to power, they neglected their work
and pillaged the factories and shops in which they had formerly been
employed. The elimination of the managing employers resulted in a
decrease in output, and to aggravate the situation the laborers
continued to insist upon a shorter and shorter working day. In
desperation the government attempted to keep the people at their tasks
by force. The workers were exploited to a degree previously unknown,
even in Russia. They worked longer hours and for less pay than
formerly. In many places they were attached to their tasks like
medieval serfs, and even harnessed to carts like beasts of burden. The
trade unions were abolished, and the workers were forbidden to strike,
on pain of imprisonment or death. Yet despite these measures the
output of factories, mills, and mines steadily decreased. Industry
stagnated, and business fell away. The millions of Russia were
starving in a land of plenty.
152. RETURN TO CAPITALISTIC METHODS.--To save the country from
economic ruin, Lenin turned to capitalism. Free initiative and open
competition in trade were again allowed. The socialization of
railroads, mills, and natural resources was halted. The arable land,
which under socialism had not grown enough food to support even the
peasants living upon it, was again cultivated under the wage system.
The capitalists and managing employers who were alive and still in
Russia, were gathered together and placed in charge of industry. The
laborers, who had been promised an eight- or six-hour day and complete
control of industry, were now forced by the bolshevist government to
work long hours under their former employers for practically no pay.
By 1919 the essential features of the capitalistic system had been
accepted by Lenin and Trotzky, the bolshevists continuing in power as
a despotic group which maintained authority over the laborers and the
employers by armed force. The theory that all except the laborers are
parasites had been exploded.
153. WAS SOCIALISM GIVEN A FAIR TRAIL IN RUSSIA?--To point out that an
experiment has failed is one thing; to prove that it has been
attempted under fair conditions is quite another. We cannot,
therefore, condemn the bolshevist experiment without some regard for
the conditions under which it was conducted.
Undoubtedly, the bolshevists had to contend against several important
difficulties. The majority of the Russian people are illiterate
peasants, who had had, at the time of the overthrow of the Czar in
1917, little or no training in self-government. In 1917, Russia was,
moreover, in a state of political demoralization, the result of three
years of war, concluded by a military debacle and a disorderly peace.
The suddenness with which socialism was introduced was also a factor
which handicapped the bolshevists.
On the other hand, many favorable conditions were present. With
respect to natural resources, Russia is one of the richest countries
in the world. She has practically everything necessary to a healthy
and self-sufficing industrial life. Over this wealth the bolehevists
had full control. Lenin, the bolshevist chief, is conceded to have
been a remarkable executive, so that the socialist experiment was
conducted by a man not only well versed in Marxian doctrine, but
capable of exercising an intelligent and authoritative control of the
government. The bolshevist territory was blockaded by Great Britain,
France, and the United States, but trade connections between Russia
and the two last-named countries had been unimportant. Trade
connections with Germany and Sweden on the west, and China on the
east, were not broken off.
It is clear that the socialist experiment in Russia was attended by
important advantages and disadvantages. Whether or not bolshevism had
an absolutely fair trial is as yet impossible to say. On the other
hand, the disastrous failure of the experiment would seem to indicate
that it could not have met with any great degree of success under
fairly favorable conditions. The admissions of the bolshevist leaders
themselves, together with the conclusions of the most impartial
investigators of the experiment, justify the conclusion that socialism
in Russia failed because it was based upon false principles. The
bolshevists have been accused of having instituted a reign of terror,
bringing in its train lawlessness, murder, desecration of the church,
and the most brutal savagery. Into these charges we cannot go; it is
enough that the most reliable evidence goes to show that bolshevism,
as a nation-wide application of socialist doctrine, was a failure.
154. FAILURE OF BOLSHEVIST PROPAGANDA BEYOND RUSSIA.--Bolshevism, in
common with other varieties of socialism, sought to break down
national barriers and to establish a dictatorship of the proletariat
in all of the countries of the world. Some of the milder socialists in
western Europe and America disavowed the acts of the Russian group,
but the majority of socialists beyond Russia appear to have at least
secretly sympathized with the bolshevists. Encouraged by this
attitude, Lenin and Trotzky frankly admitted their intention of
fomenting world-wide revolution. The bolshevist government
appropriated large sums for propaganda in countries beyond Russia, and
socialist sympathizers everywhere advocated an attempt to overthrow
"world capitalism." In the period of unrest immediately following the
World War there was some response to bolshevist propaganda in a number
of countries, but sounder opinion prevailed, and in 1920 Lenin
admitted that the workingmen of Europe and America had definitely
rejected his program. The one case of nation-wide socialism had proved
too great a failure not to impress the laboring classes in the more
advanced countries of the world as a visionary and unworkable scheme.
QUESTIONS ON THE TEXT
1. Why is bolshevism of interest to students of American democracy?
2. Explain the origin of the bolshevists.
3. How did the bolshevists come into power?
4. To what extent was the bolshevist constitution liberal?
5. To what extent did it restrict the suffrage?
6. What did the bolshevist constitution say concerning a "red" army?
7. Explain the phrase, "dictatorship of the proletariat."
8. How did the bolshevists suppress democracy in Russia?
9. Outline the steps by which the bolshevists destroyed capitalism.
10. What were the effects of this destruction?
11. Why did Lenin return to capitalism?
12. Was bolshevism given a fair trial?
13. What was the fate of bolshevist propaganda beyond Russia?
REQUIRED READINGS
1. Williamson, _Readings in American Democracy_, chapter xv.
Or all of the following:
2. Bloomfield, _Modern Industrial Movements_, pages 295-302.
3. Bolshevist constitution, reprinted in the above reference, pages
243-258; copies may also be secured by writing to _The Nation_, New
York City.
4. Brasol, _Socialism versus Civilisation_, chapter iii.
QUESTIONS ON THE REQUIRED READINGS
1. What occurred in Russia on October 28, 1917? (Brasol, page 113.)
2. What was the substance of the bolshevist announcement of the
overthrow of the Kerensky government? (Brasol, page 114.)
3. What was the attitude of the menshevists toward the bolshevists
after the latter had seized control in Russia? (Brasol, pages 120-
122.)
4. What opinion did the bolshevists express with regard to world
civilization? (Bolshevist constitution, chapter iii.)
5. In what body did the constitution vest supreme control over the
bolshevist government? (Bolshevist constitution, chapter v.)
6. What was the food situation in bolshevist Russia? (Brasol, page
129.)
7. Discuss the output of coal and iron under bolshevist rule. (Brasol
pages 132-133.)
8. Describe agricultural conditions under the bolshevists. (Brasol,
pages 133-135)
9. Describe the condition of transportation in bolshevist Russia.
(Brasol, pages 135-141.)
10. What were the results of the bolshevist attempt to fix prices by
governmental decree? (Brasol, pages 154-155.)
11. What was the attitude of bolshevism toward the peasants?
(Bloomfield, page 297.)
12. What was the relation between bolshevist theory and bolshevist
practice? (Bloomfield, pages 299-300.)
TOPICS FOR INVESTIGATION AND REPORT
I
1. Make as thorough a study as the time allows of material appearing
in newspapers and magazines, between November, 1917, and the present
time, on the subject of bolshevism. (Consult newspaper files, and also
the _Readers' Index to Periodical Literature_.)
(a) Classify the material according as it consists of direct
quotations from bolshevist leaders, or of indirect quotations.
(b) Classify the material according as it is favorable to bolshevism,
unfavorable, or neutral.
(c) Classify the material according as it consists of reports of
persons who had themselves actually investigated the situation in
Russia, or reports based upon hearsay evidence.
(d) What conclusions do you draw from this study?
II
2. The essential elements of the bolshevist constitution.
3. Bolshevist propaganda in the United States. (_Hearings before a
sub-committee of the Committee on the Judiciary, U. S. Senate_.
Government Printing Office, Washington, D. C., 1919.)
4. Attitude of the United States government toward bolshevism.
(_Memorandum on certain aspects of the Bolshevist Movement in Russia_,
Government Printing Office, Washington, D. C., 1919.)
5. Bolshevism and the Russian trade unions. (_Current History
Magazine_, published by the New York _Times_, September, 1920.)
6. The character of Lenin. (Bloomfield, _Modern Industrial Movements_,
page's 203-271.)
7. Return of the bolshevists to capitalism. (Bloomfield, _Modern
Industrial Movements_, pages 291-295.)
8. Socialist attempts to explain or justify the failure of bolshevism.
(Brasol, _Socialism versus Civilisation_, chapter iv.)
CHAPTER XVI
THE CASE AGAINST SOCIALISM
155. ADMINISTRATIVE DIFFICULTIES CONFRONTING SOCIALISM.--Under
socialism the work of government would be greatly increased. Thousands
of intricate administrative rules would have to be drawn up for the
control and direction of activities now attended to by individuals
animated by personal interest.
Now, it is seriously to be questioned whether the most highly
centralized government could effectively administer the innumerable
activities of our complex industrial life. Upon what basis would land
be distributed? How would individuals be apportioned among the various
employments? Upon what basis would the wages of millions of workmen be
determined? Could so mechanical an agency as government foresee future
business conditions expertly enough to direct the productive forces of
the nation effectively? If prices are no longer to be fixed by
competition, how, and by means of what agency, are they to be
determined?
These are only a few of the vital questions which would arise in
connection with the administration of a socialist state. Various
suggestions have been made with regard to some of these difficulties,
but there is among socialists no general agreement as to the answer of
any one of these questions. They continue to constitute, in the eyes
of practical men, a grave obstacle to socialism.
156. DANGERS OF A SOCIALIST BUREAUCRACY.--Governmental power would
have to be very highly centralized if a socialist state were
effectively to administer the nation's economic activities as a unit.
But this very concentration of power might easily result in the
development of a bureaucracy. Waste and the possibility of corruption
have unfortunately characterized even those governments over which the
people exercise considerable control; it seems probable that the
greater centralization of authority demanded by socialism would
increase rather than decrease these dangers.
It is to be noted here that the socialists, who might be supposed to
consider as paramount the interests of society or of the public, are
the very people who are least inclined to do anything of the kind.
[Footnote: This concept was suggested to me by Professor Thomas Nixon
Carver of Harvard University.] Socialists look upon the state only as
an agency for benefiting particular groups of individuals. The
emphasis of political socialism upon class struggle, the frank
admissions of the I.W.W. that they seek to suppress all but the
laboring class, and the establishment by the bolshevists of a
dictatorship of the proletariat, all these facts indicate that
socialists seek the welfare of particular groups rather than the
welfare of the general public.
But class legislation is repugnant to the principles of American
democracy. We believe in government by the masses and for the masses;
furthermore, we are committed to the ideal of as much individual
freedom and as little governmental compulsion as is compatible with
the good of both individual and community. The concept of a socialist
bureaucracy, administered in the interests of particular groups, runs
counter to our fundamental beliefs and ideals.
157. SOCIALISM WOULD DESTROY PERSONAL INITIATIVE.--One of the
strongest arguments against socialism is that it would destroy
personal initiative. Socialism runs counter to human nature by under-
valuing the principle of self-interest. Economists are generally
agreed that the abolition of the institution of private property would
cause the ambition of the individual to slacken. In spite of its
defects, it is the competitive system, with its promise of reward to
the energetic and the capable, which is largely responsible for the
miraculous prosperity of modern times. Men ordinarily will not undergo
systematic training, perfect inventions, strive to introduce greater
and greater economies into their business, or undertake the risk of
initiating new enterprises, unless they are assured that they will be
able to enjoy the fruits of their labor.
And not only would socialism discourage ambition by abolishing private
enterprise, but it might encourage inefficiency and shiftlessness.
Every man would be guaranteed a job, every individual would be
protected against want. It is even likely that a socialist state would
undertake to rear and provide for the offspring of its citizens. Human
experience indicates that this degree of paternalism would encourage
laziness and increase irresponsibility.
It is sometimes said that under socialism men would work as eagerly
for social esteem as they now work for financial gain. This would be a
highly desirable condition, but unfortunately there is nothing in
human experience to justify the hope that such a state of affairs will
speedily be realized. The spread of altruism in the modern world is
heartening, but no sensible person will shut his eyes to the fact
that, for the immediate future at least, self-interest promises to be
much more widespread than altruism. The love of gain may not be the
highest motive in life, but it is better than none, and for a long
time to come it will probably be the one which appeals most strongly
to the average man. Socialists and non-socialists alike deplore the
domination which self-interest exercises over human affairs. But
whereas the non-socialist wisely tries to adapt a program of
industrial reform to this hard fact, many socialists appear to believe
that because the principle of self-interest often works out badly,
they ought to act as though that principle did not exist.
158. SOCIALIST THEORY OF DISTRIBUTION UNSOUND.--Both socialists and
non-socialists admit that poverty is an undesirable condition. But
over the method of improving the condition of the poor the socialist
and the non-socialist disagree. The defender of capitalism begins by
pointing out that, under competitive conditions, the unskilled laborer
is poor primarily because his labor is not highly productive. The
socialist ignores this fact, and insists that the laborer shall
receive a share of wealth which shall be adequate to his needs. As we
shall have occasion to point out in the next chapter, this attitude of
the socialist indicates a fundamental defect in his theory. Socialism
pays more attention to who shall eat and how much shall be eaten, than
it does to the more fundamental question of how food is to be
produced, and how much can actually be produced. Laws may oblige an
employer to give his workmen twice as much as they add to the value of
his product, but though this will benefit the workmen while it lasts,
such a practice would, if widely adopted, lead to industrial
bankruptcy. [Footnote: It is assumed, in this section, that the
productivity of the laborer is determined from the point of view of
the employer. This is in accordance with the productivity theory which
was discussed in Chapter IX.]
159. SOCIALIST THEORY OF VALUE UNSOUND.--Many of the defects of the
socialist doctrine are traceable to the fact that it rests upon false
assumptions. One of these false assumptions is that commodities have
value in proportion as labor has been expended upon them. This labor
theory of value has been discarded by every authoritative economist of
modern times. As has been pointed out in Chapter VIII, value depends
upon scarcity and utility. The soundness of the scarcity-utility
theory, as well as the unsoundness of the labor theory, may be brought
out with reference to three classes of goods.
First, there are commodities which have value in spite of the fact
that no labor has been expended upon them. Virgin land, the gift of
Nature, is the most important example. Articles of this class have
value because they satisfy men's wants, _i.e._ have utility, and
because they are scarce. Labor has nothing to do with their original
value.
Second, there are commodities which have no value, even though much
labor has been expended upon them. A building erected in a desert or
in a wilderness is an example. Unwanted books, or paintings by unknown
artists are other examples. Commodities in this class may represent a
great expenditure of labor, and still have no value, first because
they do not satisfy anyone's wants, and second because they are not
scarce, _i.e._ there are not fewer of them than are wanted.
Third, articles may have a value which is out of proportion to the
amount of labor expended upon them. The value of diamonds, old coins,
and rare paintings is disproportionate to the actual amount of labor
involved in their production. A sudden change in fashion may cause the
value of clothing and other commodities to rise or fall, with little
or no regard for the amount of labor expended upon them. In each case
it is not labor that determines value, but scarcity and utility.
160. LABOR NOT THE ONLY FACTOR IN PRODUCTION.--Labor is an important
factor in production, but land, capital, co÷rdination, and government
are also of vital importance to any modern industrial community. The
great error of the socialist is that he over-estimates the importance
of the laborer, and minimizes or altogether denies the importance of
the individuals with whom the laborer co÷perates in production. This
error is explainable: the laborer does most of the visible and
physical work of production, while the part played by the landowner,
the capitalist, and the entrepreneur is less physical and often is
apparently less direct. The complexity of the industrial mechanism
very often prevents the laborer from appreciating the true relation
existing between his own physical labor, and the apparently indirect
and often non-physical efforts of those who co÷perate with him. It is
in this connection that producers' co÷peration and bolshevism have
performed a great service. They have demonstrated, by the out-and-out
elimination of the managing employer, that the laborer alone cannot
carry on modern industry. Such actual demonstrations of the value of
factors of production other than labor are of far more service in
correcting the viewpoint of the socialist than is any amount of
theoretical argument.
161. THEORY OF CLASS STRUGGLE UNWARRANTED.--The theory of class
struggle is based upon the claim that the laborer produces all wealth.
But we have seen this claim to be unfounded; therefore the theory of
class struggle is built upon an error. Ultimately, the theory of class
struggle tends to injure the very class which seeks to gain by
advocating it, for true and permanent prosperity for the laboring
class (as well as for all other classes) can result only when all of
the factors of production work together harmoniously. Fundamentally
the quarrel between capital and labor [Footnote: The phrase "capital
and labor" is loose and inaccurate, but is in common use. Used in this
sense the word "capital" refers to the capitalist and employing
classes, while the word "labor" refers to the workers. See Section
181, Chapter XVIII, for a fuller discussion.] is as suicidal as though
the arms of a human body refused to co÷perate with the other members.
There are, indeed, many antagonisms between capital and labor, but
socialism seeks to foment, rather than to eliminate them. Socialism
preaches social solidarity and prosperity for all, but by inciting the
class struggle it makes for class hatred and a disharmony between
capital and labor which decreases prosperity and threatens economic
ruin.
162. HISTORY HAS DISPROVED SOCIALISM.--Karl Marx bases his theory of a
future socialist state upon a number of predictions, none of which has
come true. According to Marx, socialism was inevitable. He declared
that the centralization of wealth in the hands of the capitalists, on
the one hand, and the increasing misery of the workers on the other,
would accentuate the class struggle and bring about the downfall of
capitalism. As a matter of fact, laws are more and more restricting
the undue concentration of wealth in the hands of a few. The middle
classes, far from disappearing, as Marx predicted, are increasing in
numbers and in wealth. The working classes are not becoming poorer and
more miserable, but are securing a larger and larger share of the
joint income of industry.
The socialist revolution came in 1917, not in the most enlightened
country in the world, as Marx had predicted, but in Russia, one of the
most backward of civilized countries. This revolution did not
demonstrate the superiority of socialism over capitalism, but revealed
the fundamental weaknesses of socialism, and led to a more widespread
recognition of the merits of the capitalistic system.
In the progressive countries of western Europe and America, the
likelihood of a socialist revolution has been greatly diminished by
two developments. These developments, both of which were unforeseen by
Marx, are as follows: first, the improving condition of the workers
has rendered socialist doctrine less appealing; second, the increasing
effectiveness of legislation designed to remedy the defects of
capitalism has caused attention to be directed to legislative reform
rather than to socialism. With many who were formerly socialists, the
supreme question has become, not how to destroy the present order, but
how to aid in perfecting it by means of appropriate legislation.
163. SOCIALISM CLAIMS TOO MUCH.--Socialism often appeals strongly to
people who are unable to distinguish between plans which are
realizable and promises which cannot be fulfilled. For example,
socialism promises greatly to increase the productive power of the
nation, to shorten the hours of labor, and to insure a just
distribution of wealth. These reforms, it is claimed, would be
accompanied by the elimination of unemployment, poverty, vice, and
attendant evils. It is maintained that socialism would encourage a
higher moral tone and a healthier and more vigorous social life than
now exist.
Without doubt these are desirable aims, but we must face the hard fact
that socialism is not likely to attain them.. Some of the ills which
socialism claims to be able to cure are neither attributable to
capitalism, nor open to remedy by socialism. For example, crises and
unemployment are often due to the alternations of good and bad
harvests, to the varying degrees of severity in successive winters, to
new mechanical inventions, and to changes in fashion. These forces are
beyond the effective control of any state. This being so, it is unfair
for socialists to attribute their evil effects to capitalism. It is
likewise unwarranted that socialism should claim to be able
effectively to control these forces.
Other industrial evils are due to the infirmities of human nature, and
to the fact that we are a highly civilized people living more and more
under urban conditions. Crime, vice, and disease are grave social
problems which demand solution, but it is unfair for socialism to
charge these evils against capitalism. Such defects are due partly to
the fact that we are human, and partly to the fact that much of modern
life is highly artificial. Unless socialism contemplates a return to
small, primitive communities, there is nothing to indicate that it
would be able materially to reduce crime, vice, nervous strain, or
ill-health. Indeed, there is no evidence to show that socialism could
make as effective headway against these evils as we are making under
capitalism.
164. DEFECTS OF SOCIALISM OUTWEIGH ITS MERITS.--It is only after the
advantages of a system or an institution have been carefully weighed
against its disadvantages that its value appears. A socialist system
would have some obvious merits. It might eliminate unemployment, since
everyone would be an employee of the state, and, as such, would be
guaranteed against discharge. Charitable aid would probably be
extended to many people now left to their own resources.
But certainly socialism could not cure ills which are due either to
natural causes, or to the infirmities of human nature. The abolition
of private initiative and of private property would strike at the root
of progress. Socialism would also probably give rise to a series of
new problems, such as the evils arising out of a bureaucratic form of
government. As its program now stands, it is probably fair to say that
the defects of socialism greatly outweigh its merits.
165. SOCIALISM UNDER-RATES CAPITALISM.--The ardor of the socialist
often causes him to underestimate the merits of capitalism, and to
exaggerate its defects. The striking achievements of capitalism, so in
contrast with the negative character of socialism, are not generally
appreciated by the socialist. On the other hand, the socialist places
an undue emphasis upon the defects of the present system. The radical
agitator too often overlooks the millions of happy, prosperous homes
in this and other countries; he too often sees capitalism in terms of
poverty, crises, unemployment, vice, disease, and extravagance.
Our age is not to be despaired of. An age of progress is always an age
of adaptation and of adjustment, and it is precisely because American
democracy is both a progressive ideal and a living, growing
institution that it is confronted with problems. The socialist
indictment is not a prelude to chaos, for through the process of
adjustment we are making steady progress in solving our problems.
Capitalism has served us well, and though it has defects, these are
clearly outweighed by its merits. So long as we know of no other
system which would work better, we are justified in retaining
capitalism.
166. NECESSITY OF A DEFINITE PROGRAM OF INDUSTRIAL REFORM.--Socialism
appeals to certain types of people because it offers a confident
program, even though it is a mistaken and probably a dangerous
program. And it is the almost universal failure of non-socialists to
advance a substitute program that is responsible for a large share of
the resentment which industrial evils have aroused among non-
socialists. _If not socialism, what?_ is the cry. We are challenged to
move, to do something, to present a reform program which will justify
the rejection of socialism.
Lest our survey of industrial reform seem negative and devoid of
constructive elements, therefore, the next chapter will be devoted to
what may be called a democratic program of industrial reform. The
basic idea of this program is that poverty is as unnecessary as
malaria or yellow fever, and that we can abolish poverty without
sacrificing private property, personal initiative, or any of the other
institutions which we hold dear.
QUESTIONS ON THE TEXT
1. What are some of the administrative difficulties which would
confront a socialist state?
2. Why would socialism tend to give rise to a bureaucratic government?
3. In what way does socialism run counter to human nature?
4. In what way does the socialist differ from the non-socialist in his
attitude toward the principle of self-interest?
5. In what way is the socialist theory of distribution unsound?
6. Demonstrate the unsoundness of the labor theory of value, with
reference to three classes of goods.
7. How may we explain the socialist's tendency to overestimate the
importance of labor, and to underestimate the value of other factors
of production?
8. Explain clearly the statement that "history has disproved
socialism."
9. In what way does socialism claim too much?
10. Name some industrial evils which socialism probably could not
cure.
11. What is meant by the statement that "socialism under-rates
capitalism"?
12. Why is it necessary for non-socialists to advance a program of
industrial reform?
REQUIRED READINGS
1. Williamson, _Readings in American Democracy_, chapter xvi.
Or all of the following:
2. Brasol, _Socialism versus Civilization_, chapter ii.
3. Bullock, _Selected Readings in Economics_, pages 681-705.
4. Ely, _Outlines of Economics_, chapter xxxi.
5. Le Rossignol, _Orthodox Socialism_, chapters viii and ix.
6. Skelton, _Socialism, a Critical Analysis_, chapter iii.
QUESTIONS ON THE REQUIRED READINGS
1. What is the "American conception of equality"? (Brasol, pages 75-
76.)
2. Why is the wage system a necessary feature of modern
industrial life? (Brasol, page 93.)
3. What is the importance of the spirit of enterprise in increasing
national wealth? (Brasol, page 99.)
4. What effect has the development of entrepreneur ability had upon
the condition of the laboring classes? (Le Rossignol, pages 112-113.)
5. Could collective production be carried on in a democratic country?
(Bullock, pages 682-683.)
6. Could socialism increase the productivity of the nation? (Bullock,
pages 685-688.)
7. What are some of the difficulties which a socialist state would
encounter in distributing wealth? (Bullock, pages 688-693.)
8. What difficulties would confront a socialist state in fixing wages?
(Bullock, pages 696-705.)
9. What has been the effect of the Industrial Revolution upon the
condition of the laboring classes? (Le Rossignol, pages 107-108.)
10. Explain why Marx's prediction of an increasing concentration of
wealth in the hands of a few has not come true. (Le Rossignol, pages
128-130.)
11. To what extent is socialism too pessimistic about the present
order? (Le Rossignol, page 138.)
12. To what extent does socialism overestimate industrial evils?
(Skelton, page 53.)
13. What service has been rendered by socialism? (Ely, page 638.)
14. What, according to Skelton, is the fundamental error of socialism?
(Skelton, pages 60-61.)
TOPICS FOR INVESTIGATION AND REPORT
I
1. Make a list of a number of familiar commodities, and divide them
into three classes for the purpose of testing the error of the labor
theory of value, and the truth of the scarcity-utility theory.
(Consult Section 159.)
2. Make a study of unemployment in your locality, with particular
reference to unemployment due to
(a) climatic changes,
(b) changes in fashion,
(c) accidents, such as fire, flood or earthquake.
3. Interview an elderly friend or relative, with the purpose of
securing a definite idea of the condition of the working classes a
half century ago. Contrast with the condition of the laborers to-day.
4. Make a list of the notable inventions of the nineteenth century. To
what extent has each increased the productivity and well-being of the
various occupational groups in your community?
II
5. History of socialism. (Consult an encyclopedia.)
6. Varieties of socialism. (Ely, _Outlines of Economics_, chapter
xxx.)
7. The Iron Law of wages. (Le Rossignol, _Orthodox Socialism_, chapter
iii.)
8. The socialist's attitude toward industrial crises. (Le Rossignol,
_Orthodox Socialism_, chapter vi.)
9. Objections to the socialist's attitude toward production. (Ely,
_Strength and Weakness of Socialism_, part iii, chapter vi.)
10. Objections to socialism as a scheme of distribution. (Ely,
_Strength, and Weakness of Socialism_, part iii, chapter viii.)
11. Socialism and American ideals. (Myers, _Socialism and American
Ideals_.)
12. Social justice without socialism. (Clark, _Social Justice without
Socialism_.)
CHAPTER XVII
A DEMOCRATIC PROGRAM OF INDUSTRIAL REFORM
[Footnote: The title of this chapter, as well as the material in
Sections 170-175, has been adapted, by permission, from the writings
and lectures of Thomas Nixon Carver, Professor of Economics in Harvard
University.]
167. THERE IS NO SIMPLE REMEDY FOR THE DEFECTS OF CAPITALISM.--The
economic system of a modern civilized nation is a vast and complicated
affair, and its defects are both numerous and deep-lying. No one
really familiar with the problem would propose so simple a remedy as
socialism for so complex a disease as industrial maladjustment.
History affords many examples of schemes that were designed to
eliminate poverty from the world suddenly and completely, but no such
scheme has succeeded.
Let it be understood at the outset of this chapter, therefore, that
really to eliminate the basic defects of our industrial system we must
resort to a series of comprehensive reforms rather than to a single
scheme or theory. These reforms must be so wisely planned and so
carefully executed as to attack the evils of capitalism from a number
of angles simultaneously. The attack must be partly by legislative,
and partly by non-legislative methods.
The series of reforms referred to above must have three aims: first,
to give every individual exactly what he earns; second, to make it
possible for every individual to earn enough to support himself and
his family at least decently; and third, to teach every individual to
use wisely and economically the income which he receives.
A program embodying these three aims has the disadvantage of seeming
commonplace and slow of fulfillment to those who prefer novel and
sensational schemes, but it has the advantage of being both workable
and safe.
168. THE NATURE OF JUSTICE.--Among the advocates of socialism the word
"justice" is much used, but apparently little understood. Justice in
industry implies that every individual shall receive precisely what he
earns, no more, no less. If a monopolist secures unearned profits,
there is injustice. If a laborer adds to the value of a product to the
extent of five dollars, there is injustice if he receives less than
five dollars in wages. Similarly, there is injustice if the laborer
earns only four dollars, but receives five dollars. Wherever there is
an unfair distribution of wealth, there is a double injustice: some
individual gets a share of wealth which he did not earn and to which,
therefore, he is not entitled; while the individual who did earn that
wealth is deprived of it.
169. THE IMPORTANCE OF THIS.--All right-thinking reformers will agree
with the socialist that much or all of the unearned wealth of the
moneyed classes ought to be taken for the benefit of the community.
But he who accepts the democratic program of industrial reform will
not sanction the socialist's proposal to eliminate poverty primarily
by decreeing higher wages.
In the first place, this proposal of the socialist is unjust. A man
who earns three dollars a day may not be able to live on that amount,
and it may be desirable for some agency to give him more than three
dollars a day. But that would be charity, not justice. It would be, as
we have just seen, a double injustice.
In the second place, such a practice would lead inevitably to national
bankruptcy. Under the competitive system, wages tend to be determined
by productivity. To attempt to eradicate poverty primarily by the
raising of wages is futile, for employers cannot long pay out in wages
more than the laborer adds to the product. Some employers might do so
for a long time, and all employers might do so for a short time, but
if the practice were nation-wide and long-continued, it would result
in economic ruin. To put a premium upon propagation by guaranteeing
every man a job, and to pay him, not according to productivity, but
according to need, would be equivalent to building up a gigantic
charitable institution. Charity is a necessary and laudable function,
but the proper care of the dependent classes is possible only when the
majority of the people are not only self-supporting, but actually
produce a surplus out of which the unfortunate can be cared for. If
applicants for charity too largely outnumber those producing a
surplus, national bankruptcy results.
In the third place, an increase in wages might not benefit even those
receiving higher wages unless they were able and willing to spend
their income wisely and economically.
170. THE REDISTRIBUTION OF UNEARNED WEALTH.--The first step in our
program is to apply the principle of justice to the problem of
unearned wealth. The student should be careful at this point to
distinguish between wealth which has been earned, however great, and
wealth which has been acquired by unjust methods. American democracy
will tolerate no interference with wealth which has been earned; on
the other hand, it demands that unearned riches be redistributed in
the form of services performed by the government for the people as a
whole.
There are three chief methods of redistributing unearned wealth. The
first is by means of increased taxes on land. As was pointed out in
the chapter on single tax, that income from land which is due, not to
the efforts of the owner, but either to natural fertility or to the
growth of the community, may be considered as unearned. While the
single tax is too drastic a reform, it is unquestioned that we need
heavier taxes upon the unearned increment arising from land.
A second method of redistributing unearned wealth is through the
application of inheritance taxes. Reserving the whole problem of
taxation for later discussion, [Footnote: See Chapter XXXII.] it may
be said here that in many cases large sums are willed to individuals
who have done little or nothing to deserve them. In so far as this is
true, and in so far as such a tax does not discourage the activities
of fortune builders, the inheritance tax is a desirable means of
redistributing unearned wealth.
The last method of redistributing unearned wealth is by a tax on those
elements in profits which are due to the abuse of monopoly conditions.
[Footnote: Monopoly will be treated more fully in Chapters XXVII and
XXVIII.] Complete monopoly rarely exists, but in many businesses there
is an element of monopoly which allows the capitalist or entrepreneur
to secure a measure of unearned wealth. In the interest of justice,
much or all of this ought to be taken for the use of the community.
171. SOMETHING MORE THAN JUSTICE IS NECESSARY.--It is an error to
suppose that justice would necessarily eliminate either low wages or
poverty. As we have seen, justice would require the redistribution of
a large amount of unearned wealth. But much more important is the
question of large numbers of laborers whose wages are undesirably low.
If the rule of justice were applied to this latter class, that is, if
they were given just what they earned, many would continue to be poor.
Indeed, if justice were strictly administered, it is even possible
that among a few groups poverty would increase, since some individuals
are incapable of really earning the wages they now receive.
Something more than justice, therefore, is necessary. We must not only
see that a man gets as much as he produces, no more, no less, but we
must make it possible for every individual actually to produce or earn
enough to support himself decently or comfortably. This, in essence,
is the distinction between the socialist and the liberalist, _i.e._ he
who accepts the democratic program of industrial reform: the socialist
would practice injustice and invite economic ruin in a vain effort to
eliminate poverty; the liberalist seeks the abolition of poverty
without violating either justice or economic law.
172. WHY WAGES ARE LOW.--A little thought will show that directly or
indirectly poverty is sometimes the result of low wages. It follows,
thus, that the source of some poverty would be dried up if an increase
in wages could be secured in an economical manner. To come to the
heart of the problem, wages are low because productivity is low. That
is to say, employers operating under conditions of free competition
will pay laborers in proportion as the latter give promise of adding
to the value of the product. When men are scarce, relatively to the
supply of land and capital, the employer will be justified in offering
high wages, because under those circumstances the productivity of each
of his prospective employees will be high. He will actually offer high
wages, because if he does not, the laborers will tend to hire out to
his competitors. But if laborers are plentiful, relatively to the
supply of the other factors of production, the employer will be forced
to offer lower wages, because under the circumstances each of the
prospective employees shows promise of being able to add relatively
little to the value of the product. In such a case, the employer will
actually offer low wages because he need not fear that his competitors
will hire all of the laborers applying for jobs.
Thus when laborers are plentiful, relatively to the demand, the
automatic functioning of the law of supply and demand will result in
low wages. We need not waste time debating whether or not there ought
to be such a thing as the law of supply and demand; a far more
profitable exercise is to recognize that such a law exists, and to
consider how our program of industrial reform may be adapted to it.
173. AN ECONOMICAL REMEDY FOR LOW WAGES.--Low wages are generally the
result of low productivity, and low productivity is in turn the result
of an oversupply of laborers relatively to the demand. Granting the
truth of these premises, an economical remedy for low wages involves
two steps: first, the demand for labor [Footnote: By "labor" is here
meant those types of labor which are poorly paid, because
oversupplied. Unskilled day labor is an example.] must be increased;
and second, the supply of labor must be decreased. Any measure which
will increase the demand for labor, relatively to the demand for the
other factors of production, will increase the productivity of labor,
and will justify the payment of higher wages. Competition between
prospective employers will then actually force the payment of higher
wages. Similarly, any measure which will decrease the supply of labor
will strengthen the bargaining position of the laborer, and, other
things remaining equal, will automatically increase wages.
174. INCREASING THE DEMAND FOR LABOR.--If we bear in mind that modern
industry requires a combination of the various factors of production,
it will be seen that the utilization of laborers depends upon the
extent to which land, capital, and entrepreneur ability are present to
combine with those laborers. Where there is a large supply of these
factors, many laborers can be set to work. Thus one way of increasing
the demand for labor is to increase the supply of land, capital, and
entrepreneur ability.
The available supply of land can be increased by several methods.
Irrigation, reclamation, and dry farming increase the available supply
of farm land. The fertility of land may be retained and increased by
manuring, rotation of crops, and careful husbandry. Improved
agricultural machinery will also enable land to be used in larger
quantities and in more productive ways. And while we do not think of
man as actually creating land, the draining of swamps and the filling
in of low places increases the available amount of both farm and urban
land. By whatever means the amount of available land is increased, the
effect is to open more avenues to the employment of laborers.
The supply of capital may be increased chiefly by the practice of
thrift among all classes of the population. Capital arises most
rapidly when individuals produce as much as possible, and spend as
little as possible for consumers' goods. Any measure which will
discourage the well-to-do from wasteful or luxurious ways of living,
and at the same time encourage the poor to save systematically, even
though they save only a trifle, will add to the supply of available
capital. Every increase in the supply of capital will enable more and
more laborers to be set to work.
Entrepreneur ability may be increased by a variety of methods. The
training of men for business callings increases the supply of
entrepreneurs. Taxes on inheritances, excess profits, and the unearned
increment of land will tend to force into productive work many capable
men who now either idle away their lives, or retire from business
prematurely. It is also important that the well-to-do classes be
encouraged to rear larger families, since it is these classes which
can best afford to give their children the higher forms of training
and education. Lastly, it is desirable to teach that leisure is
disgraceful, and that whether one is rich or poor, the useful and
productive life is the moral and patriotic life. "He who does less
well than he can does ill."
175. DECREASING THE SUPPLY OF LABOR.--Hand in hand with measures
deigned to increase the demand for labor should go consistent efforts
to decrease the supply of unskilled and poorly paid labor. One of the
most effective means of accomplishing this is to restrict by law the
immigration to this country of masses of unskilled workers which glut
the American labor market and force down the wages of unskilled
workmen already here. The general problem of immigration will be
discussed elsewhere; here it is only necessary to note that as an
economic proposition unrestricted immigration is undesirable.
The supply of unskilled labor may be somewhat restricted by additional
laws. It is clear that we ought to pass and enforce laws which would
prevent the propagation of mental defectives. There ought also to be
laws which would discourage the marriage of individuals who show no
promise of being able to rear and support children who are physically
fit. It might not be expedient to pass legislation requiring a certain
minimum income of persons intending to marry, but from the purely
economic point of view, such laws would certainly be advisable.
Much in this general field can be done by non-legislative methods.
Young people can be taught the desirability of postponing marriage
until their earnings justify the acceptance of such a responsibility.
Just as the well-to-do should be encouraged to prefer family-building
to social ambition, so the poorer classes ought to be encouraged to
postpone marriage until, through education or training, the proper
support of a family is assured. This end must be secured through moral
and social education, rather than through legislation.
The encouragement of thrift among the poorer classes of the population
is an important factor in decreasing the supply of unskilled labor.
Thrift increases savings, and by making possible education or
apprenticeship in a trade, it enables the children of the unskilled
worker to pass from the ranks of the poorly paid to the ranks of the
relatively well paid. Thus not only does the practice of thrift by the
poor add to the amount of capital in existence, and thus indirectly
increase the demand for labor, but it helps the poor directly and
immediately.
Vocational education is of fundamental importance in decreasing the
supply of unskilled labor. It renders higher wages economically
justified by training individuals away from overcrowded and hence
poorly paid jobs, and toward those positions in which men are scarce,
and hence highly paid. If vocational education turns unskilled workmen
into entrepreneurs, such education has the doubly beneficial effect of
lessening the supply of unskilled labor, and of increasing the demand
for labor. The importance of trade schools, continuation schools, and
other agencies of vocational education can hardly be exaggerated.
Employment bureaus and labor exchanges are essential to the democratic
program of industrial reform. Just as vocational education must move
individuals from overcrowded to undercrowded occupations, so the
employment bureau should move laborers from places where they are
relatively little wanted, and hence poorly paid, to places where they
are relatively much wanted, and hence better paid. A co÷rdinated
system of national, state, and municipal employment bureaus is a
valuable part of our program of industrial reform.
176. IMPORTANCE OF PERSONAL EFFICIENCY.--We have seen that the
bargaining position of the laborer may be strengthened by any and all
measures which would increase the demand for his labor, relatively to
the demand for the other factors of production. As a general
proposition, this strengthened position would tend automatically to
result in higher wages.
Along with these measures it should not be forgotten that the
industrial position of the individual worker tends to improve in
proportion as he increases his personal efficiency. It is of the
greatest importance that the individual should strive to secure as
thorough an education as possible, and that he safeguard himself
against accident and disease. He should realize, also, that employers
seek men who are not only competent, but whose personal habits are
attractive and trust-inspiring. Regardless of the scarcity or
oversupply of labor, personal efficiency will tend to enable the
worker to receive larger wages than would otherwise be possible.
177. SOMETHING MORE THAN HIGH WAGES IS NECESSARY.--We have taken some
time to point out how wages might be increased without violating
economic law. But high wages do not necessarily mean the abolition of
poverty, indeed, actual investigations have proved that often poverty
exists regardless of whether wages are high or low. A family of four,
for example, might be well fed, comfortably clothed, and otherwise
cared for in a normal manner, on, say, three dollars a day, provided
that sum were utilized wisely. A second family of equal size, however,
might spend six dollars a day so carelessly that the children would be
denied such vital necessities as medical attention and elementary
education, while neither parents nor children would be adequately
provided with food or clothing.
178. INCOME MUST BE UTILIZED WISELY.--Thus an indispensable factor in
the abolition of poverty is the economical utilization of income.
Aside from the fact that it increases the amount of capital in
existence, thrift is imperative if a family is to get the full benefit
of its income. In both the home and the school the child should be
taught the proper care and utilization of money. He should receive, in
addition, fundamental instruction in such matters as expense-
accounting and budget-making. Of similarly great value is the training
of boys and girls to a proper appreciation of the home-making ideal,
to which subject we shall return later. [Footnote: See Chapter XXIII.]
It is fortunate that we are directing more and more attention to these
and similar measures, for they strike at the heart of one of the great
causes of poverty--the inability of the individual to make the proper
use of his income. Unless our citizens are trained to spend money
wisely, and to distinguish clearly between the relative values of
services and commodities, an increase in wages will never eliminate
malnutrition, illiteracy, and other elements of poverty.
179. SUMMARY.--For the sake of clearness, let us summarize the
essential features of the democratic program of industrial reform.
The first aim of this program is to give every individual precisely
what he earns, no more, no less. Applying the principle of justice
would result in heavy taxes on unearned wealth secured through
inheritance, or as rent from land, or as monopoly profits.
The second aim of our program arises from the fact that justice might
not improve the condition of the laboring class, since some laborers
manifestly could not earn enough to support themselves and their
families decently.
In addition to administering justice, therefore, we must put the
individual in a position to earn an amount adequate to his needs. This
involves two lines of action: first, the bargaining position of the
laborer must be strengthened by measures designed to increase the
demand for his labor, relatively to the demand for the other factors
of production; second, increasing the personal efficiency of the
worker will render him more attractive to the employer.
The third aim of the democratic program of industrial reform is to
teach the individual to use his income wisely and economically. Only
after this has been done can we be assured that the raising of wages
will materially improve the condition of the worker.
180. SOCIAL PROBLEMS.--There is an important word to be said here. The
democratic program of industrial reform is economically sound, and
ultimately it would eliminate poverty. But it is not an immediate cure
for all of the social and economic ills of American democracy. There
will long continue to be persons whom no amount of care can render
capable of earning enough to support themselves. There are many other
individuals who may ultimately become self-supporting, but who for
some time to come will need special care and attention. There are,
lastly, many other individuals who are partially or entirely self-
supporting,--women and children, for example,--but whose social and
economic interests need to be safeguarded by legislation. The
democratic program of industrial reform could ultimately eliminate
many of the basic social problems now confronting us; meantime we are
under the necessity of grappling with such questions as labor
disputes, the risks of industry, crime, and dependency. Indeed, no
matter how vigorously and intelligently we attack the defects of
capitalism, it is probable that we shall always have to face grave
social problems. Part III of the text will accordingly be devoted to a
consideration of American social problems.
QUESTIONS ON THE TEXT
1. Why is there no simple remedy for the defects of capitalism?
2. What are the three aims of the program advanced in this chapter?
3. What is the nature of justice?
4. In what sense is an unfair distribution of wealth a double
injustice?
5. Under what conditions would the raising of wages tend to result in
national bankruptcy?
6. What are the three chief methods of redistributing unearned wealth?
7. Why does the elimination of poverty demand something more than
justice?
8. What is the fundamental cause of low wages? Explain clearly.
9. What is an economical remedy for low wages?
10. Why will higher wages result from an increase in the demand for
labor?
11. By what three methods may the demand for labor be increased?
12. Name some of the methods whereby the supply of labor may be
decreased.
13. What is the importance of personal efficiency in our program?
14. What is the relation of wages to poverty?
15. What is the importance of an economical utilization of income?
16. Summarize the argument in this chapter.
17. Why is the program outlined not an immediate panacea for all
social and economic ills?
REQUIRED READINGS
1. Williamson, _Readings in American Democracy_, chapter xvii. Or all
of the following:
2. Carver, _Elementary Economics_, chapters xiv, xxix, xxxi, and
xivii.
3. Carver, _Essays in Social Justice_, chapter i.
QUESTIONS ON THE REQUIRED READINGS
1. Why does the need for justice arise? (_Essays_, page 3.)
2. What is the first duty of the state? (_Essays_, page 9.)
3. What is moral law? (_Essays_, page 23.)
4. What is the relation of meekness to national strength? (_Essays_,
pages 33-34.)
5. What is meant by a "balanced nation"? (_Elementary Economics_,
pages 118-119.)
6. What is the aim of balancing a population? (_Elementary Economics_,
page 119.)
7. Name an important method of securing this balance. (_Elementary
Economics_, pages 119-120.)
8. What classes of the population multiply the least rapidly? Why is
this undesirable? (_Elementary Economics_, page 120.)
9. What is the object of the "geographical redistribution of
population"? (_Elementary Economics_, page 120.)
10. Explain the working of the "law of variable proportions" in
industry. (_Elementary Economics_, pages 258-260.)
11. Why are there differences of wages in different occupations?
(_Elementary Economics_, page 268.)
12. What is the "law of population"? (_Elementary Economics_, page
273.)
13. What is the effect of immigration upon wages? (_Elementary
Economics_, pages 273-274.)
14. What are the two ways of getting men to do what is necessary for
the prosperity of the nation? Of these two ways, which is preferable?
(_Elementary Economics_, pages 387-388.)
15. What are the dangers of freedom? (_Elementary Economics_, pages
389-390.)
TOPICS FOR INVESTIGATION AND REPORT
I
1. Make a study of the occupational groups in your locality for the
purpose of discovering which of these groups receive the lowest wages.
Can you connect the fact that they receive low wages with their
numerical strength?
2. Is the supply of unskilled labor in your community affected by
European immigration? If so, attempt to trace the relation of this
immigration to low wages in your community.
3. What classes of workmen receive the highest wages in your locality?
What is the relation of these high wages to the restricted number of
this type of workman?
4. Study the methods by means of which land in your locality is
utilized. In what ways, if in any, could various plots be made to
employ more laborers?
5. By what means could the supply of capital in your locality be
increased? In what ways might this increased supply of capital be
utilized? To what extent would the utilization of this increased
supply of capital justify the employment of additional laborers?
6. Do you believe that your community needs more entrepreneurs? What
reason have you for believing that a training school for the technical
professions would increase the productivity of your community?
7. Write to the Bureau of Education in your state for data relative to
the status of vocational education in your commonwealth.
8. Interview one or more officials of a bank in your community for the
purpose of learning of the ways in which banks encourage thrift.
9. Write to the Bureau of Labor Statistics in your state for
information relative to the status of public employment bureaus in
your commonwealth.
II
10. Causes of inequality. (Taussig, _Principles of Economics_, vol.
ii, chapter liv.)
11. The Malthusian doctrine. (Malthus' _Essay on Population_. If this
essay is not available, consult an encyclopedia under "Malthus.")
12. The principle of self-interest. (Carver, _Essays in Social
Justice_, chapter iii.)
13. How much is a man worth? (Carver, _Essays in Social Justice_,
chapter vii.)
14. Causes of the scarcity of labor. (Carver, _Elementary Economics_,
pages 269-271.)
15. The importance of consumption. (Carver, _Elementary Economics_,
chapters xxxviii and xxxix.)
16. Importance of thrift. (_Annals_, vol. lxxxvii, pages 4-8.)
17. Luxury. (Carver, _Elementary Economics_, chapter xl.)
18. Choosing a vocation. (Parsons, _Choosing a Vocation_.)
PART III--AMERICAN SOCIAL PROBLEMS
CHAPTER XVIII
INDUSTRIAL RELATIONS
181. LABOR AND CAPITAL.--Strictly speaking, five distinct factors are
involved in production: land, labor, capital, co÷rdination, and
government. As a matter of fact, we are accustomed to speak of the
immediate conduct of industry as involving only two factors: labor and
capital. Used in this sense, the term labor refers to the masses of
hired workmen, while the term capital is held to include not only the
individual who has money to invest, _i.e._ the capitalist proper, but
also the entrepreneur, or managing employer.
Labor and capital co÷perate actively in production, while the other
factors remain somewhat in the background. As we have seen, both labor
and capital are essential to industry, and fundamentally their
interests are reciprocal. But in spite of this basic harmony, there
are many points of difference and antagonism between labor and
capital. This chapter discusses the more important of these
disagreements, and outlines some suggested methods of reducing or
eliminating them.
182. THE FACTORY SYSTEM AND THE LABORER.--Wherever it has penetrated,
the Industrial Revolution has concentrated large numbers of landless
laborers in industrial establishments controlled by relatively few
employers. Very early in the development of the factory system, the
laborer saw that he was at a relative disadvantage in bargaining with
employers. Not only does the average laborer lack funds to tide him
over a long period of unemployment, but the fact that his labor is
generally his sole reliance obliges him to secure work at all hazards.
The anxiety and discontent of laborers have been increased by the
realization that the factory system affords little opportunity for the
average workman to rise to the position of an employer. Most laborers
are unable to secure either the training or the capital necessary to
set themselves up as independent business men.
183. RISE OF LABOR ORGANIZATIONS.--The risks and limitations which the
factory system imposes upon the laboring classes have encouraged
workmen to organize for the purpose of promoting their mutual
interests. The individual gains, it has been found, when his interests
are supported by a group of workmen acting as a unit, and bringing
their united pressure to bear upon the employer. The labor
organization has been the result of this discovery. A labor
organization may be defined as a more or less permanent and continuous
association of wage earners, entered into for the purpose of improving
the conditions of their employment.
The first labor organizations in the United States were formed early
in the nineteenth century, but it was not until about 1850 that the
trade union assumed national importance. After 1850, however, and
particularly after the Civil War, the trade union grew rapidly. In
1881 a number of national trade unions combined to form the American
Federation of Labor. This body, while exercising no real authority
over the trade unions comprising it, is nevertheless an important
agency in co÷rdinating trade union policies throughout the country. It
is important, also, as a means of formulating and expressing the aims
and ideals of the working classes. The Federation had a membership of
2,604,701 in 1914, and in 1920 included more than 4,500,000 members.
With the exception of the railroad brotherhoods, nearly all of the
important trade unions in the country are affiliated with the American
Federation of Labor.
184. RISE OF EMPLOYERS' ASSOCIATIONS.--The growing power of the trade
union after 1850 stimulated the growth of employers' associations. In
1886 the first national employers' association was organized under the
name of the Stove Founders' National Defence Association. Later there
was formed a number of other important associations, including the
National Association of Manufacturers, the National Council for
Industrial Defence, and the American Anti-Boycott Association.
The primary purpose of the employers' association is the protection of
the employers' interests against trade union aggression. Some of the
associations are frankly hostile to the trade union movement, while
others take the stand that the organization of laborers is undesirable
only if the power of the trade union is abused. The promotion of
friendly relations between labor and capital is increasingly an
important concern of the employers' association.
185. WHAT THE TRADE UNION WANTS.--One of the basic aims of the trade
union is either to raise wages or to prevent their reduction. Because
of the constant shiftings of supply and demand, the prices of
commodities are rarely stationary for very long. Over any extended
period of time prices are either rising or falling. During a period of
rising prices the workmen are at a relative disadvantage, [Footnote:
Rising prices affect all who purchase commodities, of course, but here
we are intent upon the position of the laborer only.] because they
have to pay for commodities higher prices than they had anticipated
when they contracted to work for a definite wage. In such a case, the
union attempts to secure higher wages for its members. When, on the
other hand, prices are falling, the workmen gain, because they do not
have to pay as high prices as they had anticipated. In this latter
case, the laborers attempt to maintain their advantage by opposing any
reduction in wages.
The desire of the trade unions to improve the general condition of the
working classes has steadily widened the program of organized labor.
Shorter hours and better conditions of work are important trade union
demands. Unions quite generally approve the principle of a minimum
wage, [Footnote: The principle of the minimum wage is discussed in the
next chapter, Sections 205-207.] at least for women and child workers.
Formerly, and to some extent even now, the unions have opposed the
introduction of labor-saving machinery on the grounds that it
displaces workmen and hence causes unemployment. Union members
generally prefer to be paid by the hour or by the day, rather than so
much per unit of product. The reason given for the preference is that
strain and undue fatigue often result from _piece-work,_ as the system
of pay on the basis of units of product is called. Trade unions
universally demand that employers recognize the principle of
collective bargaining, by which is meant the privilege of workmen
dealing with the employer collectively or through the union. Very
often, also, the unions demand the closed shop, that is to say, a shop
from which all non-union employees are excluded.
186. WHAT THE EMPLOYER WANTS.--Price movements likewise affect the
employer. But whereas the laborer is at a relative disadvantage when
prices are rising, the employer tends to gain, for the reason that he
secures for his product higher prices than he had expected. [Footnote:
In a period of rising prices, the employer's costs also tend to rise,
but generally not so rapidly as do prices.] Suppose, for example that
a shoe manufacturer can make a profit if a pair of shoes sells for
$4.00. If later the price rises to $5.00 and his expenses remain
stationary or very nearly so, he reaps an unusually large profit. And
whereas in a period of falling prices the laborer tends to gain, the
employer often loses heavily, for the reason that he must sell at a
relatively low price goods produced at a relatively high cost. If, in
the case given above, the price of the pair of shoes falls from $4.00
to $3.00, while the expenses of the manufacturer remain stationary, or
very nearly so, he may make little or no profit. Thus while prices are
rising the employer attempts to maintain his advantage by resisting an
increase in wages, while in a period of falling prices he seeks to cut
down his expenses by reducing wages. In either case the immediate
interests of workmen and employer are antagonistic.
Just as the growing complexity of the industrial situation has
enlarged the trade union program, so the aims of employers have
steadily increased in number and in importance. On the grounds that it
restricts the fullest utilization of his plant, the employer very
often objects to a shortening of the working day, even where there is
a corresponding decrease in the day-wage. Some employers are unwilling
to provide sanitary workshops for their employees, or otherwise to
improve the conditions of employment. The employer generally objects
to the minimum wage, as constituting an interference with his "right"
to offer workmen what wages he chooses. Collective bargaining is
accepted by many employers, but many others insist upon the right to
hire and discharge men as they see fit, without being forced to
consider the wishes of the union. Employers often oppose the closed
shop, and insist upon the open shop, an open shop being defined as one
in which workmen are employed without regard to whether or not they
are members of a union.
187. METHODS OF INDUSTRIAL WARFARE.--Both capital and labor back up
their demands by a powerful organization using a variety of weapons.
The trade union generally attempts to enforce its demands by threat
of, or use of, the _strike_. A strike is a concerted stoppage of work
initiated by the workmen as a group. Sometimes accompanying the strike
is the _boycott_, which may be defined as a concerted avoidance of
business relations with one or more employers, or with those who
sympathize with those employers. The strike is generally accompanied
by the practice of _picketing_, by which is meant the posting of union
agents whose duty it is to attempt to persuade non-union workmen not
to fill the places of the striking workmen. Pickets may also attempt
to persuade customers not to patronize the employer against whom a
strike has been launched. Sometimes picketing leads to _intimidation
and violence_ on the part of either strikers or representatives of the
employers.
In turn, the employer may employ a variety of weapons against workmen
with whom he cannot agree. An employer may make use of the _lockout_,
that is, he may refuse to allow his labor force to continue at work.
Many employers also use the _blacklist_, _i.e._ the circulation of
information among employers for the purpose of forewarning one another
against the employment of certain designated workmen. The employer may
also attempt to end a strike by persuading non-union men to fill the
places vacated by the strikers. Such men as accept are known as
_strike-breakers_. On the plea that the strike may result in the
destruction of his property, the employer may resort to the
_injunction_. This is an order secured from a court, and restraining
certain laborers in the employer's interest.
188. THE COST OF INDUSTRIAL WARFARE.--The struggles of labor against
capital constitute a species of warfare which involves the general
public. Regardless of whether a particular dispute ends in favor of
the laborers or the employer, every strike, lockout, or other
interference with industrial co÷peration lessens the amount of
consumable goods in existence. Thus aside from the fact that
industrial warfare encourages class antagonisms, it is an important
cause of the relative scarcity of goods, and the resulting tendency of
prices to rise. Often great injury results from a dispute which
originally was of small proportions. In 1902, for example, the
anthracite coal strike cost the country more than $100,000,000, though
the strike had been initiated because of a local dispute over
recognition of the union. In 1919, when we were suffering from a
general scarcity of goods, there occurred in this country more than
three thousand strikes, involving a loss of more than $2,000,000,000
in decreased production.
189. NECESSITY OF INDUSTRIAL PEACE.--Industrial warfare very often
results in the correction of abuses, but in many cases it seems to
bring little or no benefit to either labor or capital. In any case, it
is a costly method, and one which constitutes a menace to the peace of
the community. American democracy demands that in the settlement of
disputes between labor and capital, industrial warfare be replaced by
some method less costly, less violent, and more in harmony with the
principles of justice and civilized behavior. Responsibility for the
present extent of industrial warfare cannot definitely be placed upon
either capital or labor, but at least both sides should be obliged to
recognize that the public is a third party to every industrial
dispute. We should insist upon fair play for both capital and labor,
but we should likewise insist that the interests of the public be
safeguarded.
190. SOME METHODS OF INDUSTRIAL PEACE.--As has already been pointed
out, profit sharing is not of great importance in lessening industrial
unrest. Various systems of bonuses and pensions have temporarily
improved the position of some groups of workmen, but experience has
proven both bonuses and pensions to be limited in scope. Employers are
often unwilling to adopt such devices as these, while the laborers
frequently regard them as paternalistic measures which at best are a
poor substitute for the higher wages to which they consider themselves
entitled. Existing evils are often lessened by welfare work, which
includes such measures as the establishment of schools, libraries, and
playgrounds for the laborers. But in many cases welfare work is
initiated by the employer for the purpose of diverting the attention
of the workmen from their fundamental grievances, and for this reason
it is often opposed by the workmen. All of the measures enumerated in
this section are of more or less value, but as methods of combating
industrial warfare, they have proved to be palliative, rather than
remedial or preventive.
191. THE TRADE AGREEMENT.--In some industries there is a growing
tendency for employers not only to recognize the union, but also to
make a collective contract, or trade agreement, with the unionized
workmen. The trade agreement may lead to the formation of councils in
which representatives of both workmen and employer attempt to reach a
friendly agreement upon disputed matters. The trade agreement has been
particularly successful in many industries in England. In this country
it is best known in the soft coal mining industry in eastern United
States, and in the needle trades of New York City. On the whole, the
trade agreement has not been markedly successful in the United States.
Although it smoothes out minor differences, the unions still prefer to
back their more important demands by use of the strike.
192. VOLUNTARY ARBITRATION.--Since 1898 the several states have been
giving an increasing amount of attention to the creation of boards of
industrial conciliation, mediation, and arbitration. [Footnote: The
words conciliation, mediation, and arbitration are variously used, but
the following distinction may be of use. Mediation is an attempt to
get the disputants to come together for the purpose of discussing
their grievances. Conciliation is aid extended to the disputants in
the actual settlement of the dispute. Arbitration implies that a third
party settles the dispute and renders a decision.] Most states now
have some provision for a board whose duty it is to attempt to
eliminate industrial warfare. The powers and duties of these boards
vary from state to state. In some states the board may investigate
labor disputes on its own initiative, but it is not obliged to make an
investigation. In other states the investigation of industrial
disputes is compulsory.
Boards of the type discussed in this section have no power to _compel_
the disputants to arbitrate their troubles, though they may _persuade_
the parties involved to resort to arbitration. When the disputants
agree to allow the state board to arbitrate the dispute, and when also
they previously promise to abide by the decision of the board, the
award of the state board is binding upon both sides. When the parties
to the dispute have not previously agreed to abide by the award, the
board cannot force an acceptance of its decision, but can only rely
upon public sentiment to help effect a just settlement.
193. COMPULSORY ARBITRATION IN NEW ZEALAND AND AUSTRALIA.--The
frequent refusal of labor and capital willingly to submit their
differences to arbitration has led to the development of the principle
of compulsory arbitration.
In New Zealand, compulsory arbitration was adopted as early as 1894.
In that country the arbitrating body is known as the court of
arbitration, the decisions of which are absolute and binding. At the
discretion of the court, the awards handed down may be extended to
embrace other employees or employers in the same trade, or in the same
locality, or in the whole country. Violations of the award, either by
labor or by capital, are punishable by heavy fines. An even more
drastic form of compulsory arbitration has been adopted in Australia.
Due to the influence of many complicating factors, the status of
compulsory arbitration in these two countries is uncertain. Many
students of the question maintain that this form of arbitration has
materially reduced industrial warfare; on the other hand, other
authorities declare that compulsory arbitration in New Zealand and
Australia has not markedly improved industrial relations.
194. COMPULSORY ARBITRATION IN THE UNITED STATES.--Although the
principle of compulsory arbitration has been familiar to American
students of labor problems for more than a quarter of a century, there
is as yet very little sentiment in favor of its application to
industrial disputes in this country. The explanation of this is not
far to seek. Individualism is so strong in the United States that
compulsory arbitration is regarded by many Americans as an unwarranted
interference in private business. It is still generally true that both
labor and capital prefer to settle their disputes in open struggle.
Equally important, perhaps, is the feeling that compulsory arbitration
laws would nullify the constitutional guarantee that no citizen shall
be deprived of life, liberty, or property without due process of law.
[Footnote: For an explanation of this point, see Chapter XIX, Section
214.]
However, a definite step toward compulsory arbitration was taken when
in 1920 the State of Kansas established a Court of Industrial
Relations "for the purpose of preserving the public peace, protecting
the public health, preventing industrial strife, disorder, and waste,
and securing regular and orderly conduct of the businesses directly
affecting the living conditions of the people." The law of 1920
declared illegal the suspension of work in those industries which are
designated as essential and necessary to the community life.
Industrial disputes arising in such industries are subject to
compulsory arbitration by the court. The merits of this court are
still being debated. Some authorities declare that the court has
already demonstrated its value, but other observers claim that so far
this tribunal has not operated to reduce labor troubles in Kansas.
195. STATUS OF THE DEMANDS OF LABOR.--For a number of years the
attitude of labor has been clearly aggressive, while the attitude of
capital has tended to be one of resistance. In view of this fact, the
simplest way of considering the merits of the industrial situation is
to examine the demands of labor. The justice of these demands cannot
be gone into here, but a few words of general application may be
helpful.
The proper determination of wages depends, of course, upon the
particular circumstances. No general rule can be laid down, except the
very obvious one that wages cannot permanently go so high as to wipe
out profits in an industry, nor yet so low as to render it impossible
for the workmen to secure a decent living.
The steady improvement of living and working conditions is desirable,
and is a challenge to any progressive society.
Shorter work hours are desirable, wherever the cutting down of the
working day does not too greatly hamper production. Many economists
feel that an eight-hour day will prove a social gain only if
introduced gradually. They believe that it should be introduced in
proportion as the industrial productivity of the country increases to
compensate for the shortening of the working day.
Opposition to the introduction of labor-saving machinery is both
useless and short-sighted. The officials of most unions now advise
workmen not to oppose the adoption of machinery, but rather to fit
themselves to operate the machines.
The question of a closed shop or an open shop is largely a matter of
opinion. The problem will probably continue to be disputed for a long
time to come. Many students of labor conditions feel that the closed
shop is justifiable only when accompanied by the open union. By an
open union is meant a union into which all laborers competent to do
the work are admitted freely. Where the open union principle is
adopted, Professor Taussig points out, the closed shop is no longer a
monopolistic device to shut out competition and raise wages for a
small group. It becomes, instead, a means of promoting mutual aid and
collective bargaining.
Many employers still refuse to recognize the principle of collective
bargaining, but from the social point of view collective bargaining is
desirable. In many cases it so strengthens the position of the
laborers that they are able to compete with the employer more nearly
on terms of equality. Under such conditions competition in the labor
market is in a healthy state. The difficulty is, of course, that some
unions may take advantage of their strengthened position to enforce
unduly severe conditions upon the employer.
196. THE OUTLOOK.--Although it is probable that industrial
disagreements will long endure, we have a right to expect that
continued progress will be made in settling these disputes peaceably.
By many it is believed that compulsory arbitration is the most
effective method of securing industrial peace, but for reasons already
given, the extension of this form of arbitration will probably be slow
in this country. English experience would indicate that we have not
yet exhausted the possibilities of the trade agreement, but though
this device is becoming better known in the United States, both the
American laborer and the American employer are still disposed to
settle their differences by means of the strike, the lockout, and
similar weapons.
The present century is an age of industrial stress and change, and it
is possible that the ultimate solution of the disputes between labor
and capital has not yet been advanced. From the data now at hand,
however, it is maintained by many that labor disputes must ultimately
be eradicated through the development of industrial democracy.
Industrial democracy implies the joint direction of industrial
policies by employer and employees, working together harmoniously and
in the spirit of equality. When industrial democracy is attained,
according to this view, mutual trust and the spirit of friendly
co÷peration will enable labor and capital to adjust their differences
peaceably and economically, without dictation from any outside source.
QUESTIONS ON THE TEXT
1. Why are we accustomed to speak of labor and capital as the two
chief factors in production?
2. Why have labor organizations arisen?