Section 122.

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?

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