Every historian today owes much to Karl Marx for his development of
the “Economic Interpretation of History.” Whatever that theory may
fail to explain, it certainly succeeds in explaining the nature and
growth of the Socialist movement. When the great attempt at real
political and economic democracy made by the French people in their
great Revolution had failed and left behind it as a legacy the memory
of the Terror and the wars of Napoleon, every nation in Europe felt the
reaction. Russia, Austria, Spain and non-industrial Europe generally
reacted towards simple absolutism, noble against peasant. But in the
countries within the boundary marked out by the industrial revolution,
the wealth created by the new machines placed the balance of economic
power in the hands of the commercial classes, and so forced the old
landed aristocracy to admit them to political power as well. In the
meanwhile the first shock of large scale production had widened the gap
between the industrial workers and the employing class. Independent
artisans were ruined or forced into factories, and in the wake of the
new industry there trailed a network of industrial oligarchies which
spread until they covered the civilized world. The already enfranchised
classes refused to use their power to moderate the harshness of the
competitive struggle, honestly believing that any interference with
“economic law” could work nothing but ruin and hardship in the end.
In view of the facts as they existed in the days of the _Communist
Manifesto_ it was practically inevitable that an economist in sympathy
with the economically powerless and politically disfranchised masses
should interpret history as did the Marxians. In an age of coal,
iron and steam (that potent trinity), of large scale production, of
capitalistic agriculture, of economic tyranny, of sharpening class
divergence and increasing poverty, it seemed that there was no way to
realize democracy but to wait until industry had been concentrated
into the hands of a few rich men, till the middle class and the free
peasantry had been reduced to the proletarian ranks, and till the ever
increasing misery of the workers taught them to combine and seize the
means of production and distribution by a single revolutionary stroke.
Private property could have appeared only as a tool for robbing the
workers of the “surplus value” of their labor, religion as an ingenious
means of sidetracking revolutionary activities, and patriotism as an
excuse for standing armies and protective tariffs. This was a tenable
explanation of the world--in 1848!
But the world has moved since the day of the _Manifesto_. Now manhood
suffrage is the rule and not the exception. The worst forms of factory
serfdom have been ended by legislative and economic changes. The
various reform parties of Europe and America and even the Conservatives
compete with each other for the workingman’s vote by programs of
social amelioration which steadily grow more ambitious every year.
Socialism itself has altered in a changing world. The “Revisionist” or
common-sense wing of the party has abandoned both the “surplus value”
metaphysics, and the prophecy, so happily falsified, of “increasing
misery” and “cumulative panics,” and has moderated the class war
dogma far enough to permit working hand in hand with the once hated
bourgeoisie for immediate reforms. Other Socialists still repeat
the old catchwords, but modify them by a process of “interpretation”
analogous to that which makes Liberal Christians content to repeat the
historic creeds. Of course some revolutionists have looked upon this
readjustment with misgivings, and, as a result, we have sporadic and
badly led revolts against party discipline, such as Syndicalism in
France, Larkinism in England and the I. W. W. in America.
The main citadel of Socialist theory still remains intact, however,
in the eyes of its defenders; and so the loss of unessential outposts
harms the party very little. If it is true that industry conducted in
large units is _always_ in the end more efficient than if undertaken
by many small units, sooner or later all the means of production and
distribution will be concentrated either in the hands of a closely-knit
class of industrial magnates or else in the hands of society as a
whole. The only choice then open will be between control by the few,
and control by the many: there will no longer be a choice between
individualism and collectivism. This must be, because individualism
always involves some measure of free competition, and under a system of
competition the less efficient competitor is forced into the background
by the more efficient. The one hope of saving both democracy and
private property, then, lies in the chance that centralization beyond a
certain point is not an economic gain.
The factors that undoubtedly do make for greater concentration are
numerous and important, but they are so well known that a brief mention
of a few of the more important will be sufficient here. The first
cause of monopoly is the fact that nature is also a monopolist. Many
valuable mineral deposits are found in quantity in a small area, and
hardly at all outside of it. Coal, iron, timber, water-power and a
ready access to market are not to be had everywhere. There are also
economies in the greater size of a plant, especially where, as in the
telegraph service or the railroad lines, there is an enormous initial
expense in any case, and profits increase directly with the amount of
business which can be done on the basis of a given amount of fixed
capital. Standardization of commodities, especially of commodities used
in production--such as machine parts, is an advantage to the consumer,
and hence to the largest producer. In the large factory, moreover, the
subdivision and specialization of labor can be carried farther--more
processes can be handled under one roof, and more patents can be
united into one machine. But the chief advantage of the great factory
is that it can afford great quantities of _power_ in place of using
hand labor. The reason why “handicraft revivals” have had such limited
success is that the most skilled of artisans, working by hand, cannot
produce in quantity as can the engineer with his machine. So long as
this difference exists, individual industry can only be a decorative
border to the main fabric of industrial life. The _type_ of power now
generally used gives an added advantage to concentration. “For steam
can only be generated in a fixed spot, and the motive power furnished
thereby can only be distributed over a small area.”[1]
These advantages are due to the _size_ of a unit of production. But
large industry is usually also rich industry (or it could not be very
large), and there are other advantages due to the _wealth_ of the
owners. The wealthy concern can buy goods cheaply in quantity, and,
if its demand is great enough, even exercise some control over the
production of needed raw materials. It can afford the best machinery,
the best labor, the best management. This advantage notoriously
applies, even to such organizations as churches and universities,
since the ablest pastors and professors are attracted by the largest
institutions. A great saving can also be made by such factors as
combining clerical forces, managers, salesmen and other employees of
several firms into one, thus reducing salary costs, and preventing
duplication of effort. Other advantages of the rich firm are
diminished advertising costs, the abolition of premiums, the reduced
need of borrowed capital and of extending credit to consumers, power
over prices, middlemen, carriers and competitors, the ability to adjust
supply to probable demand, and, as centralization approaches monopoly,
the power to reduce wages without fear of losing employees to other
firms. What then is left but to admit the contention of the Socialist
that Socialism has no alternative except the undesirable one of a new
feudalism differing from the old only in resting upon an industrial
rather than an agricultural basis?
The first objection I would make to the positing of this dilemma is
to the assumption that the farmer can be safely ignored. Socialists
admit that concentration is proceeding more slowly in agriculture
than in any other branch of production, but they say that as industry
develops, the movement toward the city which is so strong today will
become stronger than ever, until the manufacturing population will
outnumber the agricultural many times. But there is a balance in these
things. We must have food, and every person who leaves the country for
the city subtracts one from the number of food producers, and adds
a customer for other farmers to supply. Hence the growth of a large
population divorced from the land means a continually augmenting profit
for the agriculturist, and a growing inducement to go “back to the
land.” Agriculture must then remain a cardinal factor in our economic
life. To be sure, in the past the great estate has often triumphed
over the small farm, and the Socialists maintain that it will again.
If the causes which produced the “latifundia” of Rome, the feudal land
ownership of the middle ages, the sheep farms of sixteenth century
England, the capitalist farming of the early nineteenth century and the
cotton plantations and “bonanza” wheat farms of America, were operative
today, this contention would be right. But just the contrary is the
case. The vast estates of eastern Prussia,[2] heavily mortgaged and
hard pressed for labor, are being rapidly alienated by the landlords
themselves, who are encouraging the government they dominate to
establish a system of peasant proprietorships in their place. In
France the small holder is triumphant economically, and he controls
by his vote the political destinies of the Republic. In Australia
and New Zealand, the squatters’ sheep farms have receded before the
advance of selectors’ holdings, which in turn are being parcelled out
under “Closer Settlement Acts.” In Ireland most of the landlords have
already been bought out under the Wyndham act, and even in England,
where the custom of primogeniture has tended to keep estates together,
the Conservative or landlords’ party has promised to establish small
holdings by a policy of government purchase from the present owners.
If the Socialist theory as regards agriculture holds good anywhere, it
must be in America. But on turning to the census of 1910 what do we
find? Over 62 per cent. of our farms are worked by their owners, and
these include about 65 per cent. of the improved land, and more than
that of total area! In 1850 the average number of acres to a farm was
over 202; today it is 138.1. More significant yet, while the number
of owned and rented farms increased, the number of farms worked by
managers shows an absolute _decrease_ in the decade since 1900. This
was the type of farm that was going to supplant all others, according
to the Marxian prophecy. In the words of the census:[3] “That the
number of farms increased more rapidly than the acreage of land in
farms, is accounted for partly by the fact that in some sections of the
country considerable numbers of small truck, poultry and fruit farms
have been established, but still more by the fact that in the West
large numbers of farms of moderate size have been established where
great cattle ranches were formerly found. Then, too, in the Southern
states, the subdivision of many plantations into smaller tracts of land
operated by tenants--a process begun soon after the Civil War--has
continued, each of such tracts counting as a farm under the census
definition.”
It is further to be noted that the forces which have tended to bring
about the triumph of the state and the plantation, are of less and
less significance as we turn to the future, whereas the counter
forces which make for agricultural decentralization increase with the
progress of population, invention and popular education. Slave labor
was alike the cause of the Roman manor and the Mississippi plantation,
but the world will probably never see slavery extended again, for it
is at once too inhumane for modern sentiment, and too wasteful for
present-day scientific methods. On its economic side, the American
Civil War was a fight to the death between the small farm run by
free labor, and the slave plantation. So, virtually, is the present
conflict in Mexico. Certainly in the first case, and probably in the
second, victory belongs to the farm. Feudalism was partly a result
of the disorders caused by barbarian raids, which forced men to put
themselves and their holdings under the protection of some great lord,
and partly of the exhaustion of the precious metals, which made it
necessary for a king to pay his retainers in landed estates instead of
money. Neither factor has been operative for centuries, or probably
ever will be again. Nor is it probable that it will ever again pay to
turn good arable land into pasture, as happened in Tudor England: the
increasing density of population forbids it. Capitalistic farming in
the eighteenth and nineteenth centuries rested upon the costliness of
agricultural machinery, and the ignorance of the average farmer. Today
the advance of industry puts cheap machinery within the pocket-range
of the individual farmer, and scientific training is placed within
reach of all by agricultural schools and colleges, state and national
experiment stations, and the free distribution of information.
Knowledge is no longer a monopoly: the farmer is becoming an engineer
of intensive agriculture. What factors _are_ now effective? The chief
is the growth of population, the consequent increased value of land,
and therefore the need for conservation rather than exploitation of
its richness. Small diversified stock, fruit, poultry and dairy farms,
where every acre can be watched over and put to its best use, yield a
greater profit than where the land is covered with staple crops. The
agricultural laborer or “hired man” is another factor in the situation.
Few persons like to work for wages, some do not like agricultural
life, almost no one enjoys the combination. Hence the laborer in the
country will either buy a small holding of his own, if he can, or else
go to the city. Whole provinces in Germany east of the Elbe have been
depopulated just for that reason. No doubt the wholesaler has certain
advantages in marketing his goods, but such voluntary systems of
coöperative credit and sales as are so popular in western Germany and
Denmark, reduce this to a minimum.
Is agriculture a solitary exception to a general law of the indefinite
concentration of industry? In many cases, such as the telephone,
telegraph, cable (possibly _not_ wireless telegraphy), railroads,
steamship lines, certain kinds of mining, certain wholesale
physical and chemical processes, and the making of standardized
goods, no doubt concentration has advantages which do not tend to
diminish. Such industries will be either socialistically owned, or
quasi-socialistically controlled by the government. But this leaves
a wide range of trade and manufacture where other centralizing
factors operate, which are not permanent but temporary. If the
largest plant, even today, is the most efficient, why do separate
establishments increase in number so rapidly? In 1909[4] the number
of establishments in the continental United States were no less
than 268,491, representing an increase of 24.2 per cent. over the
number in 1904. But the most remarkable fact is that the number of
persons engaged in manufacture increased in the same period by only
23.6 per cent. and the number of wage workers, as distinguished from
owners and salaried persons, only by 21.0 per cent. Of course the
Socialist will reply that many different plants are really controlled
by single corporations, openly or secretly, according to the degree
of enforcement of “anti-trust” laws. This is perfectly true, but it
belongs to another aspect of the problem. What the census figures
indicate is that the maximum efficiency point of a _plant_ has not only
a definite limit, but may even decrease with the progress of industry.
The truth is that Socialism is a phenomenon of the age of coal burning,
the nineteenth century. Steam power is being more and more replaced
by electrical power, which, generated in one place, can be used over
an immense area. It is true that most electricity is still derived,
at some loss of efficiency but an immense gain in availability, from
the burning of coal or other fuel. But the coal beds are far from
inexhaustible, and sooner or later we must supplement our supply by the
“white coal” of the waterfalls. The Age of Electricity will usher in
a second great industrial revolution. By putting power in quantity at
the disposal of the independent artisan, it will for the first time in
history enable him to compete with the great factory. Our tiny remnant
of handicraftsmen may thus become a great army of artisan-engineers,
combining the skill and personal attention of the old-fashioned
master craftsman, with the technical training and machinery of modern
engineering. And if the supply of energy within the atom is ever tapped
to a sufficient degree, power will be as cheap as water, and the
greatest advantage of the large producer be wiped out forever.
These changes will make small production a possibility; there must
be other causes to make it the general rule of industry. As wealth
increases and the standard of living rises, quality in commodities will
come to be considered as well as quantity. If the small productive unit
cannot compete on even terms with the large in wholesale production,
it may more than do so in retail production for an exacting market.
“Finishing” industries, “assembling” industries and the like will
absorb an ever increasing proportion of the industrial population.
The future will have use for the expert, and only the expert; the
mere laborer will be eliminated by the advance of education and the
specialization of machinery. There will yet come a time when it will
pay the manufacturer better to keep “cheap labor” in opulent idleness
than to let its unskillful fingers touch the machines. Mere routine
duties in commerce can be left in large measure to calculating
and recording machinery. The great concerns will then run with a
small office force and a staff of engineers, and release a host of
supernumerary clerks and laborers for individual industry. The only
“proletariat” will be one of cogs and wires and dynamos.
There still remains the problem of distribution. Will the great
stores, banks and exchanges continue to control the economic life of
the nation? Will competition in buying and selling crush the small
producer, no matter how efficient his production? It must be admitted
that this is a possibility. The last moral I should wish anyone to
draw from this article is that “everything is bound to work out all
right” because of certain beneficent economic laws. Certainly it
will need all our statesmanship to realize the possibilities I have
sketched. All I contend is that they _are_ possibilities, that we are
not hopelessly driven to the alternative of aristocratic or democratic
collectivism, that the stars in their courses do not, as is so often
contended, fight against the small producer. But I see no cause for
despair in the matter of exchange and control. The small shop still
continues to exist beside the big store; the individual concern may
fail, but the type endures. Perhaps all middlemen, big and small,
will in the end disappear as the connection between producer and
consumer becomes more direct. Even the poorest classes of the future
will, I think, buy more goods to order than ready made. As to the
power of the big establishment over carriers and middlemen, these can
be controlled in part by law, as in the extirpation of the railway
rebate. The advantages of credit and capital on the side of the large
concerns, can be offset by coöperative credit and sales agencies, as
readily in manufacturing as in agriculture. By ensuring a high level
of competition unfair advantages can be eliminated, and the fight be
purely one of industrial efficiency, which is not always on the side of
the biggest battalions.
It is of the first importance to realize that each perceptible social
change involves many other perceptible changes, that, in Spencer’s
happy analogy, the social constitution is a web, no strand of which can
be moved without moving others. The changes we have tried to forecast
cannot come effectively before the subsidence of the wave of fierce
competition which was partly smoothed down by the trusts. In many
businesses, competition in drumming and advertising is still at the
point where it costs more to sell goods than to make them and hosts
of men accomplish only the neutralizing of each other’s efforts. The
rationalizing of competition and the growth of a coöperative spirit
would release men for other pursuits; and the growth of intelligence
in learning what is to be had and discriminating what is best, must
diminish the billions spent on advertising. These additions to
productive labor and capital must diminish the ills which have made
Socialism seem desirable as well as inevitable.
Suppose we do our best to realize these possibilities to the full.
Suppose a Socialist then revisits the earth two or three hundred years
from now. He may see in full operation what he has always declared
impossible, a democratic individualism. Instead of an impoverished and
disappearing farming class, he will find a populous countryside divided
into small homesteads, and run at a handsome profit by specialists in
intensive agriculture. Instead of a factory or mining proletariat,
hungry and rebellious, he will find great wholesale establishments
owned and run by a handful of engineers, turning out pulp, cloth, metal
and standard parts for machinery, turning the products over to millions
of independent artisan establishments supplied with cheap and plentiful
power, to be worked into countless articles of art and utility. He will
look to the processes of exchange to find great financial magnates
and railway barons on the one hand, and a horde of miserable clerks
and small shopkeepers in difficulties on the other. Instead, he
will discover a network of voluntary credit and sales associations,
information bureaus, individually owned freight automobiles (and
possibly airships); with perhaps a few regulated railway lines and
pneumatic delivery tubes, run by a prosperous association of experts.
He will look for the old-time “servant class,” and find that the
scientifically trained housewife, with a power plant in the cellar, can
run her own house, thank you, and consider it the most honorable of
professions. Seeing everything so effectively managed for the happiness
of the people, he will look to see in the government the universal
owner and employer of his dreams, but he will find instead a clearing
house of help and information, which puts its knowledge of efficient
management, of technical processes, of economic and sociological
conditions, at everyone’s disposal, and comes to the rescue in the
rare case of poverty, failure or crime. Will he rejoice that the world
is happy, or be sorry that it is not happy his way? If I know the
Socialist, he will claim that he was right all along, and that this
state of society is really Socialism. Let him claim the word; I call
it democratic individualism, because it means the greatest possible
_distribution_ of economic power and function consistent with efficient
production.