READ STUDY GUIDE: Chapters 15-22
We had made an appointment to meet the ladies at the dining-hall for dinner, after which, having some engagement, they left us sitting at table there, discussing our wine and cigars with a multitude of other matters.
"Doctor," said I, in the course of our talk, "morally speaking, your social system is one which I should be insensate not to admire in comparison with any previously in vogue in the world, and especially with that of my own most unhappy century. If I were to fall into a mesmeric sleep tonight as lasting as that other and meanwhile the course of time were to take a turn backward instead of forward, and I were to wake up again in the nineteenth century, when I had told my friends what I had seen, they would every one admit that your world was a paradise of order, equity, and felicity. But they were a very practical people, my contemporaries, and after expressing their admiration for the moral beauty and material splendor of the system, they would presently begin to cipher and ask how you got the money to make everybody so happy; for certainly, to support the whole nation at a rate of comfort, and even luxury, such as I see around me, must involve vastly greater wealth than the nation produced in my day. Now, while I could explain to them pretty nearly everything else of the main features of your system, I should quite fail to answer this question, and failing there, they would tell me, for they were very close cipherers, that I had been dreaming; nor would they ever believe anything else. In my day, I know that the total annual product of the nation, although it might have been divided with absolute equality, would not have come to more than three or four hundred dollars per head, not very much more than enough to supply the necessities of life with few or any of its comforts. How is it that you have so much more?"
"That is a very pertinent question, Mr. West," replied Dr. Leete, "and I should not blame your friends, in the case you supposed, if they declared your story all moonshine, failing a satisfactory reply to it. It is a question which I cannot answer exhaustively at any one sitting, and as for the exact statistics to bear out my general statements, I shall have to refer you for them to books in my library, but it would certainly be a pity to leave you to be put to confusion by your old acquaintances, in case of the contingency you speak of, for lack of a few suggestions.
"Let us begin with a number of small items wherein we economize wealth as compared with you. We have no national, state, county, or municipal debts, or payments on their account. We have no sort of military or naval expenditures for men or materials, no army, navy, or militia. We have no revenue service, no swarm of tax assessors and collectors. As regards our judiciary, police, sheriffs, and jailers, the force which Massachusetts alone kept on foot in your day far more than suffices for the nation now. We have no criminal class preying upon the wealth of society as you had. The number of persons, more or less absolutely lost to the working force through physical disability, of the lame, sick, and debilitated, which constituted such a burden on the able-bodied in your day, now that all live under conditions of health and comfort, has shrunk to scarcely perceptible proportions, and with every generation is becoming more completely eliminated.
"Another item wherein we save is the disuse of money and the thousand occupations connected with financial operations of all sorts, whereby an army of men was formerly taken away from useful employments. Also consider that the waste of the very rich in your day on inordinate personal luxury has ceased, though, indeed, this item might easily be over-estimated. Again, consider that there are no idlers now, rich or poor—no drones.
"A very important cause of former poverty was the vast waste of labor and materials which resulted from domestic washing and cooking, and the performing separately of innumerable other tasks to which we apply the cooperative plan.
"A larger economy than any of these—yes, of all together—is effected by the organization of our distributing system, by which the work done once by the merchants, traders, storekeepers, with their various grades of jobbers, wholesalers, retailers, agents, commercial travelers, and middlemen of all sorts, with an excessive waste of energy in needless transportation and interminable handlings, is performed by one tenth the number of hands and an unnecessary turn of not one wheel. Something of what our distributing system is like you know. Our statisticians calculate that one eightieth part of our workers suffices for all the processes of distribution which in your day required one eighth of the population, so much being withdrawn from the force engaged in productive labor."
"I begin to see," I said, "where you get your greater wealth."
"I beg your pardon," replied Dr. Leete, "but you scarcely do as yet. The economies I have mentioned thus far, in the aggregate, considering the labor they would save directly and indirectly through saving of material, might possibly be equivalent to the addition to your annual production of wealth of one half its former total. These items are, however, scarcely worth mentioning in comparison with other prodigious wastes, now saved, which resulted inevitably from leaving the industries of the nation to private enterprise. However great the economies your contemporaries might have devised in the consumption of products, and however marvelous the progress of mechanical invention, they could never have raised themselves out of the slough of poverty so long as they held to that system.
"No mode more wasteful for utilizing human energy could be devised, and for the credit of the human intellect it should be remembered that the system never was devised, but was merely a survival from the rude ages when the lack of social organization made any sort of cooperation impossible."
"I will readily admit," I said, "that our industrial system was ethically very bad, but as a mere wealth-making machine, apart from moral aspects, it seemed to us admirable."
"As I said," responded the doctor, "the subject is too large to discuss at length now, but if you are really interested to know the main criticisms which we moderns make on your industrial system as compared with our own, I can touch briefly on some of them.
"The wastes which resulted from leaving the conduct of industry to irresponsible individuals, wholly without mutual understanding or concert, were mainly four: first, the waste by mistaken undertakings; second, the waste from the competition and mutual hostility of those engaged in industry; third, the waste by periodical gluts and crises, with the consequent interruptions of industry; fourth, the waste from idle capital and labor, at all times. Any one of these four great leaks, were all the others stopped, would suffice to make the difference between wealth and poverty on the part of a nation.
"Take the waste by mistaken undertakings, to begin with. In your day the production and distribution of commodities being without concert or organization, there was no means of knowing just what demand there was for any class of products, or what was the rate of supply. Therefore, any enterprise by a private capitalist was always a doubtful experiment. The projector having no general view of the field of industry and consumption, such as our government has, could never be sure either what the people wanted, or what arrangements other capitalists were making to supply them. In view of this, we are not surprised to learn that the chances were considered several to one in favor of the failure of any given business enterprise, and that it was common for persons who at last succeeded in making a hit to have failed repeatedly. If a shoemaker, for every pair of shoes he succeeded in completing, spoiled the leather of four or five pair, besides losing the time spent on them, he would stand about the same chance of getting rich as your contemporaries did with their system of private enterprise, and its average of four or five failures to one success.
"The next of the great wastes was that from competition. The field of industry was a battlefield as wide as the world, in which the workers wasted, in assailing one another, energies which, if expended in concerted effort, as to-day, would have enriched all. As for mercy or quarter in this warfare, there was absolutely no suggestion of it. To deliberately enter a field of business and destroy the enterprises of those who had occupied it previously, in order to plant one's own enterprise on their ruins, was an achievement which never failed to command popular admiration. Nor is there any stretch of fancy in comparing this sort of struggle with actual warfare, so far as concerns the mental agony and physical suffering which attended the struggle, and the misery which overwhelmed the defeated and those dependent on them. Now nothing about your age is, at first sight, more astounding to a man of modern times than the fact that men engaged in the same industry, instead of fraternizing as comrades and co-laborers to a common end, should have regarded each other as rivals and enemies to be throttled and overthrown. This certainly seems like sheer madness, a scene from bedlam. But more closely regarded, it is seen to be no such thing. Your contemporaries, with their mutual throat-cutting, knew very well what they were at. The producers of the nineteenth century were not, like ours, working together for the maintenance of the community, but each solely for his own maintenance at the expense of the community. If, in working to this end, he at the same time increased the aggregate wealth, that was merely incidental. It was just as feasible and as common to increase one's private hoard by practices injurious to the general welfare. One's worst enemies were necessarily those of his own trade, for, under your plan of making private profit the motive of production, a scarcity of the article he produced was what each particular producer desired. It was for his interest that no more of it should be produced than he himself could produce. To secure this consummation as far as circumstances permitted, by killing off and discouraging those engaged in his line of industry, was his constant effort. When he had killed off all he could, his policy was to combine with those he could not kill, and convert their mutual warfare into a warfare upon the public at large by cornering the market, as I believe you used to call it, and putting up prices to the highest point people would stand before going without the goods. The day dream of the nineteenth century producer was to gain absolute control of the supply of some necessity of life, so that he might keep the public at the verge of starvation, and always command famine prices for what he supplied. This, Mr. West, is what was called in the nineteenth century a system of production. I will leave it to you if it does not seem, in some of its aspects, a great deal more like a system for preventing production. Some time when we have plenty of leisure I am going to ask you to sit down with me and try to make me comprehend, as I never yet could, though I have studied the matter a great deal how such shrewd fellows as your contemporaries appear to have been in many respects ever came to entrust the business of providing for the community to a class whose interest it was to starve it. I assure you that the wonder with us is, not that the world did not get rich under such a system, but that it did not perish outright from want. This wonder increases as we go on to consider some of the other prodigious wastes that characterized it.
"Apart from the waste of labor and capital by misdirected industry, and that from the constant bloodletting of your industrial warfare, your system was liable to periodical convulsions, overwhelming alike the wise and unwise, the successful cut-throat as well as his victim. I refer to the business crises at intervals of five to ten years, which wrecked the industries of the nation, prostrating all weak enterprises and crippling the strongest, and were followed by long periods, often of many years, of so-called dull times, during which the capitalists slowly regathered their dissipated strength while the laboring classes starved and rioted. Then would ensue another brief season of prosperity, followed in turn by another crisis and the ensuing years of exhaustion. As commerce developed, making the nations mutually dependent, these crises became world-wide, while the obstinacy of the ensuing state of collapse increased with the area affected by the convulsions, and the consequent lack of rallying centres. In proportion as the industries of the world multiplied and became complex, and the volume of capital involved was increased, these business cataclysms became more frequent, till, in the latter part of the nineteenth century, there were two years of bad times to one of good, and the system of industry, never before so extended or so imposing, seemed in danger of collapsing by its own weight. After endless discussions, your economists appear by that time to have settled down to the despairing conclusion that there was no more possibility of preventing or controlling these crises than if they had been drouths or hurricanes. It only remained to endure them as necessary evils, and when they had passed over to build up again the shattered structure of industry, as dwellers in an earthquake country keep on rebuilding their cities on the same site.
"So far as considering the causes of the trouble inherent in their industrial system, your contemporaries were certainly correct. They were in its very basis, and must needs become more and more maleficent as the business fabric grew in size and complexity. One of these causes was the lack of any common control of the different industries, and the consequent impossibility of their orderly and coordinate development. It inevitably resulted from this lack that they were continually getting out of step with one another and out of relation with the demand.
"Of the latter there was no criterion such as organized distribution gives us, and the first notice that it had been exceeded in any group of industries was a crash of prices, bankruptcy of producers, stoppage of production, reduction of wages, or discharge of workmen. This process was constantly going on in many industries, even in what were called good times, but a crisis took place only when the industries affected were extensive. The markets then were glutted with goods, of which nobody wanted beyond a sufficiency at any price. The wages and profits of those making the glutted classes of goods being reduced or wholly stopped, their purchasing power as consumers of other classes of goods, of which there were no natural glut, was taken away, and, as a consequence, goods of which there was no natural glut became artificially glutted, till their prices also were broken down, and their makers thrown out of work and deprived of income. The crisis was by this time fairly under way, and nothing could check it till a nation's ransom had been wasted.
"A cause, also inherent in your system, which often produced and always terribly aggravated crises, was the machinery of money and credit. Money was essential when production was in many private hands, and buying and selling was necessary to secure what one wanted. It was, however, open to the obvious objection of substituting for food, clothing, and other things a merely conventional representative of them. The confusion of mind which this favored, between goods and their representative, led the way to the credit system and its prodigious illusions. Already accustomed to accept money for commodities, the people next accepted promises for money, and ceased to look at all behind the representative for the thing represented. Money was a sign of real commodities, but credit was but the sign of a sign. There was a natural limit to gold and silver, that is, money proper, but none to credit, and the result was that the volume of credit, that is, the promises of money, ceased to bear any ascertainable proportion to the money, still less to the commodities, actually in existence. Under such a system, frequent and periodical crises were necessitated by a law as absolute as that which brings to the ground a structure overhanging its centre of gravity. It was one of your fictions that the government and the banks authorized by it alone issued money; but everybody who gave a dollar's credit issued money to that extent, which was as good as any to swell the circulation till the next crises. The great extension of the credit system was a characteristic of the latter part of the nineteenth century, and accounts largely for the almost incessant business crises which marked that period. Perilous as credit was, you could not dispense with its use, for, lacking any national or other public organization of the capital of the country, it was the only means you had for concentrating and directing it upon industrial enterprises. It was in this way a most potent means for exaggerating the chief peril of the private enterprise system of industry by enabling particular industries to absorb disproportionate amounts of the disposable capital of the country, and thus prepare disaster. Business enterprises were always vastly in debt for advances of credit, both to one another and to the banks and capitalists, and the prompt withdrawal of this credit at the first sign of a crisis was generally the precipitating cause of it.
"It was the misfortune of your contemporaries that they had to cement their business fabric with a material which an accident might at any moment turn into an explosive. They were in the plight of a man building a house with dynamite for mortar, for credit can be compared with nothing else.
"If you would see how needless were these convulsions of business which I have been speaking of, and how entirely they resulted from leaving industry to private and unorganized management, just consider the working of our system. Overproduction in special lines, which was the great hobgoblin of your day, is impossible now, for by the connection between distribution and production supply is geared to demand like an engine to the governor which regulates its speed. Even suppose by an error of judgment an excessive production of some commodity. The consequent slackening or cessation of production in that line throws nobody out of employment. The suspended workers are at once found occupation in some other department of the vast workshop and lose only the time spent in changing, while, as for the glut, the business of the nation is large enough to carry any amount of product manufactured in excess of demand till the latter overtakes it. In such a case of over-production, as I have supposed, there is not with us, as with you, any complex machinery to get out of order and magnify a thousand times the original mistake. Of course, having not even money, we still less have credit. All estimates deal directly with the real things, the flour, iron, wood, wool, and labor, of which money and credit were for you the very misleading representatives. In our of cost there can be no mistakes. Out of the annual product the amount necessary for the support of the people is taken, and the requisite labor to produce the next year's consumption provided for. The residue of the material and labor represents what can be safely expended in improvements. If the crops are bad, the surplus for that year is less than usual, that is all. Except for slight occasional effects of such natural causes, there are no fluctuations of business; the material prosperity of the nation flows on uninterruptedly from generation to generation, like an ever broadening and deepening river.
"Your business crises, Mr. West," continued the doctor, "like either of the great wastes I mentioned before, were enough, alone, to have kept your noses to the grindstone forever; but I have still to speak of one other great cause of your poverty, and that was the idleness of a great part of your capital and labor. With us it is the business of the administration to keep in constant employment every ounce of available capital and labor in the country. In your day there was no general control of either capital or labor, and a large part of both failed to find employment. 'Capital,' you used to say, 'is naturally timid,' and it would certainly have been reckless if it had not been timid in an epoch when there was a large preponderance of probability that any particular business venture would end in failure. There was no time when, if security could have been guaranteed it, the amount of capital devoted to productive industry could not have been greatly increased. The proportion of it so employed underwent constant extraordinary fluctuations, according to the greater or less feeling of uncertainty as to the stability of the industrial situation, so that the output of the national industries greatly varied in different years. But for the same reason that the amount of capital employed at times of special insecurity was far less than at times of somewhat greater security, a very large proportion was never employed at all, because the hazard of business was always very great in the best of times.
"It should be also noted that the great amount of capital always seeking employment where tolerable safety could be insured terribly embittered the competition between capitalists when a promising opening presented itself. The idleness of capital, the result of its timidity, of course meant the idleness of labor in corresponding degree. Moreover, every change in the adjustments of business, every slightest alteration in the condition of commerce or manufactures, not to speak of the innumerable business failures that took place yearly, even in the best of times, were constantly throwing a multitude of men out of employment for periods of weeks or months, or even years. A great number of these seekers after employment were constantly traversing the country, becoming in time professional vagabonds, then criminals. 'Give us work!' was the cry of an army of the unemployed at nearly all seasons, and in seasons of dullness in business this army swelled to a host so vast and desperate as to threaten the stability of the government. Could there conceivably be a more conclusive demonstration of the imbecility of the system of private enterprise as a method for enriching a nation than the fact that, in an age of such general poverty and want of everything, capitalists had to throttle one another to find a safe chance to invest their capital and workmen rioted and burned because they could find no work to do?
"Now, Mr. West," continued Dr. Leete, "I want you to bear in mind that these points of which I have been speaking indicate only negatively the advantages of the national organization of industry by showing certain fatal defects and prodigious imbecilities of the systems of private enterprise which are not found in it. These alone, you must admit, would pretty well explain why the nation is so much richer than in your day. But the larger half of our advantage over you, the positive side of it, I have yet barely spoken of. Supposing the system of private enterprise in industry were without any of the great leaks I have mentioned; that there were no waste on account of misdirected effort growing out of mistakes as to the demand, and inability to command a general view of the industrial field. Suppose, also, there were no neutralizing and duplicating of effort from competition. Suppose, also, there were no waste from business panics and crises through bankruptcy and long interruptions of industry, and also none from the idleness of capital and labor. Supposing these evils, which are essential to the conduct of industry by capital in private hands, could all be miraculously prevented, and the system yet retained; even then the superiority of the results attained by the modern industrial system of national control would remain overwhelming.
"You used to have some pretty large textile manufacturing establishments, even in your day, although not comparable with ours. No doubt you have visited these great mills in your time, covering acres of ground, employing thousands of hands, and combining under one roof, under one control, the hundred distinct processes between, say, the cotton bale and the bale of glossy calicoes. You have admired the vast economy of labor as of mechanical force resulting from the perfect interworking with the rest of every wheel and every hand. No doubt you have reflected how much less the same force of workers employed in that factory would accomplish if they were scattered, each man working independently. Would you think it an exaggeration to say that the utmost product of those workers, working thus apart, however amicable their relations might be, was increased not merely by a percentage, but many fold, when their efforts were organized under one control? Well now, Mr. West, the organization of the industry of the nation under a single control, so that all its processes interlock, has multiplied the total product over the utmost that could be done under the former system, even leaving out of account the four great wastes mentioned, in the same proportion that the product of those millworkers was increased by cooperation. The effectiveness of the working force of a nation, under the myriad-headed leadership of private capital, even if the leaders were not mutual enemies, as compared with that which it attains under a single head, may be likened to the military efficiency of a mob, or a horde of barbarians with a thousand petty chiefs, as compared with that of a disciplined army under one general—such a fighting machine, for example, as the German army in the time of Von Moltke."
"After what you have told me," I said, "I do not so much wonder that the nation is richer now than then, but that you are not all Croesuses."
"Well," replied Dr. Leete, "we are pretty well off. The rate at which we live is as luxurious as we could wish. The rivalry of ostentation, which in your day led to extravagance in no way conducive to comfort, finds no place, of course, in a society of people absolutely equal in resources, and our ambition stops at the surroundings which minister to the enjoyment of life. We might, indeed, have much larger incomes, individually, if we chose so to use the surplus of our product, but we prefer to expend it upon public works and pleasures in which all share, upon public halls and buildings, art galleries, bridges, statuary, means of transit, and the conveniences of our cities, great musical and theatrical exhibitions, and in providing on a vast scale for the recreations of the people. You have not begun to see how we live yet, Mr. West. At home we have comfort, but the splendor of our life is, on its social side, that which we share with our fellows. When you know more of it you will see where the money goes, as you used to say, and I think you will agree that we do well so to expend it."
"I suppose," observed Dr. Leete, as we strolled homeward from the dining hall, "that no reflection would have cut the men of your wealth-worshiping century more keenly than the suggestion that they did not know how to make money. Nevertheless that is just the verdict history has passed on them. Their system of unorganized and antagonistic industries was as absurd economically as it was morally abominable. Selfishness was their only science, and in industrial production selfishness is suicide. Competition, which is the instinct of selfishness, is another word for dissipation of energy, while combination is the secret of efficient production; and not till the idea of increasing the individual hoard gives place to the idea of increasing the common stock can industrial combination be realized, and the acquisition of wealth really begin. Even if the principle of share and share alike for all men were not the only humane and rational basis for a society, we should still enforce it as economically expedient, seeing that until the disintegrating influence of self-seeking is suppressed no true concert of industry is possible."