III
The task before us, therefore, is the deliverance of life from the ascendency of the economic motive; and at bottom this means the redemption of commerce from the obsession of profit-making. In other words, commerce must be conceived and conducted as a social service. It is true that in the early days of modern commercialism, the principle of competition was regarded as the heaven-sent panacea for human ills. Men became dithyrambic about laissez-faire, and though they perforce admitted that the growth of the commercial system had caused certain glaring evils, yet they maintained that these were no more than the inevitable accidents of a process of readjustment. Let the system only work out its inherent logic to the end, and there will be a golden age for everybody. The system has had a fair trial; and so far from achieving the results confidently predicted by its advocates, it has failed hopelessly to provide even a tolerably secure and sufficient subsistence for the great mass of men. It is indeed difficult to see how it could be otherwise or how those who uphold it could have expected a different result. There is no doubt that the system has stimulated the production of wealth; and this its protagonists accurately foresaw; but they apparently supposed that the distribution of wealth would look after itself. It had indeed done so, in a fashion which has deprived the mass of toilers of that security of physical subsistence which is a necessary condition of liberty and of the liberation of the spiritual impulses. So far from adequately fulfilling the elementary services of providing men with a steady and reasonable supply of the necessities of life, it has made life itself insecure and precarious.
How this situation has come about may be stated summarily in a few words: (a) The pursuit of profit tends to lower the cost of production, while it raises the price of the product. Chief among the costs of production is the payment of labour,—that is to say, wages. The result of this tendency is to depress the income of the worker and at the same time to raise his expenditure and since there is no limit fixed at either end the standard of life is in constant danger of being lowered beneath the point of reasonable subsistence. It often happens that wages show an increase over given periods of time; but it is an increase of money-wages and not of real wages; since the period of wage-increase is generally also a period of a disproportionate increase in the price of commodities. Some check has been placed upon the decrease of wages by Trade Union action; but this is offset by the partial elimination of competition in the markets through the growth of Trusts and Combines, and the consequent upward tendency of prices.
(b) This insecurity is accentuated by the fact that the maintenance of profits frequently require a check upon productivity in order to tighten the market by reducing the supply of commodities. It is estimated that in America this interference with production has kept productivity down anywhere between twenty-five and fifty per cent. below its possible maximum. This obstruction is effected by such devices as the diminution of working hours, dismissal of workmen, and periodic stoppages of work.
(c) A further element of insecurity is to be found in the circumstance that labour is itself treated as a commodity, subject to market fluctuations, its price governed by the relation of supply to demand, like any other commodity. In order to prevent an undue rise in the price of labour, the industrial system has evolved a reserve of labour, commonly called unemployment. In normal times, there is in every trade a chronic margin—varying in amount—of unemployed men; and no man knows when his turn may come to fall into the reserve. It naturally happens that the less efficient man goes first—the man least equipped to face the demoralising effects of unemployment. The result is that he degenerates into an unemployable and swells the volume of the human driftwood of our social order.
(d) Insecurity arises also from the unquestioned and unchallenged authority of the owners or representatives of the invested capital, against whose verdicts there is no appeal. The worker is at the absolute mercy of the master or the foreman; and he can usually find work only at the sacrifice of his freedom. Should he display any signs of restiveness and be dismissed, the growth of Trusts and Employers’ Associations has made it possible to deny him employment within the area over which such bodies exercise control.
This takes no account of the dehumanising and despiritualising effects of the machine industry under the conditions of the profit system. That is an aggravation of the situation which must be considered in another connection. Here we are concerned to note the failure of commerce under a profit system to provide the conditions of security of life for the mass of men. And not the least disastrous consequence of this failure is the deep social schism it has engendered. It has created the criminal antithesis of great wealth and great poverty in great cities, and the virtually open warfare between capital and labour. The investor and the employer are bent on larger dividends upon the outlay of capital; the worker is seeking a larger return upon his outlay of labour. In the struggle the worker is at a disadvantage. For while capital and labour, the producers, are fighting, the casualties of the struggle are chiefly among the consumers. But the consumers are mostly composed of the labourer and the tenement-dweller, that is to say, the working-class itself. So that the worker in the struggle is divided against himself. If he is successful in his struggle for higher wages, the advantage is lost through the increased price of commodities; for the employer pays the higher wages out of higher prices. In the issue, the worker is caught in the vicious circle of a continuous struggle against himself, which to dependence and insecurity adds an unending confusion.
No question is here raised as to the legitimacy of profit; we are concerned only to point out the consequences of a system which permits an unlimited expansion of profits; and it should be clear that the redemption of commerce and its restoration to the status of the social service it should be, are to be wrought first by imposing a limit upon profit-making.
This requires two measures:
First, the production and distribution of the necessities of life should be definitely placed outside the sphere of competition. The British Labour Party in its memorandum on reconstruction, proposes that the coal-supply shall be so organised that the ordinary householder shall be able to have his coal delivered at his door, at a uniform price all over the country and all through the year—just as he buys postage stamps. But the principle should be extended to all the essential commodities. Flour, milk, coal, meat, wool, cotton and their immediate derivatives should be withdrawn from the circle of competitive commerce, and be no more subject to the fluctuations of a market manipulated in the interest of profit-making than the water-supply is. There is no reason why the supply of these primary articles should not be so regulated as to bear a reasonably constant proportion to the demand. For those who argue that this would dislocate the customary economic processes, a two-fold answer may be returned. First, that the customary economic processes deserve to be dislocated; and second, that the only possible justification of the customary economic processes is derived from an economic theory which is no longer relevant to the facts of life. In point of actual fact, the standardisation of prices has become in recent years increasingly common—the elimination of competition by the formation of trusts and combines has had the result of fixing prices with a considerable rigidity; and during the war, it has been done on a very large scale. In neither case is it suggested by any one that it has had a deleterious effect upon commerce. In this proposal for the standardisation of prices, there is nothing new; it is simply a revival of the mediæval custom of the justum pretium—according to which buyers and sellers and market authorities together determined a price for each commodity which should be equally fair to the producer and the consumer; and a return to this practice—with such modifications as modern conditions require—is opposed only by those who still hold to the curious illusion that Adam Smith spoke the last word upon this subject.[[14]]
[14]. Revelations of after-war profiteering in Great Britain and America are creating a definite demand for standardisation of prices. And if we are to have Wages Boards, why not Prices Boards?
Second: A limit should be placed upon profits, dividends, incomes and fortunes. This may be done by taxation, inheritance duties and other devices already familiar to the managers of public finance. We should agree to make it cease to be worth anyone’s while to exploit the public, by fixing rigid bounds to the accumulation of private wealth; and this we may do with a good conscience. For all wealth is socially produced; and the society which produces it has the first claim upon it. This is a position which can be challenged only by those who still hold that the possession of property confers upon its possessors a “divine right” to take the lion’s share of the wealth produced by the industry of the whole community.
It will be maintained that measures of this kind will take away the incentive to industry and commercial progress. But it may be pointed out in reply that the economic end of British life so far from being disastrously undermined by wholesale interference with economic laws during the war, seems to have been in a rather healthier condition than it had ever known previously. Profits were limited; prices were standardised; the old competitive basis was largely suspended. Virtually all those incentives of self-regard and gain which we have been told were essential to economic development were put out of business. Yet production reached an unprecedented point, both in quality and in amount. Another incentive was indeed operative; but this incentive was not of the personal kind. The peril of the nation in the great hazard of war evoked a social solidarity which proved a more powerful incentive to industry than the self-regarding instincts ever provided. This is our sufficient answer to those who still hold to the cynical superstition that the only motives on which we can rely in dealing with human nature are those of selfishness. What is needed to stimulate effort and devotion is the sense of direct participation in a great social task; and there is no reason to suppose that the systematic education of a couple of generations may not make this same social idealism the normal driving force of national effort. It is no doubt true that, as things are, only such a challenge to patriotic feeling as war brings, could achieve such a result; but it is our business to discover the stimuli which will make this same intensity of devotion a permanent fact.
But, it may be said, the economic conditions of wartime are abnormal, and economic “laws” must be disregarded in the stress of national crisis. This is, of course, partly true and partly untrue. So far as production is concerned, the only change that war requires is greater speed and greater volume; the difference is one of degree and not at all of kind. It is only in the region of finance that war-time conditions work havoc with economic “laws”; and the experience of war-time has taught us the useful lesson that these “laws” have no permanent character. They are on the contrary contingent and derivative affairs, being no more than general statements concerning economic tendencies which are set afoot and sustained by the ways in which men habitually act. If men could be induced to act differently, then we should require to formulate a new set of “laws.” The greatest revelation of the war in many respects is the tremendous achievement of industrial production in Great Britain under the influence of a social emotion, and without any of the common incentives of personal advantage. It may be conceded that this social emotion was to some extent stimulated by a group antagonism, but in the main it was the love of and the desire to preserve—in spite of its faults—that particular social synthesis described as British that lay behind this great performance. And once more let it be repeated that the peril of war is not the only organ of social vision.
It is not pretended that commerce will be redeemed automatically by placing a limitation upon the profit-motive; but without such a limitation, it cannot be redeemed at all. It must enter into our scheme to provide means of kindling the social vision which will transform commerce into a social service; and this implies certain changes of temper and method in the system of education. There is no reason why we should not come to regard the business of feeding and clothing the people as much a department of the public service as that of educating or that of providing them with water or the time of day, or of transmitting their correspondence; and there is no reason for supposing that a right education will not provide in time as effectual a spur to patriotism as the peril of war.