Civilization in the United States: An inquiry by thirty Americans

by Unknown

III

In the wake of the new industrialism there has come an economic opinion of protest. It is being gradually formulated by professional men, by farmers, by trade unionists, and by the younger business men who have escaped being “self-made.” Its hesitating and confused statement is due to the disturbed conditions out of which it comes. The varied interests of its many authors prevents unity of words or of principles. Its origin in the contact of minds steeped in the older individualism with the arresting facts of the newer economic order explains its current inarticulate expression. It can be set forth briefly only by subordinating the reality of variety to the tendencies which are clearly inherent within it.

The objective of this newer opinion is a modification of the prevailing order, rather than its overthrow. It is quite conscious of defects in its arrangements and knows that its fruits are not all good. It has never considered the question of the efficiency or inefficiency of the system as a whole. The older individualistic notions are strong enough to give an intuitive belief that the theory of the control of industry by business for profit is essentially sound. But it would eliminate the bad, patch up the indifferent, and retain the good. It would set up in the government an external authority which through regulation and repression would make business interests serve the community. Its faith is in private enterprise compelled by the State to promote “public welfare.” Its detail can best be suggested by typical illustrations.

There is, first of all, the attitude of the protestants towards freedom of contract. They accept the prevailing theory that the relations of buyer and seller, employer and employé, owner and agent, can safely be left to the free choice of all concerned. But they point out that in practice the principle does not give its assumed results. For, whereas the theory assumes the parties to be equal in their power to determine the terms of the contract, it is a matter of common knowledge that employers and labourers occupy unequal bargaining positions. They would leave relations to be determined by free bargaining; but, as a preliminary, they would attempt to establish equality of bargaining power. To that end they would have the contract made by “collective bargaining” between employers and employés “through representatives” chosen by each. Moreover, they would use the State to better the position of the weaker party. Thus legislation has been passed depriving employers of their right of requiring employés, as a condition of employment, not to remain members of labour unions. Although the courts have found such legislation to be “an arbitrary interference with the liberty of contract which no government can justify in a free land,” its advocates will insist that their aim has been only “to establish that equality in position between the parties in which liberty of contract begins.”

There is, in the next place, a growing opinion among the protestants that the State is “a moral agent” and should determine the rules under which business is to be carried on. They point out that in business there are bad as well as good conditions, that business men engage in proper as well as in improper practices, and that some activities harm while others help the community. In many instances the employer finds it to his advantage to establish conditions which the interests of the workers and of the consumers require. In others, the elevation of standards waits upon the pleasure of the most inconsiderate employer. The prohibition of child labour, the shortening of the working day, and the payment of a minimum wage may be advantageous alike to labourers and to the community; yet these innovations involve an increase in cost and cannot be made against the competition of the producer who will not establish them. In such cases it is the duty of the State to establish minimum conditions which must be met by all employers. The imposition of such standards in no way affects the system under which business is carried on; for the competition of rival sellers can be just as acute and just as considerate of the public, if all of them are forced to pay their employés a living wage, as if they are all free to force wages down to starvation. Upon this theory the State has established uniform weights and measures, prohibited the use of deleterious chemicals, stopped the sale of impure food, provided compensation for the human wear and tear of industry, and established minimum standards of safety, health, and service.

There is, finally, a growing opinion that in some industries the profit-making motive must be superseded by some other. In the railway industry it has been repeatedly shown that the pecuniary interest of the management fails to coincide with that of either the owners or of the shippers. Long ago the determination of charges for service was put beyond the discretion of the officials. Of late there has been an increasing tendency to make accounts, services, expenditures, valuations, and other matters meet standards of public service. When this has been effected, as it will be, the officials of the roads will become mere subordinates responsible to a public authority. Then profit-making as a guide to administration will have given way to an official judgment of results in terms of established standards. Then it will be discovered that public control formally rejected has been achieved by indirection. But many times ere this American opinion has come by devious paths to goals which its individualism has not allowed it to regard as quite desirable.

For the moment the medley of opinion here roughly characterized as a demand for control is dominant. Its proponents are almost as naïve as the advocates of capitalism in a belief in the essential goodness of a mythical system of “free enterprise.” They differ from them in placing greater emphasis upon voluntary associations and in demanding that the State from without compel business to serve the common good. As yet they have formulated no consistent theory of economics and no articulate programme for achieving their ends. Without a clear understanding of the development of industry and of the structure of the economic order, they are content to face specific problems when they meet them. They are far from ready to surrender an inherited belief in an individualistic theory of the common good.