(2) Cooperation in production involves democratic management of a business as well as a more radical sharing of its profits. The workers themselves contribute the capital, elect the managers, and divide the profits. By their votes they can determine hours of work, and arrange conditions to suit themselves, so far as their capital allows. Cooperation-when fully carried out-is socialism on a small scale introduced into the midst of a capitalistic regime. Its defects are, first, that it is difficult while that regime lasts to find capital enough-since those who have capital to invest usually prefer to manage the business themselves or to entrust their money to a business conducted on ordinary lines; secondly, that failure means the loss of the hard-earned savings of workingmen; thirdly, that it is difficult to retain skillful managers, since such men usually prefer the opportunities which individualistic business offers of making a larger income; and fourthly, that it is difficult for a democratically managed concern to compete successfully with autocratic business. Political democracies are at a disadvantage in a struggle with tyrannies, if the latter are governed by able men. A one- man policy is more stable, permits of quicker action and a more consistent policy than is possible to a democracy. Exactly so in business, our dictatorial captains of industry have an advantage over their usually less skilled and always less powerful heads, and their smaller capital. The millionaire can cut prices and stand losses which would ruin a cooperative body of workingmen. So that cooperative production has not generally proved successful. In any case, there seems to be no probability of societies of producers being able to supplant the capitalistic concerns; we must turn elsewhere for the solution of our problems.
(3) Consumers' cooperation has been more widely successful. On this plan a number of people contribute the capital of a business in equal small amounts and share the profits in proportion to their purchases. The possibility of excessive profits to a single owner or a small group of owners is thus abolished. But the other evils of autocratic industry remain; laborers are hired for current wages, as by the capitalists, and the temptations to unfair treatment of employees and of competitors remain.
(4) "Consumers' Leagues," so called, have made a business of ascertaining the conditions under which goods are produced, and exhorting their members to purchase only those which have involved fair treatment to the workers. The undertaking is praiseworthy, and has accomplished some good. But its effects are limited by obvious causes. It is extremely difficult in many cases for the consumer to discover the conditions of production of what he wishes to buy. It is a nuisance to have to burden himself with such perplexing considerations. And it is impossible to maintain public allegiance to a white list in face of the temptation of bargain sales. Evils must be attacked at their source; they cannot be effectively controlled from the consumer's end. III. Government regulation of prices, profits, and wages? There are two proposals that promise thoroughgoing cure for industrial evils government regulation of business, leaving it upon its present capitalistic basis, and socialism, the complete democratizing of industry. It seems that one or the other alternative must ultimately be accepted. According to the former, and less radical, plan, publicity of accounts would be required in every industry; and state or national commissions would have full power to supervise the conditions of production, to set a minimum standard below which wages must not fall, to fix maximum prices above which the products must not be sold, to prevent stock- watering, to enforce standards of honesty and good workmanship in goods, to see to it that all competition is carried on fairly, and to forbid excessive salaries to managers. Equal standards would be exacted throughout an industry, and any increased cost of production would result in the raising of prices (except where profits had previously been exorbitant); thus there would be no real hardship upon employers. The minimum wage should not, of course, be set above the actual productive power of labor; and the inefficient laborers who would be thrown out of employment as not worth the standard wage must be looked after by the provision of free vocational education and state employment. Apprentices, cripples, defectives, and persons giving only part time, would be permitted to receive partial wages; and above the minimum wage, differences in stipend would still exist, as now, to stimulate industry and skill. With such provision for safe- guarding the rights of labor, of competitors, and of the public, profits would not be directly regulated; if they became excessive, they would be clipped by the requirement of a lower price for the product, or of more sanitary or safer conditions of production. But the initiative and energy of the owners would be retained by permitting a sliding scale of profits; the higher the wages paid, or the lower the price set upon products, the greater the profits they could be allowed. Thus a premium would still be set upon efficiency. Under this plan monopoly could be carried to any extent; strikes could be absolutely forbidden, and all dissatisfaction settled by the arbitration of the impartial government commission. Monopoly might even be legally maintained by a refusal of charters to would-be competitors, thus insuring to the public the advantages of a completely organized business without leaving the public at its mercy. The natural monopolies, such as railways, telephones, lighting-service, from which private fortunes have often been made at public expense, can easily be regulated by carefully considered and short-term franchises.
Up to date, the partial and tentative trials of this plan have been encouragingly successful. But there are obvious defects in it, which we must notice:
(1) The danger of failures in business would still exist. Some factors would tend to lessen this danger as, the prevention of stock- watering, misappropriation of funds, excessive salaries, and the unfair competition of rivals. But failures could no longer be averted by squeezing wages, neglecting conditions of production, or lowering the quality of goods. The employers may well ask, in bitterness, what right the Government has to close their chances of high profits when it leaves the chance of total loss. Private ownership of business, still retained on the plan we are considering, must involve risk of bankruptcy, with its economic waste and its suffering.
(2) The plant, capital, and management of a business would still be entirely at the disposal of the owner, and handed down in his family or to partners voluntarily taken in. The son of a capitalist, who inherits the business, may be by no means the most deserving or efficient person to carry it on. Industry is not democratic under this plan; justice is attained as a compromise between the interests of capitalists and laborers. Class antagonisms are still fostered; distrust of the impartiality of the government commission would continually be present, and might at any time lead to actual rebellion and violence.
(3) The temptations to corruption would be enormous. The capitalists, with their reserve funds, would be in a position to bribe or unfairly influence any susceptible members of the commissions; and with the danger of bankruptcy on the one hand, and the great prizes to be won on the other, there would inevitably result in the present state of the average human conscience-a great deal of foul play. Commissioners would have an unlimited opportunity of blackmailing employers. Labor members would pull in one direction, and upper-class members in another. The strain upon public morality would be severe.
IV. SOCIALISM? Socialism promises, according to its adherents, to accomplish all the good results of government regulation, while obviating its defects. It behooves us, then, to give it careful and unbiased attention. The movement toward it is, at least, one of the most significant and widespread movements of our times, evoking on the one hand extraordinary enthusiasm and loyalty, so that to millions of men it is almost a religion, and on the other hand deep distrust, impatient contempt, or bitter hostility. Moreover, the movement is steadily growing; we must recognize that it is not a fad, but a deep current, an international brotherhood that numbers in its ranks many able and intellectual men. We may here disregard the inadequate economic theories that have hampered its earlier years, and the Utopian dreams that have been published under its name, and consider it only as a practical program for remedying our acknowledged and serious industrial evils.
The gist of the socialist proposal is that all industry shall be made democratic, as government is now becoming democratic all over the earth. All plants and all capital are to be owned by the State, and all business run as the Post-Office is run, or as the Panama Canal was built. The managers of each industry are to be chosen from the ranks, according to their fitness, for proved efficiency and knowledge of the business. Everybody will be upon a salary, and the opportunity of increasing personal profits by lowering wages, cheating the public, neglecting evil conditions of production, or damaging rivals, will be absent. Thus, instead of trying by an elaborate system of checks to keep within due bounds the greed of man, the possibility of satisfying that greed is definitely removed, and all earnings made proportionate to industriousness and skill. We proceed to summarize the advantages that, it is urged, would follow the inauguration of this industrial democracy:
(1) All industries could be organized and centralized. A vast amount of human effort could be saved, and waste eliminated. Business would no longer, as so often now, be hampered for lack of funds to carry out plans. A special staff could be retained to invent and apply new ideas. In short, just as the trusts now are much more efficient and economical than the small concerns they have superseded, so the completely organized industries of a socialistic regime would be, we are told, in a position to double human efficiency. If the postal business were open to competition, there can be no doubt that we should be paying higher rates today for a much less efficient service. If it were a private monopoly, some one would probably be getting enormous profits out of it profits which now go back into extending the service. The labor saved by industrial unification would be available for a thousand other undertakings that cry to be carried out.