Nature is both orderly and disorderly. She is orderly, for example, in the general succession of her seasons, in the average rainfall, the average sunshine. She is orderly in the regular drawing of water from the ocean to the hills and the return of water from the hills to the ocean. But Nature is extremely disorderly in her detail. Some years rainfall is deficient and men starve because of drouth. Other years the sunshine is insufficient and men starve because of rain. The beneficent flow of water from the hills to the ocean is attended by disorder which is often calamitous; the river swells to a torrent in one place and spreads out to unwholesome marshes in another.
The power of man to profit by the order of Nature and to adjust its disorder is an attribute that makes man almost divine; for this power exerts as great influence over the soul of man as over the matter of Nature. Man has demonstrated his control over Nature by protecting himself against deficiency of water through reservoirs, and against excess of rain through drainage; he has robbed torrents of their terrors by dykes, and made them his servants by irrigation; he drains the swamp and waters the desert. In one respect only has he failed to exercise as yet sufficient control; namely, the competitive system. The competitive system is applauded by Herbert Spencer because he finds it in Nature. But Nature does not proceed only upon the competitive plan. She furnishes us with the beehive and anthill as types of coöperation, from which man can not only learn a lesson, but receive a warning; for the evils that attend the coöperative plan of the beehive are almost as great as those that attend the competitive or predatory system.[72] What man then has to do is not blindly to follow Nature either as respects her competitive system or her coöperative system; but to do in this direction what he has done in others—profit by what is good and orderly in Nature and suppress what is evil and disorderly in it.
§ 1. Anarchy of Production and Distribution
The intelligent business man has been at work in suppressing the evils of the competitive system. He has found the waste and disorder attending unlimited competition so abominable that he has suppressed competition to the utmost possible by the organization of trusts. It has been pointed out that the disorder attending our production and distribution gives rise to anarchy in both these departments of industry. As long as every man is free to produce exactly what he chooses—what he thinks will benefit him, there is no rational relation between supply and demand.
(a) Tyranny of the Market
This process is going on in every industry. Capital rushes away from business where there is no profit to business where there is profit. The result is that the capitalist generally discovers a demand for an article too late to profit by it, and does not discover that there is no demand for an article until he is ruined by the discovery. The boasted "fluidity of capital" causes it to pour from one industry to another in obedience to what is called "the market"; and of all the despotisms that the folly of man has subjected him to, none for stupidity and pitilessness approaches the market. So long as there was no large-enough combination of capital to acquire knowledge of the supply and demand that determines market price or to any extent control it, no man, however intelligent, could tell when prices were going to rise and when to fall. And although the older economists loved to dwell upon the fluidity of labor as well as upon the fluidity of capital, they failed to take account of the bankruptcy that attends the one or the appalling conditions that attend the other. For when the supply of labor is large and factories are running at low capacity; when men and women are seeking employment, and the demand for labor is small, the effect of this law is to reduce wages below the rate necessary to support life; the unemployed are then reduced to a choice between the almshouse and starvation.
This evil consequence is a matter over which isolated employers have little or no control; for the very same cause that reduces wages reduces also the price of goods. It is because the demand for goods is small that the manufacturer has to run his factory at a reduced capacity; and the demand being small, the manufacturer cannot get a remunerative price for his goods. Now the thing that reduces prices is competition, and the thing that reduces wages is competition, and the main source of every financial, commercial, and industrial disaster is competition. Employer and employee are alike subjected to the levelling principle. The moment a particular manufacture is found to be profitable, and therefore able to pay a high rate of wages, new factories are started and wages reduced by the competition of workingmen. The flow to this industry, therefore, of both capital and labor, inevitably reduces not only wages by the direct competition between workingmen, but also the profit out of which high wages were originally paid.
Employer, therefore, and employee are both slaves of the market; the employer cannot get more than the market price for his goods, and out of this he has to pay for his raw material, the cost of running the factory, and the wages of his men. He cannot reduce the price of raw material nor the cost of running the factory—rent, fuel, etc.; these too are determined by the market. The only thing he can reduce is wages: so he is driven to reduce wages or close his factory, for he cannot long run his factory at a loss.
And so anarchy of production and anarchy of distribution lead inevitably, as all anarchy does, to despotism—the despotism of the market.