Equality

by Edward Bellamy

"The great economic inventions which Harold has been talking about," said the girl, "were of the class of what were called labor-saving machines and devices--that is to say, they enabled one man to produce more than before with the same labor, or to produce the same as before with less labor. Under a collective administration of industry in the equal general interest like ours, the effect of any such invention would be to increase the total output to be shared equally among all, or, if the people preferred and so voted, the output would remain what it was, and the saving of labor be appropriated as a dividend of leisure to be equally enjoyed by all. But under the old system there was, of course, no collective administration. Capitalists were the administrators, being the only persons who were able to carry on extensive operations or take the initiative in economic enterprises, and in what they did or did not do they had no regard to the public interest or the general gain, but to their own profit only. The only motive which could induce a capitalist to adopt an invention was the idea of increasing his profits either by getting a larger product at the same labor cost, or else getting the same product at a reduced labor cost. We will take the first case. Suppose a capitalist in adopting labor-saving machinery calculated to keep all his former employees and make his profit by getting a larger product with the same labor cost. Now, when a capitalist proposed to increase his output without the aid of a machine he had to hire more workers, who must be paid wages to be afterward expended in purchasing products in the market. In this case, for every increase of product there was some increase, although not at all an equal one, in the buying power of the community. But when the capitalist increased his output by the aid of machinery, with no increase in the number of workers employed, there was no corresponding increase of purchasing power on the part of the community to set off against the increased product. A certain amount of purchasing power went, indeed, in wages to the mechanics who constructed the labor-saving machines, but it was small in comparison with the increase in the output which the capitalist expected to make by means of the machinery, otherwise it would have been no object to him to buy the machine. The increased product would therefore tend directly to glut yet more the always glutted market; and if any considerable number of capitalists should introduce machinery in the same way, the glut would become intensified into a crisis and general stoppage of production.

"In order to avert or minimize such a disaster, the capitalists could take one or two courses. They could, if they chose, reduce the price of their increased machine product so that the purchasing power of the community, which had remained stationary, could take it up at least as nearly as it had taken up the lesser quantity of higher-priced product before the machinery was introduced. But if the capitalists did this, they would derive no additional profit whatever from the adoption of the machinery, the whole benefit going to the community. It is scarcely necessary to say that this was not what the capitalists were in business for. The other course before them was to keep their product where it was before introducing the machine, and to realize their profit by discharging the workers, thus saving on the labor cost of the output. This was the course most commonly taken, because the glut of goods was generally so threatening that, except when inventions opened up wholly new fields, capitalists were careful not greatly to increase outputs. For example, if the machine enabled one man to do two men's work, the capitalist would discharge half of his force, put the saving in labor cost in his pocket, and still produce as many goods as ever. Moreover, there was another advantage about this plan. The discharged workers swelled the numbers of the unemployed, who were underbidding one another for the opportunity to work. The increased desperation of this competition made it possible presently for the capitalist to reduce the wages of the half of his former force which he still retained. That was the usual result of the introduction of labor-saving machinery: First, the discharge of workers, then, after more or less time, reduced wages for those who were retained."

"If I understand you, then," said the teacher, "the effect of labor-saving inventions was either to increase the product without any corresponding increase in the purchasing power of the community, thereby aggravating the glut of goods, or else to positively decrease the purchasing power of the community, through discharges and wage reductions, while the product remained the same as before. That is to say, the net result of labor-saving machinery was to increase the difference between the production and consumption of the community which remained in the hands of the capitalists as profit."

"Precisely so. The only motive of the capitalist in introducing labor-saving machinery was to retain as profit a larger share of the product than before by cutting down the share of labor--that is to say, labor-saving machinery which should have banished poverty from the world became the means under the profit system of impoverishing the masses more rapidly than ever."

"But did not the competition among the capitalists compel them to sacrifice a part of these increased profits in reductions of prices in order to get rid of their goods?"

"Undoubtedly; but such reductions in price would not increase the consuming power of the people except when taken out of profits, and, as John explained to us this morning, when capitalists were forced by competition to reduce their prices they saved their profits as long as possible by making up for the reductions in price by debasing the quality of the goods or cutting down wages until the public and the wage-earners could be cheated and squeezed no longer. Then only did they begin to sacrifice profits, and it was then too late for the impoverished consumers to respond by increasing consumption. It was always, as John told us, in the countries where the people were poorest that the prices were lowest, but without benefit to the people."

THE AMERICAN FARMER AND MACHINERY.

"And now," said the teacher, "I want to ask you something about the effect of labor-saving inventions upon a class of so-called capitalists who made up the greater half of the American people--I mean the farmers. In so far as they owned their farms and tools, however encumbered by debts and mortgages, they were technically capitalists, although themselves quite as pitiable victims of the capitalists as were the proletarian artisans. The agricultural labor-saving inventions of the nineteenth century in America were something simply marvelous, enabling, as we have been told, one man to do the work of fifteen a century before. Nevertheless, the American farmer was going straight to the dogs all the while these inventions were being introduced. Now, how do you account for that? Why did not the farmer, as a sort of capitalist, pile up his profits on labor-saving machinery like the other capitalists?"

"As I have said," replied the girl, "the profits made by labor-saving machinery resulted from the increased productiveness of the labor employed, thus enabling the capitalist either to turn out a greater product with the same labor cost or an equal product with a less labor cost, the workers supplanted by the machine being discharged. The amount of profits made was therefore dependent on the scale of the business carried on--that is, the number of workers employed and the consequent figure which labor cost made in the business. When farming was carried on upon a very large scale, as were the so-called bonanza farms in the United States of that period, consisting of twenty to thirty thousand acres of land, the capitalists conducting them did for a time make great profits, which were directly owing to the labor-saving agricultural machines, and would have been impossible without them. These machines enabled them to put a greatly increased product on the market with small increase of labor cost or else the same product at a great decrease of labor cost. But the mass of the American farmers operated on a small scale only and employed very little labor, doing largely their own work. They could therefore make little profit, if any, out of labor-saving machinery by discharging employees. The only way they could utilize it was not by cutting down the expense of their output but by increasing the amount of the output through the increased efficiency of their own labor. But seeing that there had been no increase meanwhile in the purchasing power of the community at large, there was no more money demand for their products than before, and consequently if the general body of farmers through labor-saving machinery increased their output, they could dispose of the greater aggregate only at a reduced price, so that in the end they would get no more for the greater output than for the less. Indeed, they would not get so much, for the effect of even a small surplus when held by weak capitalists who could not keep it back, but must press for sale, had an effect to reduce the market price quite out of proportion to the amount of the surplus. In the United States the mass of these small farmers was so great and their pressure to sell so desperate that in the latter part of the century they destroyed the market not only for themselves but finally even for the great capitalists who conducted the great farms."

"The conclusion is, then, Helen," said the teacher, "that the net effect of labor-saving machinery upon the mass of small farmers in the United States was ruinous."