The complete realisation of full free trade in all directions has no power whatever to abate the activity of these forces, and would only serve to bring their operation into more signal and startling prominence.
For the waste of periodic over-production visible in trade depression, for the sufferings caused by ever larger oscillations in prices and greater irregularity of employment of capital and labour, for the specific evils of long hours or excessive intensity of labour, dangerous and unwholesome conditions of employment, increased employment of women and children, and growth of large-city life, freedom of trade conjoined with publicity of business operations can furnish no remedies.
It has been seen that these injuries to individuals and groups of individuals, and through them to society, arise naturally and necessarily from the unfettered operation of the enlightened self-interest of individuals and groups of individuals engaged in obtaining for themselves, by the freest use of industrial means available, the largest quantity of money.
So far as these evils are in form or in magnitude the peculiar products of the last two centuries, they are in large measure traceable to methods of production controlled by machinery, and to the social estimate of machine-products which gives machinery this controlling power.
If this is so, such progress as shall abate these evils and secure for humanity the uses of machinery without the abuses will lie in two directions, each of which deserves consideration: (i) an adequate social control over machine-production; (2) an education in the arts of consumption such as may assign proper limits to the sphere of machine-production.
§ 4. That machinery subject to the unrestricted guidance of the commercial interests of an individual or a class cannot be safely trusted to work for the general welfare, is already conceded by all who admit the desirability or necessity of the restrictive legislation of Factory Acts, Mines Regulation Acts, and the large growth of public provisions for guarding against economic, hygienic, and other injuries arising from the conditions of modern industrial life.
These provisions, whether designed directly to secure the interests of a class of employees, as in the case of Factory Acts, or to protect the consuming public, as in the case of Adulteration Acts, must be regarded as involving an admission of a genuine antagonism between the apparent interests of individuals and of the whole community, which it is the business of society to guard against.
All this legislation is rightly interpreted as a restriction of the freedom of individual industry under modern methods of production, required in the public interest. Uncontrolled machine-production would in some cases force children of six or eight years to work ten hours a day in an unhealthy factory, would introduce suddenly a host of Chinese or other "cheap" workers to oust native labour accustomed to a higher standard of comfort, would permit an ingenious manufacturer to injure the consumer by noxious adulteration of his goods, would force wages to be paid by orders upon shops owned or controlled by employers, would oblige workers to herd together in dens of infection, and to breed physical and moral diseases which would injure the body politic. The need of a growing social control over modern machine-production, in cases where that production is left in the main to the direction of individual enterprise, is admitted on every side, though the development of that control has been uneven and determined by the pressure of concrete grievances rather than by the acceptance of any distinct theory of public responsibility.
Other limitations upon individual freedom of industry imply a clearer recognition of the falsehood of the laissez faire position. The undertaking by the State or the Municipality, or other units of social life, of various departments of industry, such as the railways, telegraphs, post-offices, is a definite assertion that, in the supply of the common services rendered by these industries, the competition of private interests cannot be relied upon to work for the public good.
§ 5. The industries which the State either limits or controls in the interest either of a body of workers or of the consuming public may be regarded as passing from a private competitive condition to a public non-competitive condition. If therefore we wish to ascertain how far and in what directions social control of modern production will proceed, we shall examine those industries which already exhibit the collective character. We shall find that they are of two kinds—(1) industries where the size and structure of the "business" is such that the protection afforded by competition to the consuming public and to the workers has disappeared, or is in frequent abeyance, (2) industries where the waste and damage of excessive competition outweighs the loss of enterprise caused by a removal or restriction of the incentive of individual gain. As we have seen in the analysis of "trusts," these two characteristics, wasteful competition and monopoly, are often closely related, the former signifying the process of intense struggle, the object and ultimate issue of which is to reach the quiet haven of monopoly. Generally speaking, social control in the case of over-competing industries is limited to legislative enactments regarding conditions of employment and quality of goods. Only those industries tend to pass under public administration where the monopoly is of an article of general and necessary consumption, and where, therefore, a raising of prices considerably above the competition rate would not succeed in evoking effective competition. Since the general tendency of industry, so far as it falls under modern economies of machinery and method, is either towards wasteful competition or towards monopoly, it is to be expected that there will be a continual expansion of State interference and State undertakings. This growing socialisation of industry must be regarded as the natural adjustment of society to the new conditions of machine-production. As under the economies of machine-production the business-unit, the mass of capital and labour forming a single "firm" or "business," grows larger in size and more potent in its operations, the social disturbances which it can occasion by its private activity, the far-reaching and momentous results of its strain of competition, the probability of an anti-social exercise of "monopolic" power over the whole or part of its market-area, will of necessity increase. The railway and shipping industries, for example, in countries like England and the United States, have already reached a stage of industrial development when the social danger arising from an arbitrary fixing of rates by a line or a "pool" of lines, from a strike or lock-out of "dockers" or railway men, is gaining keener recognition every year. The rapidly growing organisation of both capital and labour, especially in the fundamental industries of coal, iron, and machine-making, in the machine-transport industries, and the most highly evolved manufactories, gives to a body of employers or employed, or to a combination of both, the power at any moment to paralyse the whole or a large portion of the entire trade of a country in pursuit of some purely private interest or resentment, or in the acquisition of some strategical position, which shall enable them to strengthen their competing power or gain a monopoly. Although the organisation of masses of capital and of labour may, as is often urged, make industrial strife less frequent, the effects of such strife upon the wider public, who have no opportunity of casting a vote for war or peace, are more momentous. Moreover, as these private movements of capital and labour proceed, the probability of combined action between employers and employed in a particular industry, to secure for themselves some advantages at the public expense, will be a factor of increasing importance in industrial evolution.