The change in the attitude of the people toward the let-alone theory of government is, as a matter of fact, the outcome of an intelligently directed effort to enlarge and democratize—not abridge—the right of initiative in its relation to the management of industry. The right of individual initiative in the sense of the right to exercise a real control over production was lost by the masses when the substitution of machinery for tools made them directly dependent upon a class of capital-owning employers. The subsequent growth of large scale production has centralized the actual control of industry in the hands of a small class of large capitalists. The small capitalists as separate and independent producers are being rapidly crushed or absorbed by the great corporation. They may still belong to the capitalist class in that they live upon an income derived from the ownership of stock or bonds. But they have no real control over the business in which their capital is invested. They no longer have the power to organize and direct any part of the industrial process. They enjoy the benefits which accrue from the ownership of wealth, but they can no longer take an active part in the management of industry. For them individual initiative in the sense of an effective control over the industrial process has disappeared almost as completely as it has in the case of the mere wage-earner. Individual initiative even for the capital-owning class has thus largely disappeared. It has been superseded by corporate initiative which means the extinguishment of individual initiative except in those cases where it is secured to the large capitalist through the ownership of a controlling interest in the business.
The abandonment of the laissez faire policy, then, in favor of the principle of government regulation of industry is the outgrowth, not of any hostility to individual initiative, but of the conviction that the monopoly of industrial power by the few is a serious evil. It is manifestly impossible to restore to the masses the right of individual initiative. Industry is too complex and too highly organized to permit a return to the old system of decentralized control. And since the only substitute for the old system of individual control is collective control, it appears to be inevitable that government regulation of business will become a fixed policy in all democratic states.
The laissez faire policy is supposed to favor progress by allowing producers to make such changes in business methods as may be prompted by the desire for larger profits. The doctrine as ordinarily accepted contains at least two erroneous assumptions, viz., (1) that any innovation in production which makes it possible for the capitalist to secure a larger return is necessarily an improvement in the sense of augmenting the average efficiency of labor, and (2) that policies are to be judged solely by their economic effects. Even if non-interference resulted in industrial changes which in all cases increase the efficiency of labor, it would not follow that such changes are, broadly considered, always beneficial. Before drawing any sweeping conclusion we must consider all the consequences direct and indirect, immediate and remote, political and social as well as economic. Hence the ordinary test—the direct and immediate effect upon productive efficiency—is not a satisfactory one. Moreover, many changes in the methods or organization of business are designed primarily to alter distribution in the interest of the capitalist by decreasing wages or by raising prices. In so far as a policy of non-interference permits changes of this sort, it is clearly harmful to the community at large, though advantageous to a small class.
In all democratic countries the conservative classes are beginning to realize that their ascendency in production is imperiled by the ascendency of the masses in the state. It thus happens that in the hope of checking or retarding the movement toward regulation of business in the interest of the people generally, they have taken refuge behind that abandoned tenet of democracy, the doctrine of non-interference.
At the same time they strongly favor any deviation from this policy which will benefit themselves. This is exemplified in their attitude in this country toward our protective tariff system, which, as originally adopted, was designed to encourage the development of our national resources by offering the prospect of larger profit to those who would invest their capital in the protected industries. Under a capitalistic system development naturally follows the line of greatest profit, and for this reason any protective tariff legislation which did not augment the profits of the capitalist would fail to accomplish its purpose. This was recognized and frankly admitted when the policy was first adopted. Later, however, when the suffrage was extended and the laboring class became an important factor in national elections the champions of protection saw that the system would have to be given a more democratic interpretation. Thus the Whig platform of 1844 favored a tariff "discriminating with special reference to the protection of the domestic labor of the country." This was, however, the only political platform in which the labor argument was used until 1872, when the Republican party demanded that "duties upon importations ... should be so adjusted as to aid in securing remunerative wages to labor, and promote the industries, prosperity, and growth of the whole country." Protection, since that time, has been defended, not as a means of augmenting profits, but as a means of ensuring high wages to American workers. The interests of the wage-receiving class, however, were far from being the chief concern of those who were seeking to maintain and develop the policy of protection. It was to the capitalist rather than the wage-earner that the system of protection as originally established made a direct appeal, and it was primarily in the interest of this class that it was maintained even after the labor argument came to be generally used in its defense. The capitalist naturally favored a policy that would discourage the importation of foreign goods and at the same time encourage the importation of foreign labor. It was to his advantage to keep the labor market open to all who might wish to compete for employment, since this would tend to force wages down and thus give him the benefit of high prices.
Any system of protection established in the interest of labor would have excluded all immigrants accustomed to a low standard of living. But as a matter of fact the immigration of cheap foreign labor was actively encouraged by the employers in whose interest the high tariff on foreign goods was maintained. The efforts of the wage-earning class to secure for themselves some of the benefits of protection by organizing to obtain an advance or prevent a reduction in wages was largely defeated through the wholesale importation of cheap foreign labor by the large manufacturing, mining and transportation companies. The agitation against this evil carried on by the labor unions finally resulted in the enactment by Congress of legislation forbidding the importation of labor under contract of employment. This, however, did not, and even if it had been efficiently enforced, would not have given the American workingman any real protection against cheap foreign labor. The incoming tide of foreign immigration has been rising and the civic quality of the immigrant has visibly declined. The free lands which formerly attracted the best class of European immigrants are now practically a thing of the past, and with the disappearance of this opportunity for remunerative self-employment the last support of high wages has been removed. With unrestricted immigration the American laboring man must soon be deprived of any economic advantage which he has heretofore enjoyed over the laboring classes of other countries.
There has been one notable exception to this immigration policy. The invasion of cheap Asiatic labor upon the Pacific coast aroused a storm of protest from the laboring population, which compelled Congress to pass the Chinese Exclusion Act. But this legislation, while shutting out Chinese laborers, has not checked the immigration from other countries where a low standard of living prevails. In fact the most noticeable feature of the labor conditions in this country has been the continual displacement of the earlier and better class of immigrants and native workers by recent immigrants who have a lower standard of living and are willing to work for lower wages. This has occurred, too, in some of the industries in which the employer has been most effectually protected against the competition of foreign goods.[181]
The time has certainly arrived when the policy of protection ought to be more broadly considered and dealt with in a public-spirited and statesman-like manner. If it is to be continued as a national policy, the interests of employees as well as employers must be taken into account. The chief evils of the protective system have been due to the fact that it has been too largely a class policy, and while maintained in the interest of a class, it has been adroitly defended as a means of benefiting the classes who derived little or no benefit—who were, indeed, often injured by our tariff legislation.
The large capitalist may grow eloquent in defense of that broad humanitarian policy under which the weak, the oppressed, and the ignorant of all nations are invited to come among us and share in the economic and political opportunities and privileges of American citizens. Such high-sounding and professedly disinterested cosmopolitanism appeals to a certain class of sentimental believers in democracy. It does not appeal, however, to any one who fully understands present-day industrial and political conditions. This capitalistic sympathy for the weak and the oppressed of other nations may be regarded by some as the expression of a broader patriotism, but its tap-root is class selfishness—the desire to secure high profits through maintaining active competition among laborers. As a matter of fact, all legislation does, and always must, appeal to the interest of those without whose influence and support it could not be enacted, and nothing is ever gained for true progress by making the pretence of disinterested love for humanity the cloak for class greed.
The desire of the employing class for cheap labor has been responsible for the greatest dangers which menace this country to-day. It was the demand for cheap labor which led to the importation of the African slave and perpetuated the institution of slavery until, with the voluntary immigration of foreign labor, it was no longer an economic necessity from the standpoint of the employing class. Indeed the very existence of slavery, by discouraging immigration, tended to limit the supply of labor, and by so doing, to cripple all enterprises in which free labor was employed. In this sense the abolition of slavery was the result of an economic movement. It was to the advantage of the employing class as a whole who found in the free labor hired under competitive conditions a more efficient and cheaper instrument of production than the slave whom they had to buy and for whose support they were responsible.