Group Morality Again.—The striking feature of the new conditions is that it means a reversion to group morality. That is, it has meant this so far. Society is struggling to reassert a general moral standard, but it has not yet found a standard, and has wavered between a rigid insistence upon outgrown laws on the one hand, and a more or less emotional and unreasoned sympathy with new demands, upon the other.[225] Group morality meant impersonal, collective life. It meant loyalty to one's own group, little regard for others, lack of responsibility, and lack of a completely social standard. There is, of course, one important difference. The present collective, impersonal agencies are not so naïve as the old kinship group. They can be used as effective agencies to secure definite ends, while the manipulators secure all the advantages of the old solidarity and irresponsibility.
Members and Management.—The corporation in its idea is democratic. For it provides for the union of a number of owners, some of them it may be small owners, under an elected management. It would seem to be an admirable device for maintaining concentration of power with distribution of ownership. But the very size of modern enterprises and unions prevents direct control by stockholders or members. They may dislike a given policy, but they are individually helpless. If they attempt to control, it is almost impossible, except in an extraordinary crisis, to unite a majority for common action.[226] The directors can carry on a policy and at the same time claim to be only agents of the stockholders, and therefore not ultimately responsible. What influence can the small shareholders in a railway company, or a great industrial corporation, or labor union, have? They unite with ease upon one point only: they want dividends or results. When an illegal policy is to be pursued, or a legislature or jury is to be bribed, or a non-union man is to be "dealt with," the head officials likewise seek only "results." They turn over the responsibility to the operating or "legal" department, or to the "educational committee," and know nothing further. These departments are "agents" for the stockholders or union, and therefore, feel quite at ease. The stockholders are sure they never authorized anything wrong. Some corporations are managed for the interest of a large number of owners; some, on the other hand, by ingenious contracts with side corporations formed from an inner circle, are managed for the benefit of this inner circle. The tendency, moreover, in the great corporations is toward a situation in which boards of directors of the great railroad, banking, insurance, and industrial concerns are made up of the same limited group of men. This aggregate property may then be wielded as absolutely as though owned by these individuals. If it is used to carry a political election the directors, according to New York courts, are not culpable.
Employer and Employed.—The same impersonal relation often prevails between employer and employed. The ultimate employer is the stockholder, but he delegates power to the director, and he to the president, and he to the foreman. Each is expected to get results. The employed may complain about conditions to the president, and be told that he cannot interfere with the foreman, and to the foreman and be told that such is the policy of the company. The union may serve as a similar buffer. Often any individual of the series would act humanely or generously, if he were acting for himself. He cannot be humane or generous with the property of others, and hence there is no humanity or generosity in the whole system. This system seems to have reached its extreme in the creation of corporations for the express purpose of relieving employers of any personal responsibility. Companies organized to insure employers against claims made by employees on account of injuries may be regarded as a device for distributing the burden. But as the company is organized, not primarily to pay damages, as are life insurance companies, but to avoid such payment, it has a powerful motive in contesting every claim, however just, and in making it so expensive to prosecute a claim that the victims may prefer not to make the attempt. The "law's delay" can nearly always be counted upon as a powerful defense when a poor man is plaintiff and a rich corporation is defendant.
Relations to the Public.—The relations of corporations to the public, and of the public to corporations, are similarly impersonal and non-moral. A convenient way of approach to this situation is offered by the ethical, or rather non-ethical, status of the various mechanical devices which have come into use in recent years for performing many economic services. The weighing machines, candy machines, telephones, are supposed to give a certain service for a penny or a nickel. But if the machine is out of order, the victim has no recourse. His own attitude is correspondingly mechanical. He regards himself as dealing, not with a person, but with a thing. If he can exploit it or "beat" it, so much the better. Now a corporation, in the attitude which it takes and evokes, is about half-way between the pure mechanism of a machine and the completely personal attitude of a moral individual. A man is overcharged, or has some other difficulty with an official of a railroad company. It is as hopeless to look for immediate relief as it is in the case of a slot machine. The conductor is just as much limited by his orders as the machine by its mechanism. The man may later correspond with some higher official, and if patience and life both persist long enough, he will probably recover. But to prevent fraud, the company is obliged to be more rigorous than a person would be who was dealing with the case in a personal fashion. Hence the individual with a just grievance is likely to entertain toward the corporation the feeling that he is dealing with a machine, not with an ethical being, even as the company's servants are not permitted to exercise any moral consideration in dealing with the public. They merely obey orders. Public sentiment, which would hold an individual teamster responsible for running over a child, or an individual stage owner responsible for reckless or careless conduct in carrying his passengers, feels only a blind rage in the case of a railroad accident. It cannot fix moral responsibility definitely upon either stockholder or management or employee, and conversely neither stockholder, nor manager, nor employee[227] feels the moral restraint which the individual would feel. He is not wholly responsible, and his share in the collective responsibility is so small as often to seem entirely negligible.
Relations to the Law.—The collective business enterprises, when incorporated, are regarded as "juristic persons," and so gain the support of law as well as become subject to its control. If the great corporation can thus gain the right of an individual, it can enter the field of free contract with great advantage. Labor unions have not incorporated, fearing, perhaps, to give the law control over their funds. They seek a higher standard of living, but private law does not recognize this as a right. It merely protects contracts, but leaves it to the individual to make the best contract he can. As most wage-earners have no contracts, but are liable to dismissal at any time, the unions have seen little to be gained by incorporation. They have thus missed contact with the institution in which society seeks to embody, however tardily, its moral ideas and have been, in a sense, outlaws. They were such at first by no fault of their own, for the law treated such combinations as conspiracies. And they are still at two decided disadvantages. First, the capitalistic or employing corporation acting as a single juristic person may refuse to buy the labor of a union; indeed, according to a recent decision, it cannot be forbidden to discharge its employees because of their membership in a union. As the corporation may employ scores of thousands, and be practically the only employer of a particular kind of labor, it can thus enforce a virtual boycott and prevent the union from selling its labor. It does not need to use a "blacklist" because the employers are all combined in one "person." On the other hand, the union is adjudged to act in restraint of interstate commerce if it boycotts the employing corporation. The union is here treated as a combination, not as a single person. The second point in which the employing body has greatly the legal advantage appears in the case of a strike. Men are allowed to quit work, but this is not an effective method of exerting pressure unless the employer is anxious to keep his plant in operation and can employ no one else. If he can take advantage of an open labor market and hire other workmen, the only resource of the strikers is to induce these to join their ranks. But they have been enjoined by the courts, not only from intimidating, but even from persuading[228] employees to quit work. The method of procedure in enforcing the injunction, which enables the judge to fix the offense, eliminate trial by jury, determine the guilt, and impose any penalty he deems fit, has all the results of criminal process with none of its limitations, and forms a most effective agency against the unions. Where persuasion is enjoined it is difficult to see how a union can exert any effective pressure except in a highly skilled trade, where it can control all the labor supply. In the field of private rights and free contract, the labor unions are then at a disadvantage because they have no rights which are of any value for their purposes, except, under certain conditions, the right to refuse to work. And since this is, in most cases, a weapon that injures its wielder far more than his opponent, it is not effective.
Disappointed in the field of free contract, the labor unions seek to enlist public agency in behalf of better sanitary conditions and in prevention of child-labor, long hours for women, unfair contracts, and the like. Capitalistic corporations frequently resist this change of venue on the ground that it interferes with free contract or takes away property without "due process of law," and many laws have been set aside as unconstitutional on these grounds,[229] several of them no doubt because so drawn as to appear to be in the interest of a class, rather than in that of the public. The trend in the direction of asserting larger public control both under the police power and over corporations in whose service the public has a direct interest, will be noted later. Against other corporations the general public or the unsuccessful competitor has sought legal aid in legislation against "trusts," but this has mainly proved to be futile. It has merely induced a change in form of organization. Nor has it been easy as yet for the law to exercise any effective control over the business corporation on any of the three principles invoked—namely: to prevent monopoly, to secure the public interest in the case of public service corporations, and to assert police power. For penalties by fine frequently fail to reach the guilty persons, and it is difficult to fix any personal responsibility. Juries are unwilling to convict subordinate officials of acts which they believe to have been required by the policy of the higher officials, while, on the other hand, the higher officials are seldom directly cognizant of criminal acts. Gradually, however, we may believe that the law will find a way to make both capital and labor organizations respect the public welfare, and to give them support in their desirable ends. The coöperative principle cannot be outlawed; it must be more fully socialized.
§ 4. THE METHODS OF PRODUCTION, EXCHANGE, AND VALUATION
The Machine.—The technique of production has shown a similar progress from individual to collective method. The earlier method was that of handicraft. The present method in most occupations, aside from agriculture, is that of the machine. But the great economic advantage of the machine is not only in the substitution of mechanical power for muscle; it is also in the substitution of collective for individual work. It is the machine which makes possible on a tremendously effective basis the division of labor and its social organization. The extraordinary increase in wealth during the past century depends upon these two factors. The machine itself moreover, in its enormous expansion, is not only a social tool, but a social product. The invention and discovery which gave rise to the new processes in industry of every sort were largely the outcome of scientific researches carried on at public expense to a great extent by men other than those who finally utilize their results. They become in turn the instruments for the production of wealth, which is thus doubly social in origin.
This machine process has an important bearing upon the factors of character mentioned in our analysis. It standardizes efficiency; it calls for extraordinary increase of speed; it requires great specialization of function and often calls for no knowledge of the whole process. On the other hand, it gives a certain sense of power to control and direct highly complicated machinery. In the more skilled trades there is more time and resource for intellectual, æsthetic, or social satisfactions. The association of workmen favors discussion of common interests, sympathy, and coöperation; this may evoke a readiness to sacrifice individual to group welfare, which is quite analogous to patriotic sentiment at its best, even if it is liable to such violent expressions as characterize patriotic sentiment at its worst. The association of workmen is one of the most significant features of modern industry.
Capital and Credit.—The technique of exchange of services and goods has undergone a transformation from an individual and limited to a collective and almost unlimited method. The earlier form of exchange and barter limited the conduct of business to a small area, and the simpler form of personal service involved either slavery or some personal control which was almost as direct. With the use of money it became possible to make available a far greater area for exchange and to accumulate capital which represented the past labors of vast numbers of individuals. With the further discovery of the possibilities of a credit system which business enterprise now employs, it is possible to utilize in any enterprise not merely the results of the labor of the past, but the anticipated income of the future. A corporation, as organized at present, issues obligations in the form of bonds and stock which represent no value as yet produced, but only the values of labor or privilege anticipated. The whole technique, therefore, of capital and credit means a collective business enterprise. It masses the work and the abilities of thousands and hundreds of thousands in the past and the future, and wields the product as an almost irresistible agency to achieve new enterprises or to drive from the field rival enterprises.