Efficiency in Production.—Individualism can make out a strong case in respect to several of the ethical qualities which are demanded: viz., efficiency in production of goods, stimulation of active and forceful character, promotion of freedom and responsibility, encouragement to wide diversification of occupation and thus of services, and, finally, the supply to society of the kinds of goods which society wants. It would be absurd to credit the enormous increase in production of wealth during the past century to individualism alone, ignoring the contributions of science and education which have been mainly made under social auspices. It would be as absurd to credit all the gains of the century in civilization and freedom to individualism as it would be to charge all the wretchedness and iniquity of the century to this same policy. But, setting aside extravagant claims, it can scarcely be doubted that Adam Smith's contentions for greater individual freedom have been justified as regards the tests named. Granting that the great increase in amount and variety of production, and in means of communication and distribution, has been primarily due to two agencies, the machine and association, it remains true that individualism has permitted and favored association and has stimulated invention.
Initiative and Responsibility.—Moreover, the general policy of turning over to individuals the power and responsibility to regulate their own acts, is in accord with one great feature of moral development. The evolution of moral personality, as traced in our early chapters, shows the individual at first living as a member of a kinship group which determines his economic as well as his religious and social life, and permits him neither to strike out independently, nor, on the other hand, to suffer want so long as the group has supplies. Individual initiative and responsibility have steadily increased, and the economic development has undoubtedly strengthened the development of religious, political, and moral freedom. It is the combination of these which gives the person of to-day the worth and dignity belonging to autonomy, self-government, and democracy.
Regulation of Production.—Further, it may be said that supply and demand, individualism's method of regulating prices and the kinds of goods produced, not only accords with a principle of freedom, but also gets those goods made which society most needs or wants. If goods of a certain kind are scarce, the high price stimulates production. While it permits crises, panics, and hardship, it at least throws the burden of avoiding hardship upon the foresight of a great many: namely, all producers, rather than upon a few persons who might be designated for the purpose. In thus providing a method to find out what society wants and how much, it is performing a social service, and, as we have pointed out, it is none the less a service because the goods are to be paid for; it is all the more so because they can be paid for. So far, then, individualism has a strong case.
§ 3. CRITICISMS UPON INDIVIDUALISM
There is undoubtedly great waste in some of its methods, e.g., its advertising and its competitions, but the most serious objections to individualism are not to be found here; they arise in connection with the other ethical criteria of economic morality. They fall chiefly under two heads. (1) Does individualism provide for real as well as formal freedom? (2) Does it distribute the benefits widely or to the few? Does it distribute them justly or unjustly?
It Does Not Secure Real Freedom.—The distinction between real and formal[236] freedom has been forced into prominence by several causes. The division of labor trains a man for a specific kind of work. If there is no opening in this he is unable to find work. The continual invention of improved machinery is constantly displacing particular sets of workers and rendering their special training worthless. A business panic causes immediate discharge of thousands of laborers. A "trust" closes several of its shops, and workmen who have purchased homes must lose their jobs or their investments, or perhaps both. The employer is no less limited in his conduct by the methods of competing firms; but it is the wage-workers who have felt this lack of real freedom most keenly. Theoretically, no one is forced to labor. Every one is free to choose whether he will work, and what work he will do. But in effect, freedom of choice depends for its value upon what the alternative is. If the choice is, do this or—starve—the freedom is not worth much. Formal freedom excludes constraint by the direct control or will of others. It excludes violence or fear of violence. But subjection to the stress or fear of want, or to the limits imposed by ignorance, is just as fatal to freedom. Hunger is as coercive as violence; ignorance fetters as hopelessly as force. Whether a man has any choice of occupation, employment, residence, or wage, depends on his physical strength, education, family ties, and accumulated resources, and on the pressure of present need. To speak of free contract where there is gross inequality between the parties, is to use a mere form of words. Free contract in this case means simply the right of the stronger to exploit the weaker.
Individualism and Justice.—Individualists, as stated, belong to two very different schools, which we may call the democratic and aristocratic, or perhaps more correctly, if we may coin a word, "oligocratic." Democratic individualism would have every man count as one. It would distribute benefits widely. It holds that since society is made up of individuals all social goods will be secured if each individual seeks and finds his own. Aristocratic individualism[237] has been reënforced by the Darwinian theory of the struggle for existence as a condition for "survival of the fittest," by race prejudice, and by imperialism. It holds that civilization is for the few "best," not necessarily for the many. Progress lies through the selection of the few efficient, masterful, aggressive individuals, races, or nations. Individualism is a policy which favors these few. It is Nature's method of dealing. It is of course regrettable that there should be weak, backward, ineffective individuals or races, but their exploitation serves the advance of the rest, and benevolence or charity may mitigate the most painful results.
The older economists of democratic individualism could properly claim two respects in which economic justice was furthered by economic processes under free management and exchange. The social body is in truth made up of members, and the old policy had been to tie up the members to make the body grow. It did promote justice to remove needless and excessive restrictions. In the second place, it is true, as the economists insisted, that in a free exchange each party profits if he gets what he wants. There is mutual benefit, and so far as this goes there is an element of justice. But while the benefit may be mutual, the amount of advantage each gets is not necessarily the same, and if the party who has greater shrewdness or resources takes advantage of a great need on the part of the other, the result may be a very unequal division. Exchanges of a birthright for a mess of pottage will be common. Very well, says the individualist, Esau will know better next time—or if he doesn't, he is an object for charity. But the trouble is that even if Esau does "know better" he is in even poorer condition next time to make a bargain if his birthright is gone; besides, if starvation or misery for himself or his family is his only alternative, what good will it do him to "know better"? Can the result, then, be just or fair? This depends on how we define "just" and "fair." If we take a purely formal view and make formal freedom of contract the only criterion, then any price is fair which both parties agree to. The law for the most part takes this view, assuming absence of force or fraud. But this leaves out of account everything except the bare formal act of assent. It is too abstract a conception of personality on which to base a definition of justice. To get the true organic relation of mutual service and benefit by a system of individualism we must have the two parties to the bargain equal. But in a large part of the exchange of business and services the two parties are not equal. One has greater shrewdness, better education, more knowledge of the market, more accumulated resources, and, therefore, less pressing need than the other. The moral consciousness will call prices or contracts unfair where the stronger takes advantage of the weaker's necessities, even if the law does not.
Competition.—The fact of competition is depended upon by the individualist to obviate the disadvantages of the weaker party. If A is ignorant of the market, B may impose upon him; but if C and D are competing with B for A's goods or services, A will soon find out what they are "worth." That is, he will get for them a social and not a purely individual valuation. There is doubtless such a gain to A. But in considering competition as removing the objections to the unfairness possible in bargaining, we must bear in mind two things. First, competition cuts both ways. It helps A when several compete for his goods or labor; but, on the other hand, it may ruin one of the competitors. If A is a laborer, it is a good thing if X, Y, and Z, employers, compete for his services. But if the boot is on the other foot, if B, C, and D also are laborers and compete with A for a place, we have the conditions which may lead to the sweat-shop. Whether there is any better way to avoid unequal distribution will be considered later. The second and seemingly fatal objection to competition as a means to justice, is that free competition under an individualistic system tends to destroy itself. For the enormous powers which the new forms of economic agency and technique give to the individual who can wield them, enable him to crush competitors. The process has been repeated over and over within the past few years in various fields. The only way in which a semblance of competition has been maintained in railroad business has been by appeal to the courts. This is an appeal to maintain individualism by checking individualism, and as might be expected from such a contradictory procedure, has accomplished little. Nor can it be maintained that the evils may be obviated, as Spencer holds, by private restraints on excessive competition. As already pointed out, if one of a body of competitors is unscrupulous, the rest are necessarily at a disadvantage. Under present conditions individualism cannot guarantee, and in many cases cannot permit, just distribution and a true organic society.
The other school of individualists is not disturbed by inequality of goods. It frankly accedes to the logic of unrestrained competition. It stakes its case upon the importance for social welfare of the exceptionally gifted few. It is important to have their services. It can have them only on terms which they set, as they will not work unless there is sufficient motive. It is, on this view, perfectly just that all the enormous increase of wealth due to modern methods should go to the few leaders, for their ability has produced it all. "The able minority of men who direct the labor of the majority are the true producers of that amount of wealth by which the annual total output, in any given community, exceeds what would have been produced by the laborers if left to their own devices, whether working as isolated units or in small self-organized groups, and controlled by no knowledge or faculties but such as are possessed in common by any one who can handle a spade or lay one brick upon another."[238]