Another Great Advance is the Change in What Makes Up the Chief Values of Life.—In early times the values of life were largely found in food, clothing, personal ornaments, bodily comfort, sex gratifications. Enjoyment of these involved exclusive possession and therefore property. But with the advance of civilization an increasing proportion of life's values falls in the mental realm of sharable goods.
Satisfaction in knowledge, in art, in association, in freedom, is not diminished, but increased when it is shared. The educated man may have no more property than the illiterate. He has access to a whole system of social values. He has freedom; he has a more genuinely independent type of power than accrues from the mere possession of things. The society of the future will find a part of its justice in so adjusting its economic system that all may enter as fully as possible into this more social world.
Methods of Social Selection.—Finally, recognizing all the value of the competitive process in the past as a method of selecting ability, it must be regarded as crude and wasteful. It is like the method of blind trial and error which obtains in the animal world. The method of ideas, of conscious use of means to secure ends, is the more effective and the more rational. Society now is gaining the scientific equipment which may allow the substitution of the more effective and less wasteful method. It should discover and educate capacity instead of giving merely a precarious encouragement to certain special types.
§ 9. THREE SPECIAL PROBLEMS
Three special problems may be noticed about which moral judgment is as yet uncertain: The open versus the closed shop, the capitalization of corporations, and the "unearned increment."
1. The Open versus the Closed Shop.—In certain industries in which the workmen are well organized they have made contracts with employers which provide that only union men shall be employed. Such a shop is called a closed shop, in distinction from an "open shop" in which non-union men may be employed in part or altogether. The psychological motive for the demand for the closed shop is natural enough: the union has succeeded in gaining certain advantages in hours or wages or both; this has required some expense and perhaps some risk. It is natural to feel that those who get the advantage should share the expense and effort, and failing this, should not be admitted to the shop. If the argument stopped here it would be insufficient for a moral justification for two reasons. First, joining a union involves much more than payment of dues. It means control by the union in ways which may interfere with obligations to family, or even to the social order. Hence, to exclude a fellow workman from the opportunity to work because he—perhaps for conscientious reasons—would not belong to the union, could not be justified unless the union could make it appear that it was maintaining a social and not merely a group interest. Second, in some cases unions have sought to limit output. In so far as this is done not for reasons of health but to raise prices, the union is opposing the interest of consumers. Here again the union must exhibit a social justification if it is to gain social approval.
On the other hand it may be noted that the individualist of the second sort—who believes in the competitive struggle as a moral process—has no ground on which to declare for "open shop." Exactly the same principle which would permit combination in capital and place no limit on competitive pressure, provided it is all done through free contracts, can raise no objection against combinations of laborers making the best contracts possible. When a syndicate of capitalists has made a highly favorable contract or successfully underwritten a large issue of stock, it is not customary under the principle of "open shop" to give a share in the contract to all who ask for it, or to let the whole public in "on the ground floor." Nor are capitalists accustomed to leave a part of the market to be supplied by some competitor for fear such competitor may suffer if he does not have business. When the capitalist argues for the open shop upon the ground of freedom and democracy, it seems like the case of the mote and the beam.
An analogy with a political problem may aid: Has a nation the right to exclude (or tax heavily) goods or persons from other countries? May it maintain a "closed shop"? The policy of the American colonists and of the United States has varied. The Puritans maintained a "closed shop" on religious lines. They came to this country to maintain a certain religion and polity. They expelled several men who did not agree with them. The United States excludes Chinese laborers, and imposes a tariff which in many cases is intended to be prohibitive against the products of other countries. This is done avowedly to protect the laborer, and in so far as it is effective it closes the shop. The maxim "This is a white man's country" is a similar "closed shop" utterance. On moral grounds the non-union man is in the same category as the man of alien race or country. What, if anything, can justify a nation or smaller group from excluding others from its benefits? Clearly the only conditions are (1) that the group or nation is existing for some morally justifiable end, which (2) would be endangered by the admission of the outsiders. A colony established to work out religious or political liberty would be justified in excluding a multitude who sought to enter it and then subvert these principles. If a union is working for a morally valuable end, e.g., a certain standard of living which is morally desirable, and if this were threatened by the admission of non-union men, the closed shop would seem to be justified. If the purpose were merely to secure certain advantages to a small group, and if the open shop would not lower the standard but merely extend its range of benefits, it is hard to see why the closed shop is not a selfish principle—though no more selfish than the grounds on which the tariff is usually advocated.
2. The Capitalization of Corporations, especially of public service corporations, is a matter on which there is a difference of policy in different states, owing probably to uncertainty as to the morality of the principles involved. The two theories held are: (a) Companies should issue capital stock only on the basis of money paid in; dividends then represent a return on actual investment. (b) Companies may issue whatever stock they please, or whatever they expect their income will enable them to pay dividends upon; dividends will then represent return for valuable privileges, or for some utility to be marketed. In behalf of this latter view it may be claimed that if the company pays dividends the investors have nothing to complain of, and if it sells its products or transportation at market rates, the consumer has nothing to complain of.
So far as the relations between corporation and investor are concerned, the issues are simple. If the stocks are issued with no expectation that they will give any return, merely to "sell," it is pure dishonesty, of the same type which under cruder conditions sold spavined horses or made counterfeit money, and now assumes the more vulgar type of dealing in "green goods." The fact that fictitious capital can be publicly advertised, gives it a financial but not a moral advantage. This, however, would have such decided limitations, credulous as human nature is, that if fictitious capital paid no dividends it would soon have no market. Hence, for the far-seeing promoter, the pressure is toward making some at least of the fictitious capital pay dividends. What is the principle in this case? If we are dealing with a new and untried mode of production or public service, the case is simply that of any speculation. If a proposed product has a possible utility, but at the same time involves so much risk that in the long run only half of such enterprises will succeed, society may consider it worth offering a profit equal to fifty per cent. in order to pay for the risk. If, on the other hand, the income is to derive from valuable public franchises, or from the growth of the community and its necessities, the case is different. Here there is little, if any, risk for which it is fair for society to pay. The excessive capital beyond the cost is designed to disguise the rate of profit, and therefore conceal from the community the cost of the goods or service. If the public demands cheaper rates it is told that the company is now paying only a fair dividend upon its stock.[247] The usual method of capitalizing many enterprises of a quasi-public sort is to issue bonds to cover the cost of construction or plant, and then one or more series of stocks which are known as "velvet." In part these stocks may represent a work of organization which is a legitimate public service, but in many cases they represent devices for transferring public wealth to private property. Enormous sums have been taken from the public in this manner. The element which makes this method particularly obnoxious is that the quasi-public corporations are given a monopoly by the community and then take advantage of this to capitalize indefinitely the necessities of a growing community. In this case the conception of public service is lost sight of in the "dazzling possibility of public exploitation."[248]