The Common Sense of Socialism / A Series of Letters Addressed to Jonathan Edwards, of Pittsburg

by John Spargo

Capitalism began when a class of property owners employed other men to work for wages. The tendency was for wages to keep at a level just sufficient to enable the workers to maintain themselves and families. They had to get enough for families, you see, in order to reproduce their kind—to keep up the supply of laborers.

Competition was the law of life in the first period of capitalism. Capitalists competed with each other for markets. They were engaged in a mad scramble for profits. Foreign countries were attacked and new markets opened up; new inventions were rapidly introduced. And while the workers found that in normal conditions the employers were in what Adam Smith calls "a tacit combination" to keep wages down to the lowest level, and were obliged to combine into unions, there were times when, owing to the fierce competition among the employers, and the demand for labor being greatly in excess of the supply, wages went up without a struggle owing to the fact that one employer would try to outbid another. In other words, temporarily, the natural, "tacit combination" of the employers, to keep down wages, sometimes broke down.

Competition was called "the life of trade" in those days, and in a sense it was so. Under its mighty urge, new continents were explored and developed and brought within the circle of civilization. Sometimes this was done by means of brutal and bloody wars, for capitalism is never particular about the methods it adopts. To get profits is its only concern, and though its shekels "sweat blood and dirt," to adapt a celebrated phrase of Karl Marx, nobody cares. Under stress of competition, also, the development of mechanical production went on at a terrific pace; navigation was developed, so that the ocean became as a common highway.

In short, Jonathan, it is no wonder that men sang the praises of competition, that some of the greatest thinkers of the time looked upon competition as something sacred. Even the workers, seeing that they got higher wages when the keen and fierce competition created an excessive demand for labor, joined in the adoration of competition as a principle—but among themselves, in their struggles for better conditions, they avoided competition as much as possible and combined. Their instincts as wage-earners made them keen to see the folly of division and competition among themselves.

So competition, considered in connection with the evolution of society, had many good features. The competitive period was just as "good" as any other period in history and no more "wicked" than any other period.

But there was another side to the shield. As the competitive struggle among individual capitalists went on the weakest were crushed to the wall and fell down into the ranks of the wage workers. There was no system in production. Word came to the commercial world that there was a great market for certain manufactures in a foreign land and at once hundreds and even thousands of factories were worked to their utmost limit to meet that demand. The result was that in a little while the thing was overdone: there was a glut in the market, often attended by panic, stagnation and disaster. Rathbone Greg summed up the evils of competition in the following words:

"Competition gluts our markets, enables the rich to take advantage of the necessity of the poor, makes each man snatch the bread out of his neighbor's mouth, converts a nation of brethren into a mass of hostile units, and finally involves capitalists and laborers in one common ruin."

The crises due to this unregulated production, and the costliness of the struggles, led to the formation of joint-stock companies. Competition was giving way before a stronger force, the force of co-operation. There was still competition, but it was more and more between giants. To adopt a very homely simile, the bigger fish ate up the little ones so long as there were any, and then turned to a struggle among themselves.

Another thing that forced the development of industry and commerce away from competitive methods was the increasing costliness of the machinery of production. The new inventions, first of steam-power and later of electricity, involved an immense outlay, so that many persons had to combine their capitals in one common fund.

This process of eliminating competition has gone on with remarkable swiftness, so that we have now the great Trust Problem. Everyone recognizes to-day that the trusts practically control the life of the nation. It is the supreme issue in our politics and a challenge to the heart and brain of the nation.