Important changes have been made in the structure of society since the inauguration of the present economic system, but these changes have not been radical enough to keep pace with the still more radical changes that have occurred in the mechanism of economic production and exchange. The chief failure of the present order is its failure to readjust social machinery in conformity with the economic changes that have occurred in society, and this failure is due, in large measure, to the limitations contained within the capitalist system.
Like all social systems which attain to positions of consequence, the capitalist system has played an important rôle in the development of society, and like all such systems, it has had its day. The needs of the community have advanced to a point at which they cannot be met under capitalism, whose chief failure to function more effectively in the present crisis may be traced to:
1. Excessive centralization of the determining control of industry in the hands of financial manipulators, who do not even enjoy the advantage of owning the industries which they dominate.
Through shrewd financial dealing they have maneuvered themselves into positions of importance, which they hold because of their ability to manipulate, a political rather than an industrial virtue. The necessary result of this concentration of authority is a denial of local self-determination and a corresponding loss of local initiative. The less local initiative there is, the more centralization is required to keep the machinery running, until a point is reached where all power and authority are exercised from the centre, and the local group is as devoid of spontaneity as it is of authority. At somewhere about this point, the friction involved in administration becomes so great that the whole of the social energy is consumed in the routine of keeping the social machinery running, and there is no surplus, either for leisure or improvement. This was the outcome of a similar centralization of authority under Feudalism, and it shows itself in any organization that permits itself to drift into the danger-zone of bureaucracy.
2. A second obstacle to the further development of the present economic system is nationalism.
The political state has become an adjunct to the capitalist economic system. It relies for one of its sources of driving power upon a concept of nationalism which places the political boundary lines that happen to surround a people first among the public limitations on conduct. "My country, right or wrong," becomes a catch phrase on the lips of school children. Whatever transpires inside these political boundary lines is sanctified by its association with the fatherland, while events having their origin outside of the country must be correspondingly discounted.
Since the middle of the nineteenth century the business men of every great industrial nation have been compelled to go abroad for raw materials, for markets and for investment opportunities. In order to obtain these economic advantages, the citizens of the civilized nations have not hesitated to plunder the natives, and if they resisted, to murder them—as Britain has done in India, as Belgium has done in the Congo, as Japan has done in Korea, as the United States has done in the Philippines and Hayti. This robbing and murdering is sanctified by the fact that "our interests were in danger" or that "our flag was fired upon" or that "our citizens have lost lives and property." But during the past few decades the exploiting nations have found more than natives to deal with. In almost every instance there have been at least two claimants for each choice economic morsel, and a conflict has frequently resulted, like that between Russia and Japan for the control of Eastern Asia or between Germany and France for the control of the iron and coal deposits of Western Europe. In such cases the wars are justified to the home populations as necessary defensive measures.
The justification may or may not be complete, but the bills must be paid, and they have proved to be inordinately high. The cost of killing African natives or unarmed Haytians is comparatively low, but the cost of killing Frenchmen and Germans is enormous. If, as some experts have estimated, the direct cost of the Great War was 250 billions of dollars, and if only 10 millions were killed, it cost something like $25,000 to kill each of the ten millions. It is at this point that nationalism breaks down because of the sheer inability of the peoples to foot the bills that have been contracted in destroying their "enemies"—namely, the citizens of other nations.
When this point is reached—when the costs of expansion beyond boundary lines of a nation are so great that the people who do the country's work cannot or will not meet them, the end of the system that depends upon expansion is already in sight. That point has been reached and passed in capitalist society.