Freeland: A Social Anticipation

by Theodor Hertzka

7. The highest authority of the association is the general meeting, in which every member possesses an equal active and passive vote. The general meeting carries its motions by a simple majority of votes; a majority of three-fourths is required for the alteration of statutes, dissolution, or liquidation.

8. The general meeting exercises its rights either directly as such, or through its elected functionaries, who are responsible to it.

9. The management of the business of the association is placed in the hands of a directorate of x members, elected for x years by the general meeting, but their appointment can be at any time rescinded. The subordinate business functionaries are nominated by the directorate; but the fixing of the salaries--measured in hours of work--of these functionaries is the business of the general assembly on the proposition of the directorate.

10. The general meeting annually elects a council of inspection consisting of x members, to inspect the books and take note of the manner in which the business is conducted, and to furnish periodical reports.

It will strike the reader at once that only with reference to the possible dissolution of an association (section 6) is there a mention of what should apparently be regarded as the principal thing--namely, of the 'property' of the associations and of the claims of the members upon this property. The reason of this is that any 'property' of the association, in the ordinary sense, does not exist. The members, it is true, possess the right of usufruct of the existing productive capital; but as they always share this right with every newly entering member, and are themselves bound to the association by nothing except their interest in the profits of their labour, so there can be no property-interest in the association so long as they are carrying on their work. And, in fact, that which everyone can use cannot constitute property, however useful it maybe. There are no proprietors--merely usufructuaries of the association's capital. And should it be thought that this is in contradiction to the obligation to reimburse the loaned productive capital of the associations, it ought not to be overlooked that even this repayment of capital--except in the already mentioned case of a liquidation--is done by the members merely in their capacity of usufructuaries of the means of production. As the reimbursed capital is derived from the profits, and these are divided among the members in proportion to each one's contribution of work, every member contributes to the reimbursement in proportion to the amount of work he does. And when the subject is looked at more closely it will be seen that the repayments are ultimately derived from the consumers of the commodities produced by the associations; they form, of course, a part of the cost of production, and must necessarily be covered by the price of the product. That this shall take place fully and universally is ensured with infallible certainty by the free mobilisation of labour. A production in which these repayments were not completely covered by the price of the commodities produced would fail to attract labour until the diminished supply of the commodities had produced the requisite rise in price. When the repayments have all been made, this part of the cost of production ceases; the association capital may be regarded as amortised, and the prices of the commodities produced sink--again under the influence of the free mobilisation of labour; so that the members of the association individually profit as little by the employment of burdenless capital as they suffered before by the liquidation of their burden. Profit and loss are always distributed--still thanks to the mobilisation of labour--equally among all the workers of Freeland.

Thus it is seen that, in consequence of this simple and infallibly operative arrangement, productive capital is, strictly speaking, as ownerless as the land; it belongs to everyone, and therefore to no one. The community of producers supplies it and employs it, and it does both in exact proportion to the amount of work contributed by each individual; and payment for the expenditure is made by the community of consumers--again by each one in exact proportion to the consumption of each individual.

That an absolute and universally uniform level of profits should result from this absolutely free mobility of labour neither was expected, nor has it been attained. Often the inequality is not discovered until the balance-sheets are drawn up, and therefore cannot until then be removed by the ebb and flow of labour. But, besides this, there is an important and continuous difference of gains--a difference which it is impossible to equalise, and which has its intrinsic foundation in the difference in the amount of effort and inconvenience involved in engaging in the different branches of labour. Certainly it is not the same in Freeland as in other parts of the world, where only too often the burden of labour is in inverse ratio to its profitableness; with us difficult, burdensome, unpleasant kinds of labour must without exception obtain larger gains than the easier and more agreeable--so far as the latter do not demand special skill--otherwise everyone would at once forsake the former and apply themselves to the latter. Moreover, the premium allowed to the older members in section 3--which varies in different associations from one to three per cent. for each year, and therefore, in cases of long-continued labour, amounts to a very respectable sum, and is intended to attach the proved veteran of labour to the undertaking--prevents an absolute equalisation of gains even in associations of exactly similar constitution.

Section 5 of the statutes requires a brief explanation. In the first year, the calculation of the advances to be made to the association members could not, of course, be based upon the net profits of the previous year, and the committee therefore suggested a fixed sum of one shilling per hour. This strikingly high rate will perhaps excite surprise, particularly in view of the scale of prices that prevailed at the Kenia; and it may reasonably be asked whence the committee derived the courage to hope for such a high rate of profits as would justify the payment of such an advance. But this valuation was not recklessly made, it was in truth the expression of extreme prudence. The results of the associated productive labour hitherto in operation had actually been much more favourable. The corn industry, for example, had yielded a gross return of a little over 41,000 cwt. of different cereals for a total expenditure of 44,500 hours of labour. The average price of these cereals in Eden Vale at that time was not quite 3s. per cwt., as we had grown more than we needed, and the export through Mombasa yielded only 3s. on account of the still very primitive means of transport. We had therefore, in round figures, agricultural produce worth £6000. The cost of producing this was: materials £400, amortisation of invested capital (implements and cattle) £300; so that £5,300 remained as net profit. As a tax to cover all those expenses which, in accordance with our programme, had to be incurred by the commonwealth, and which will be spoken of further on, not less than thirty-five per cent. was set aside. Thus a round sum of £3,400 remained as disposable profit. Divided by the 44,500 hours of labour, this gave 1s. 6d. for each hour. This was also approximately the average profit of the other kinds of production, so far as it was possible to assess it in the absence of a general market at the Kenia. Thus it could be assumed with the utmost confidence that, had we been able to control the prices of all commodities by means of supply and demand, there would either have been paid, or might have been assessed, at least a price equivalent to that which produced the agricultural profit. For we could at once have produced--as far as our supply of labour went--and disposed of cereal crops valued at 3s. per cwt. at Eden Vale; therefore, in the period of work through which we had already passed everyone was able to earn at least 1s. 6d. by one hour's labour. But, as will presently be seen, we were entering upon the next period of work with much improved means; therefore, apart from unforeseen contingencies, the productiveness of our labour must very considerably increase, so that, in granting an advance of one shilling for each hour of labour, we calculated that we were advancing scarcely the half of the actual earnings--an assumption that was fully borne out by the result. In later seasons it became the practice of most associations to make the advance as much as ninety per cent. of the net profits of the previous year.

As to the salaries of the directorate, these were from the beginning very different in different associations. Where no extraordinary knowledge and no special talent were necessary, the overseers were content to have their superintendence valued at the price of from eight to ten hours of work per diem. There were directors who received as much as the value of twenty-four hours of work per diem, and in the very first year this amounted to an income of about £850. The functionaries of a lower grade received, as a rule, the value of from eight to ten hours of work per diem. In most cases the controlling council of inspection received no extra remuneration for their duties.

The credit granted to the associations in the first year of work reached an average amount of £145 per head of the participating workers; and if it be asked whence we derived the funds to meet the requirements of the total number of our members, the answer is, from the members themselves. And the reference here is not merely to those voluntary contributions paid by the members on their joining the International Free Society, for these contributions were in the first instance devoted to the transport service between Trieste and Freeland, and would not have sufficed to supply our associations with capital if they had all been devoted to that purpose. The credit required in the course of the first year rose to nearly two million pounds sterling, while the voluntary contributions up to that date did not much exceed one million and a-half. The principal means which enabled us to meet the requirements of our members were supplied us, on the one hand by the Society's property hi disposable materials, and on the other hand by the members' tax.