Freeland: A Social Anticipation

by Theodor Hertzka

It remains now to say something of the measures adopted to ensure the most extensive publicity of industrial proceedings. We start from the principle that the community has to concern itself with the affairs of the individual as little as possible in the way of hindering or commanding, but, on the other hand, as much as possible in the way of guiding and instructing. Everyone may act as he pleases, so far as he does not infringe upon the rights of others; but, however he acts, what he does must be open to everyone. Since he here has to do not with industrial opponents, but only with industrial rivals, who all have an interest in stimulating him as much as possible, this publicity is to his own advantage. In conformity with this principle, when a new member was admitted by the outside agents, his industrial specialty was stated, and the report sent as quickly as possible to the committee. This was not done out of idle curiosity, nor from a desire to exercise a police oversight; rather these data were published for the use and advantage of the productive associations as well as of the new members themselves. The consequence was that, as a rule, the new members on their arrival at the Kenia found suitable work-places prepared for them, such as would enable them at once to utilise their working capacity to the best advantage. No one forced them to accommodate themselves to these arrangements made without their co-operation, but as these arrangements served their advantage in the best conceivable way, they--with a few isolated exceptions--accepted them with the greatest pleasure.

The second and most important subject of publication were the trade reports of the producers, of the associations as well as of the comparatively few isolated producers. Of the former, as being by far the more important and by their very nature compelled to adopt a careful system of bookkeeping, a great deal was required--in fact the full disclosure of all their proceedings. Gross returns, expenses, net returns, purchases and sales, amount of labour, disposal of the net returns,--all must be published in detail, and, according to the character of the respective data, either yearly, or at shorter intervals--the amount of labour, for example, weekly. In the case of the isolated producers, it sufficed to publish such details as would be disclosed by the regulation about to be described.

The buying and selling of all conceivable products and articles of merchandise in Freeland was carried on in large halls and warehouses, which were under the management of the community. No one was forbidden to buy and sell where he pleased, but these public magazines offered such enormous advantages that everyone who did not wish to suffer loss made use of them. No fee was charged for storing or manipulation, as it was quite immaterial, in a country where everyone consumed in proportion to his production, whether the fees were levied upon the consumers as such, or upon the same persons in their character as producers in the form of a minimal tax. What was saved by the simplification of the accounts remained as a pure gain. Further, an elaborate system of warranty was connected with these warehouses. Since the warehouse officials were at the same time the channel through which purchases were made, they were always accurately informed as to the condition of the market, and could generally appraise the warehoused goods at their full value. The sales took place partly in the way of public auction, and partly at prices fixed by the producers; and here also no commission was charged to either seller or buyer.

The supreme authority in Freeland was at the same time the banker of the whole population. Not merely every association, but every individual, had his account in the books of the central bank, which undertook the receipts and the disbursements from the millions of pounds which at a later date many of the associations had to receive and pay, both at home and abroad, down to the individual's share of profits on labour and his outlay on clothes and food. A 'clearing system,' which really included everything, made these numberless debit and credit operations possible with scarcely any employment of actual money, but simply by additions to and subtractions from the accounts in the books. No one paid cash, but gave cheques on his account at the central bank, which gave him credit for his earnings, debited his spendings to him, and gave him every month a statement of his account. Naturally the loans granted by the commonwealth as capital for production, mentioned in the previous chapter, appeared in the books of the bank. In this way the bank was informed of the minutest detail of every business transaction throughout the whole country. It not only knew where and at what price the producers purchased their machinery and raw material and where they sold their productions, but it knew also the housekeeping account, the income and cost of living of every family. Even the retail trade could not escape the omniscience of this control. Most of the articles of food and many other necessaries were supplied by the respective associations to their customers at their houses. All this the bank could check to a farthing, for both purchases and sales went through the books of this institution. The accounts of the bank had to agree with the statements of the statistical bureau, and thus all these revelations possessed an absolutely certain basis, and were not merely the results of an approximate valuation. Even if anyone had wished to do so, it would have been simply impracticable to conceal or to falsify anything.

This comprehensive and automatically secured transparency of the whole of the productive and business relations afforded to the tax assessed in Freeland a perfectly reliable basis. The principle was that the public expenditure of the community should be covered by a contribution from each individual exactly in proportion to his net income; and as in Freeland there was no source of income except labour, and the income from this was exactly known, there was not the slightest difficulty in apportioning the tax. The apportionment of the tax was very simply made as soon as the income existed, and that through the medium of the bank; and this was done not merely in the case of the associations, but also of the few isolated producers. In fact, by means of its bank the community had everyone's income in hand sooner than the earners themselves; and it was merely necessary to debit the earners with the amount and the tax was paid. Hence in Freeland the tax was regarded not as a deduction from net income, but as an outlay deducted from the gross product, just like the trade expenses. In spite of its high amount, no one looked upon it as a burden, because everyone knew that the greater part of it would flow back to him or to his, and every farthing of it would be devoted to purposes of exclusively public utility, which would immediately benefit him. It was therefore quite correct to recognise no difference whatever between productive outlay by the commonwealth and the more private outlay of the associations and individuals, and accordingly to designate the former not as 'taxes,' but as 'general expenditure.'

This general expenditure, however, was very high. In the first year it amounted to thirty-five per cent. of the net profits, and it never sunk below thirty per cent., though the income on which the tax was levied increased enormously. For the tax which the community in Freeland had imposed upon themselves for the very purpose of making this increase of wealth possible was so comprehensive in its objects as to make a most colossal amount necessary.

One of its objects was to create the capital required for the purposes of production. But it was only at first that the whole of this had to be met out of the current tax, as afterwards the repayment of the loans partly met the new demands.

A constantly increasing item of expenditure was the cost of education, which swallowed up a sum of which no one outside of Freeland can have any conception.

The means of communication also involved an expenditure that rose to enormous dimensions, and the same has to be said of public buildings.

But the chief item of expenditure in the Freeland budget was under the head of 'Maintenance,' which included the claims of those who, on account of incapacity for work or because they were by our principles released from the obligation of working, had a right to a competence from the public funds. To these belonged all women, all children, all men over sixty years of age, and of course all sick persons and invalids. The allowances to these different classes were so high that not merely urgent necessities, but also such higher daily needs as were commensurate with the general wealth in Freeland for the time being, could be met. With this view the allowances had to be so calculated that they should rise parallel with the income of the working part of the population; the amounts, therefore, were not fixed sums, but varied according to the average income. The average net profit which fell to the individual from all the productive labour in the country, and which increased year by year, was the unit of maintenance. Of this unit every single woman or widow--unless she was a teacher or a nurse, and received payment for her labour--was allotted thirty per cent.; if she married, her allowance sank to fifteen per cent.; the first three children in every household were allowed five per cent. each. Parentless orphans were publicly supported at an average cost of twelve per cent. of the maintenance unit. Men over sixty years and sick persons and invalids received forty per cent.