Freeland: A Social Anticipation

by Theodor Hertzka

'But,' I objected, 'though this increased product is withheld from the workers, it is not ownerless--it belongs to the undertakers; and these too are men who wish to use their gains to satisfy some want or other. The undertakers will now increase their consumption; and after all one might suppose it would be impossible that a general disproportion should exist between supply and demand. Certainly it would now be commodities of another kind, the production of which would be stimulated in order to restore an equilibrium between the several branches of labour. If the increase belonged to the workers, then would more grain, more ordinary clothing, and more implements be required; but since it belongs to a few undertakers there will be an increased demand only for luxuries--dainties, laces, equipages--and for the implements requisite to produce these luxuries.'

'Exactly!' said David, who here joined in the conversation. 'Only the undertakers are by no means inclined to apply, in any considerable degree, the surplus derived from increased production to an additional consumption of luxuries; but they capitalise most of it--that is, invest it in implements of production. Nay, in some circumstances--as we heard yesterday--the "undertaker" is no man at all possessing human wants, but a mere dummy that consumes nothing and capitalises everything.'

'So much the better,' I said, 'wealth will increase all the more rapidly; for rapidly growing capital means rapidly increasing production, and that is in itself identical with rapidly increasing wealth.'

'Splendid!' cried David. 'So, because the working masses cannot increase their consumption, and the undertakers will not correspondingly increase theirs, and consequently there can be no increased consumption of any commodity whatever, therefore the surplus power of production is utilised in multiplying the means of production. That is, in other words, no one needs more grain--so let us construct more ploughs; no one needs more textile material--so let us set up more spinning-mills and looms! Are you not yet able to measure the height of absurdity to which your doctrine leads?'

I think, Louis, you, like myself, will admit that there is simply no reply to reasoning so plain and convincing. An economic system which bars the products of human industry and invention from the only use to which they should finally be applied--namely, that of satisfying some human requirement--and which is then astonished that they cannot be consumed, narrowly escapes idiocy. But that such is the character of the system which prevails in Europe and America must in the end become clear to everyone.

'But, in heaven's name, what becomes of the productive power among us which thus remains unemployed?' I asked. 'We are, on the whole, as advanced in art, science, and technical skill as you are in Freeland; I must therefore suppose that we could become as rich, or nearly so, as you, if we could only find a use for all our production. But we do not actually possess a tenth of your wealth, and yet there is twice as much hard work done among us as there is here. For though among you everyone works, and among us there are several millions of persons of leisure who live simply upon the toil of others, yet this is counterbalanced by the circumstance that our working masses are kept at their toil ten hours or more daily, whilst here an average working day is only five hours. Certainly among us there are millions of unemployed workers; but that also is more than compensated for by the labour of women and children, which is unknown among you. Where then, I repeat, lies the immense difference between the utilisation of our powers of production and of yours?'

'In the equipment of labour,' was the answer. 'We Freelanders do not work so hard as you do, but we make full use of all the aids of science and technics, whilst you are able to do this only exceptionally, and in no case so completely as we do. All the inventions and discoveries of the greatest minds are as well known to you as to us; but as a rule they are taken advantage of only by us. Since your aristocratic institutions prevent you from enjoying the things the production of which is facilitated by those inventions, you are not able to take advantage of the inventions except in such small measure as your institutions permit.'

Even my father was profoundly moved by this crushing exposition of a system which he had always been accustomed to honour as the highest emanation of eternal wisdom. 'Incredible! shocking!' he murmured in a tone audible only to myself.

But Mr. Clark proceeded: 'Among us, on the contrary, the theorem of the so-called classical economics, that a general excess of production is impossible, has become a truth, for in Freeland consumption and production exactly tally. Here there can be over-production only temporarily and in isolated kinds of goods--that is, the equilibrium between different kinds of production may be temporarily disturbed. But we have no need to be afraid of even this trifling danger. The intimate connection of all productive interests springing from the nature of our institutions is an antecedent guarantee of equilibrium between all branches of production. A careful examination will show that the whole of Freeland is one great productive society, whose individual members are independent of one another, and yet are connected in one respect--namely, in respect of the proceeds of their labour. Just because everyone can labour where and how he pleases, but everyone's labour is alike in aiming at the highest possible utility, so--apart from any incidental errors--it is impossible but that an equal amount of labour should result in an equal amount of utility. All our institutions tend towards this one point. At first, as long as our commonwealth was in its initial stages, it sometimes happened that considerable inequalities had to be subsequently balanced; the producers did not always know until the year's accounts were closed what one and the other had earned. But that was a period of childhood long since outlived. At present, every Freelander knows, to within such trifling variations as may be due to little unforeseen accidents, exactly what he and others have earned, and also what they have every prospect of earning in the near future. He does not wait for inequalities to arise and then set about rectifying them; but he takes care that inequalities shall not arise. Since our statistics always show with unerring accuracy what at the time is being produced in every branch of industry, and since the demand as well as its influence upon prices can be exactly estimated from a careful observation of past years, therefore the revenue not only of every branch of industry, but of every separate establishment, can be beforehand so reliably calculated that nothing short of natural catastrophes can cause errors worth notice. If such occur, then comes in the assistance of the reciprocal insurance. In fact, in this country, not only are there no crises, but not even any considerable variations in the different productions. Our Statistical Department publishes an unbroken series of exact comparative statistics, from which can at any time be seen where either fresh demand or excess of labour is likely to arise; our supply of labour is controlled by these returns, and that is sufficient--with rare exceptions--to preserve a perfect equilibrium in production. It frequently occurs that here or there a newly started establishment comes to grief, particularly in the mining industry. Such a failure must not, however, be regarded as a bankruptcy--how can undertakers become bankrupt when they have neither ground-rent, nor interest, nor wages to pay, and who in any case still possess their highly priced labour-power?--but at the worst as a case of disappointed expectations. And should the very rare circumstance occur, that the community or an association loses the loaned capital through the premature death of the borrower, of what importance is that in the face of the gigantic sums safely employed in our business? And if a guaranty (del credere) were insisted upon to cover such a loss, it would amount to scarcely a thousandth part of one per cent., and would not be worth the ink used in writing it.'

'And do not foreign crises sometimes disturb the calm course of your Freeland production? Are not your markets flooded, through foreign over-production, with goods for which there is no corresponding demand?' I asked.