Freeland: A Social Anticipation

by Theodor Hertzka

'It certainly cannot be denied that we are considerably inconvenienced by the frequent and sudden changes of price in the markets of the world caused by the anarchic character of the exploiting system of production. We are thereby often compelled to diminish our production in certain directions, and divert the labour thus set free to other branches of industry, though there is no actual change in the cost of production or in the relative demand. These foreign, sudden, and incalculable influences sometimes make a diversion of labour from one production to another necessary in order to preserve an equilibrium in the profits, though the regular and automatic migration of labour from one industry to another is sufficient to correct the disturbance in the relations between supply and demand due to natural causes. But these spasmodic foreign occurrences cannot produce a serious convulsion in our industrial relations. Just as it is impossible to throw out of equilibrium a liquid which yields to every pressure or blow, so our industry is able to preserve its equilibrium by means of its absolutely free mobility. It may be thrown into fruitless agitation, but its natural gravity at once restores the harmony of its relations. But, as I have said, such a disturbance is produced only by a partial over-production abroad. That this brings about a superabundance of all commodities, we care but little. Since foreign countries do not send us their goods for nothing, but demand other goods in return, what those other goods shall be is their business, not ours. We have no interest-bearing bonds or saleable property in land; hence our export goods must be the produce of our labour. The fact that in Freeland every product must find a purchaser is therefore by no means affected by external trade.'

'That is very clear,' I admitted.

'But,' interposed my father,' why do you not protect yourselves against disturbance due to foreign fluctuations in production, by a total exclusion of foreign imports?'

'Because that would be to cut off one's hand in order to prevent it from being injured,' was Mr. Clark's drastic answer. 'We import only those goods which we cannot produce so cheaply ourselves. But since, as I have already taken the liberty of saying, the imported goods are not presented to us, but must be paid for by goods produced by us, it is of importance that we should be able to produce the goods with which we make the payment more cheaply--that is, with less expenditure of labour-power--than we could the imported goods. For instance, we manufacture scarcely any cotton goods, but get nearly all such goods from England and America. We could, certainly, manufacture cotton goods ourselves, but it is plain that we should have to expend upon their manufacture more labour-power than upon the production of the corn, gold, machinery, and tools with which we pay for the cotton goods that we require. If it were not so, we should manufacture cotton goods also, for there is no conceivable reason for not doing so but the one just mentioned. If, therefore, our legislature prohibited the importation of cotton goods, we should have to divert labour from other branches of industry for the sake of producing less than we do now. We should have either to put up with fewer goods, or to work more, to meet the same demand. Hence, in this country, to enact a protective duty would be held to be pure madness.'

'Then you hold,' said my father, 'that our European and American economists and statesmen who still in part adhere to the system of protection, are simply Bedlamites; and you believe that the only rational commercial policy is that of absolute free trade?'

'Allow me to say,' answered Mr. Clark,' that Europe and America are not Freeland. I certainly cannot regard protection even abroad as rational, for the assumptions from which it starts are under all circumstances false. But neither do I think the foreign free trader is essentially wiser than the protectionist, for he also starts from assumptions which are baseless in an exploiting country. The prohibitionists think they are encouraging production: they are doing the opposite, they are hindering and hampering production; and the free traders, in so far as they insist upon this fact, are perfectly correct. Both parties, however, fail to see that in an exploiting society, which is never able to utilise more than a small part of its power to produce, the influence of legislative interference with trade upon the good or the bad utilisation of productive power is a matter of very little importance. Of what advantage is it to the free traders that a nation under the domination of their commercial system is able to make the most prolific use of their industrial capacities, so long as the continuance of industrial servitude prevents this nation from enjoying more than enough to satisfy the barest necessities of life? More than is consumed cannot, under any circumstances, be produced; and consumption among you abroad is so infinitely small, that it is verily ridiculous to dispute over the question whether this or that commodity can be produced better at home or abroad.

'What alone interests us in this controversy among the foreign commercial politicians is that neither party has the slightest suspicion that what the free traders rightly reproach the protectionists with, and what the latter wrongly defend, is the very thing that gains so many adherents to protection--namely, the hindering and hampering of production. The protectionists have a right to boast that they compel their people to apply two day's labour or a double amount of capital to the production at home of a thing which, by means of external trade, might have been exchanged for things that are the product of merely half as much expenditure of home labour. We, who work in order to enjoy, would have a good right to treat as insane any persons among us who proposed such a course as an "encouragement of home labour"; but among you, where labour and enjoyment are completely dissevered, where millions cry for work as a favour--among you, the hampering of labour is felt to be a benefit because it makes more toil necessary in order to procure an equal amount of enjoyment. Among you it is also a somewhat dangerous narcotic, for protection has a Janus head: it not merely increases the toil, it at the same time still more diminishes the consumption by raising the price of the articles in demand, the rise in price never being followed immediately by a rise in wages; so that, in the end, in spite of the increased difficulty in production, no more labour and capital are employed than before. But the intimate relation between these things is as a book sealed with seven seals to both protectionists and free traders. Had it been otherwise, they must long since have seen that the cure for industrial evils must be looked for not in the domain of commercial politics, but in that of social politics.'

'Now I begin to understand,' I cried out, 'the widespread growth of economic reaction against which we Western Liberals are waging a ridiculous Quixotic war with all our apparently irrefutable arguments. We present to the people as an argument against protection exactly that after which they are--unconsciously, it is true--eagerly longing. Protective tariffs, trade guilds, and whatever else the ingenious devices of the last decades may be called, I now understand and recognise as desperate attempts made by men whose very existence is threatened by the ever growing disproportion between the power to produce and consumption--attempts to restore to some extent the true proportion by curbing and checking the power to produce. Whilst the protectionist is eager to put fetters upon the international division of labour, to keep at a distance the foreigner who might otherwise save him some of his toil, the advocate of trade-guilds fights for hand-labour against machine-labour and commerce. And when I look into the matter, I find all these people are in a certain sense wiser than we Liberals of the old school, who know no better cure for the malady of the time than that of shutting our eyes as firmly as possible. It is true, our intentions have been of the best; but since we have at length discovered how to attain what we wished for, we should at once throw off the fatal self-deception that political freedom would suffice to make men truly free and happy. Political freedom is an indispensable, but not the sole, condition of progress; whoever refuses to recognise this condemns mankind afresh to the night of reaction. For if, as our Liberal economics has taught, it were really contrary to the laws of nature to guarantee to all men a full participation in the benefits of progress, then not only would progress be the most superfluous thing imaginable, but we should have to agree with those who assert that the eternally disinherited masses can find happiness only in ignorant indifference. Now I realise that the material and mental reaction is the logically inevitable outcome of economic orthodoxy. If wealth and leisure are impossible for all, then it is strictly logical to promote material and mental reaction; whilst it is absurd to believe that men will perpetually promote a growth of culture without ever taking advantage of it. I now see with appalling distinctness that if our toiling masses had not been saved by their social hopes from sharing our economic pessimism, we Liberals would long since have found ourselves in the midst of a reaction of a fearful kind: it is not through us that modern civilisation has been spared the destruction which overwhelmed its predecessors.'

After dinner, Mr. Ney invited us to accompany him to the National Palace, where the Parliament for Public Works was about to hold an evening session in order to vote upon a great canal project. He thought the subject would interest us. We accepted the invitation with thanks.

The Parliament for Public Works consists of 120 members, most of whom, as David--who was one of the party--told me, are directors of large associations, particularly of associations connected with building; but among the members are also professors of technical universities, and other specialists. The body contains no laymen who are ignorant of public works; and the parliament may be said to contain the flower and quintessence of the technical science and skill of all Freeland.