Freeland: A Social Anticipation

by Theodor Hertzka

And who will undertake to say that such a turn of affairs is altogether impossible? The luxury of the few, it is said, cannot possibly absorb the immense surplus of modern productiveness. But why not? Because a rich man has only one stomach and one body; and, moreover, everyone cannot possibly have a taste for luxury. Granted; luxury, in its modern forms, cannot possibly consume more than a certain portion of the surplus produce of modern labour. But are we shut up to these modern kinds of luxury? What if the wealthy once more have recourse to a mode of spending repeatedly indulged in by antiquity in order to dispose of the accumulating proceeds of slave-labour? In ancient Egypt a single king kept 200,000 men busy for thirty years building his sepulchre, the great pyramid of Ghizeh. This same Pharaoh probably built also splendid palaces and temples with a no less profligate expenditure of human labour, and amassed treasures in which infinite labour was crystallised. Contemporaneously with him, there were other Egyptian magnates, priests, and warriors in no small number, who sought and found in similar ways employment for the labour of their slaves. If the luxury of the living did not consume enough, then costly spices, drink-offerings and burnt-offerings were lavished upon the dead, and thus the difficulty of disposing of the accumulated produce of labour was still further lightened. And this succeeded admirably. The Egyptian slave received a few onions and a handful of parched corn for food, a loin-cloth for clothing; and yet, notwithstanding a comparatively highly developed productiveness of the labour of countless slaves exploited by a few masters, there was no over-production. In ancient India the men in power excavated whole ranges of hills into temples, covered with the most exquisite sculptures, in which an infinite amount of labour was consumed; in ancient Rome the lords of the world ate nightingales' tongues, or instituted senseless spectacles, in order to find employment for the superfluous labour of countless slaves who, despite the considerable productiveness of labour, were kept in a condition of the deepest misery. And it answered. Why should not such a course answer in modern times? Because, thanks to the control we have acquired over nature, the productiveness of labour has become infinitely greater. Labour may have become infinitely more productive; indeed, I think it probable that it is no longer possible for the maddest prodigality of the few wealthy to give full employment to the whole of the labour-energy at present existing without admitting the masses to share in the consumption; but it would be possible for the wealthy to consume a very large portion of the possible produce. Then why does the modern exploiting society build no pyramids, no rock palaces; why do the lords of labour institute no costly cultus of the dead; why do they not eat nightingales' tongues, and keep the exploited populace busy with circus spectacles and mock sea-fights? They could indulge in these and countless other things, if they only discovered that the surplus must be consumed and not capitalised. But as long as they continue to multiply the instruments of labour, and only the instruments of labour, so long are they simply increasing over-production, and can become richer only in proportion as the consumption accidentally increases. As soon, however, as they adopt the above-mentioned expedient, the connection between their wealth and the lot of the masses is broken. Why does not this happen?

I hope it is not necessary for me expressly to assert that I am far from wishing for such a turn in affairs; rather, I should look upon it as the greatest misfortune that could befall mankind, for it would mean that, despite the enormously increased productiveness of labour, exploitation was not necessarily a hindrance to civilisation, and consequently would not necessarily be superseded by economic justice. But Confucius says rightly, that what is to be deplored is not always to be regarded as impossible or even as only improbable.

John Bell (Centre): The last speaker, who in other respects shows himself to be a profound thinker, overlooks the fact that the completest utilisation of the existing means of civilisation and the corresponding evolution of wealth are not the only determining criteria in the struggle for existence among nations. The strength of a nation that employs its wealth in fostering the higher development of the millions of its subjects, will ultimately become very different from that of a nation which consumes an equal amount of wealth merely in increasing the enjoyment, nay, the senseless luxury, of the ruling classes.

Aristid-Kolotroni (Centre): The last speaker is correct in what he says, although it may be objected that the wealthy are not necessarily obliged to consume their wealth in senseless luxury: they might just as well gratify their pride by boundless benevolence, accompanied by enormous expenditure in all imaginable kinds of scientific, artistic and other institutions of national utility. But I think we are getting away from the main point, which is: is such a turn of affairs possible? The fact that it has not occurred, despite all the evils of over-production, that on the contrary a continually growing desire to capitalise all surplus profits dominates the modern world, should save us from a fear of such a contingency.

Kurt Olafsohn (Freeland): I must agree with Satza-Muni, the honourable member for Japan, so far as to admit that the bare fact that such a contingency has not yet been realised cannot set our minds completely at rest. The consideration advanced by the two following speakers as to whether an exploiting society in which the consumption by the wealthy increases indefinitely must, under all circumstances, succumb to the influence of the free order of society, appears arbitrary and inconclusive. I venture to think that the free society does not possess the aggressive character of the exploiting society, and that therefore the latter, even though it should prove to be decidedly the weaker of the two, may continue to exist for some time side by side with the other so far as it does not itself recognise the necessity of passing over to the other. And this recognition would be materially delayed by the fact that the ruling classes profit by the continuance of exploitation. The change could then be effected universally only by sanguinary conflicts, whilst we lay great stress upon the winning over of the wealthy to the side of the reformers. It is the enormous burden of over-production that opens the eyes of exploiters to the folly of their action; should this spur be lacking, the beneficial revolution would be materially delayed. The member for Japan is also correct in saying that repeatedly in the course of history the surplus production which could not be consumed in a reasonable manner has led the exploiting lords of labour to indulge in senseless methods of consumption. It may therefore be asked whether what has repeatedly happened cannot repeat itself once more; but a thorough investigation of the subject will show that the question must be answered with a decided No.

No, it can never happen again that full employment for highly productive labour will be found except under a system of economic justice; for since it last occurred, a new factor has entered into the world which makes it for all times an impossibility. This factor is the mobilisation of capital and the consequent separation of the process of capital formation from the process of capital-using. Anyone who in Ancient Egypt or Ancient Rome had surplus production to dispose of and wished to invest it profitably, therefore in the form of aids to labour, must either himself have had a need of aids to labour, or must have found someone else who had such a need and was on that account prepared to take his surplus, at interest of course. It was impossible for anyone to invest capital unless someone could make use of such capital; and if this latter contingency did not occur, it was a matter of course that the possessor of the surplus production, unusable as capital, should seek some other mode of consuming it. Many such modes offered themselves, differing according to the nature of the several kinds of exploiting society. If the constitution of the commonwealth was a patriarchal one, the labour which had become more productive would be utilised in improving the condition of the serfs, in mitigating the severity of their labour. In a commonwealth of a more military character the increasing productiveness of labour would serve to enlarge the non-labouring, weapon-bearing class. If--as was always the case when civilisation advanced--the bond between lord and serf became laxer, the lord merely increased his luxury. But, in any case, the surplus which could not be utilised in the augmentation or improvement of labour was consumed, and there could therefore be no over-production. As now, however, the possessor of surplus produce can--even when no one has a need of his savings--obtain what he wants, viz. interest, he has ceased to concern himself as to whether that surplus is really required for purposes of production, but is anxious to capitalise even that which others can make as little use of as he can.

And this, in reality, is the result of the mobilisation of capital. Since this discovery has been made, all capital is as it were thrown into one lump, the profits of capital added to it, and the whole divided among the capitalists. No one needs my savings, they are absolutely superfluous, and can bear no fruit of any kind; nevertheless I receive my interest, for the mobilisation of capital enables me to share in the profits of profit-bearing, that is, of really working, capital. I deposit my savings at interest in a bank, or I buy a share or a bill and thereby raise the price of all other shares or bills correspondingly, and thus make it appear as if the capital which they represent had been increased, while in truth it has remained unchanged. And the produce of this working capital has not increased through the apparent addition of my capital; the interest paid on the whole amount of capital including mine is not more than that paid on the capital before mine was added to it. The addition of my superfluous capital has lowered the rate of interest, or, what comes to the same thing, has raised the price of a demand for the same rate of interest as before; but even a diminished rate of interest is better than no interest at all. I continue, therefore, to save and capitalise, despite the fact that my savings cannot be used productively as capital; nay, the above-mentioned diminution of the rate of interest impels me, under certain circumstances, to save yet more carefully, that is, to diminish my consumption in proportion as my savings become less remunerative. It is evident that my surplus produce cannot find any productive employment at all, yet there is no way out of this circle of over production. Luxury cannot come in as a relief, because the absence of any profitable employment for the surplus renders that surplus valueless, and the ultimate result is the non-production of the surplus. Only exceptionally is there an actual production of unconsumable and, consequently, valueless things; the almost unbroken rule is that the things which no one can use, and which therefore are valueless, will not be produced. Since the employer leaves to the worker only a bare subsistence, and can apply to capitalising purposes only so much as is required for the production of consumable commodities, every other application of the profits being excluded by capitalism, he cannot produce more than is enough to meet these two demands. If he attempts to produce more, the inevitable result is not increased wealth, but a crisis.

We have, therefore, no ground to fear that the ruling classes will again, as in pro-capitalistic epochs, be able to enjoy the fruits of the increasing productiveness of labour without allowing the working masses to participate in that enjoyment. Capitalism, though by no means--as some socialistic writers have represented--the cause of exploitation, is the obstacle which deprives modern society of every other escape from the fatal grasp of over-production but that of a transition to economic justice. It is the last stage in human economics previous to that of social justice. From capitalism there is no way forward but towards social justice; for capitalism is at one and the same time one of the most effectual provocatives of productivity and the bond which indissolubly connects the increase of the effective production of wealth with consumption.

Wilhelm Ohlms (Right): Then how is it that the Freeland institutions, which are to become those of the whole of civilised mankind, have broken with capitalism?

Henri Farr (Freeland): So far as by capitalism is to be understood the conversion of any actual surplus production into working capital, we in Freeland are far from having broken with it. On the contrary, we have developed it to the utmost, for much more fully than in the exploiting capitalistic society are our savings at all times at the disposal of any demand for capital that may arise. But our method of accumulating and mobilising capital is a very different and much more perfect one: the solidarity of interest of the saver with that of the employer of capital takes the place of interest. This form of capitalism can never lead to over-production, for under it--as in the pre-capitalistic epoch--it is the demand for capital that gives the first impulse to the creation of capital. But that this kind of capitalisation is impracticable in an exploiting society needs no proof. For such a society there is no other means of making the spontaneously accumulating capital serviceable to production than that of interest; and as soon as the mobilisation of capital dissolves the immediate personal connection between saver and employer of capital, creditor and debtor, interest inevitably impels to over-production, from which there is no escape except in economic justice--or relapse into barbarism. [Loud and general applause.]