At the present day we have a society, industrial instead of agricultural; and the struggle which we are witnessing is that between capital and labour. It is a struggle, not for land, but for profits; and if we are to show that it is, like the Civil War, “an irrepressible conflict between opposing and enduring forces,” we must show in this case also that the thing struggled for is limited in quantity, and ultimately insufficient to satisfy the needs of both the contending parties.
That our industrial system is based upon profits, and that a failure of profits would lead to its collapse, will be admitted by anyone. But how could profits ever fail? the reader asks. Will not the soil always produce? And does not every man who comes into the world bring a pair of hands with him, to produce things and earn his living? And so, can there not always be profitable exchange? There could, I answer, provided that the various pairs of hands were to remain upon equal terms. But suppose that one pair were to get some advantage over the other pairs, and use that advantage to get constantly increasing advantage; might there not then come a time when the other pairs, having less and less, were finally unable to furnish as much profits as were necessary?
We began the economic battle in this country upon equal terms. Some got the advantage and became masters, the others becoming wage-workers. This advantage—that is, capital—brought constantly increasing advantage—profit, rent, interest; and those who had not the advantage stayed meanwhile just where they were—they got enough to live on, and no more. Numerous exceptions to this do not in the least disturb the main facts—that as a class the wage-workers stayed wage-workers, and the masters stayed masters. Neither does the fact that wages rose constantly in the least disturb the main fact, for the cost of living rose also; the wage-worker got his living then, and he gets it now. And meanwhile, according to the way of nature, and in spite of the outcry of moralists and old-fashioned statesmen, the strong went on growing stronger, and fighting among each other, the victors growing ten times stronger yet; until now we have come to a stage where, industrially speaking, we are a nation of eighty million pygmies and a dozen giants. Nor is the work quite done yet—it is going straight on, in spite of anti-trust decisions and the labour of the “muckrake man”—and within a very few more years the dozen giants will be but one giant.
The dozen, meanwhile, are giants, and they are that because the industrial opportunities of the nation are their property. They are the nation, economically speaking; they own its railroads and telegraphs, its coal mines, oil fields, factories and stores. And they grant to the eighty millions of the nation the right to these opportunities and a chance to earn their living upon one certain definite condition—that of what they produce, they receive only a part, yielding up the balance to be “profits.”
It is also important to notice that these profits are not taken “in kind”—the product must first be sold, so that both wages and profits can be paid in money. It thus follows that the amount of profits is strictly limited by the amount of market that can be found; in other words, that a society whose income is limited, is also limited as to its profit-yielding capacity—that, for instance, a society of eighty millions of people receiving a mere living wage will be able to yield just so much rent, interest and dividends, and not any more.
But what it yields has in the past been enough, says the reader. Why will it not be enough for the future?
Just this is the crux of the whole matter. Rent, interest, dividends, it must be understood, are fractions; and fractions may be decreased as well by increasing the denominator, as by decreasing the numerator. A man, for instance, who invested a hundred dollars and made six, would receive six per cent. interest; but if he invested the second year one hundred and six dollars, and was able still to gain only six, his profit would be, not six per cent., but only five and a fraction. If he wished to make six, he would have to squeeze out a little more than six dollars; would have to compel the man who paid it to him to work just a little harder. And that, in miniature, is a representation of what is going on in our society to-day. You, the well-meaning reader, who are struggling to make the world better, and failing—whether the thing which you are trying to reform be politics or literature or religion, New York or Colorado or the Philippines, Fifth Avenue or Wall Street or Hell’s Kitchen—you are meeting with failure because of that little arithmetical difficulty which has just been set forth.
Consider our millionaire fortunes, how they grow. Consider, for instance, that Mr. John D. Rockefeller makes fifty per cent. a year upon his holdings in the Standard Oil Company. The stock of the Standard Oil Company is now at five hundred, and has been as high as eight hundred in the market. This is assuming that Mr. Rockefeller invested in the stock at par—though as a matter of fact, he put in only about twenty dollars a share, which would make his profit two hundred and fifty per cent. His income is at least fifty million dollars a year.
What does he do with it? Of course, he can’t spend it—if he treated himself to a St. Louis Exposition every year, he couldn’t spend it. What he does with it is to take it promptly, and reinvest it in the form of new capital; he employs a staff of thirty-two trained experts to aid him in this work. The effect of this is, of course, to make his income fifty per cent., compound interest, instead of simple; and what it will be in the course of time is a problem for those who like figures. While he is doing this, all the other capitalists are doing the same—the American millionaire lets his wife and daughters spend as much of his money as they can, but he seldom spends any himself; he is more interested in “doing things.” The consequence is, therefore, that year after year we are paying the vast mass of our people mere living wages, and all the surplus product of our toil we are selling, and devoting to the creation of new instruments of production. We have, mark you, machinery that creates products for hundreds of times as many men as it employs, and still we skim off the surplus and devote it to making new machines. Is it not obvious that this cannot go on forever? And that the time must come that we make all that we need—or rather that our people have money to buy, wages being what they are? And if that ever happens, then of course the factories will have to shut down. We shall have millions of men out of work, and starving on our streets; and when they form processions and begin agitating, demanding that we give them work, then we say—that is, our newspapers, our preachers, our politicians, everybody says—
“But, my good man, there is no more work to be done!”