1. The modern industrial system which I have described, with its high organization and fine division of labor, has one great drawback. The men, or groups of men, are dissevered from one another, their interests are often antagonistic, and the changes which occur take the form of conflicts of interest. I mean this: if a shoemaker worked alone, using a small capital of his own in tools and stock, and working for orders, he would have directly before him the facts of the market. He would find out without effort or reflection when “trade fell off,” when there was risk of not replacing his capital, when the course of fashion or competition called upon him to find other occupation, and so on. When a journeyman shoemaker works for wages, he pays no heed to these things. The employer, feeling them, has no recourse but to lower wages. It is by this measure that, under the higher organization, the need of new energy, or of a change of industry, or of a change of place is brought home to the workman. To him, however, it seems an arbitrary and cruel act of the master. Hence follow trade wars and strikes as an especial phenomenon of the modern system. It is just because it is a system, or more properly still, an organism, that the readjustments which are necessary from time to time in order to keep its parts in harmonious activity, and to keep it in harmony with physical surroundings, are brought about through this play of the parts on each other.
2. A general movement of labor and capital towards land, throughout the civilized world, means a great migration towards the new countries. This does not by any means imply the abandonment or decay of older countries, as some have seemed to believe. On the contrary, it means new prosperity for them. When I read that the United States are about to feed the world, not only with wheat and provisions, but with meat also, that they are to furnish coal and iron to mankind, that they are to displace all the older countries as exporters of manufactures, that they are to furnish the world’s supply of the precious metals, and I know not what all besides, I am forced to ask what is the rest of the world going to do for us? What are they to give us besides tea, coffee, and sugar? Not ships, for we will not take them and are ambitious to carry away all our products ourselves. Certainly this is the most remarkable absurdity into which we have been led by forgetting that trade is an exchange. Neither can any one well expect that all mankind are to come and live here. The conditions of a large migration do, however, seem to exist. A migration of population is still a very unpopular idea in all the older states. The prejudice against it is apparent amongst Liberals and Tories, economists and sentimentalists. There is, however, a condition which is always suppressed in stating the social problem as it presents itself in hard times. That problem, as stated, is: “How are the population to find means of support?” and the suppressed condition is: “if they insist on staying and seeking support where they are and in pursuits to which they are accustomed.” The hardships of change are not for one moment to be denied, but nothing is gained by sitting down to whine about them. The sentimental reasons for clinging to one’s birthplace may be allowed full weight, but they cannot be allowed to counterbalance important advantages. I do not see that any but land owners are interested to hold population in certain places, unless possibly we add governing classes and those who want military power. When I read declamations about nationality and the importance of national divisions to political economy (observe that I do not say to political science), I never can find any sense in them, and I am very sure that the writers never put any sense into them.
We may now return to consider the remedies proposed for hard times. We shall see that although they are quack remedies, and although they set at defiance all the economic doctrines which have been so laboriously established during the last century, they are fitted to meet the difficulty as it presents itself to land owners, governments, military powers, socialists, and sentimentalists. The tendency is towards an industrial system controlled by a natural coöperation far grander than anybody has ever planned, towards a community of interest and welfare far more beneficent than any universal republic or fraternity of labor which the Internationalists hope for, and towards a free and peaceful rivalry amongst nations in the arts of civilization. It is necessary to stop this tendency. What are the means proposed?
1. The first is to put a limit to civil liberty. By civil liberty (for I feel at once the need of defining this much-abused word) I mean the status which is created for an individual by those institutions which guarantee him the use of his own powers for his own development. For three or four centuries now, the civilized world has been struggling towards the realization of this civil liberty. Progress towards it has been hindered by the notion that liberty was some vague abstraction, or an emancipation from some of the hard conditions of human life, from which men never can be emancipated while they live on this earth. Civil liberty has also been confused with political activity or share in civil government. Political activity itself, however, is only a means to an end, and is valuable because it is necessary to secure to the individual free exercise of his powers to produce and exchange according to his own choice and his own conception of happiness, and to secure him also that the products of his labor shall be applied to his satisfaction and not to that of any others. When we come to understand civil liberty for what it is, we shall probably go forward to realize it more completely. It will then appear that it begins and ends with freedom of production, freedom of exchange, and security of property. It will then appear also that governments depart from their prime and essential function when they undertake to transfer property instead of securing it, and it may then be understood that legal tender laws, and protective tariffs as amongst the last and most ingenious devices for transferring one man’s product to another man’s use, are gross violations of civil liberty. At present the attempt is being made to decry liberty, to magnify the blunders and errors of men in the pursuit of happiness into facts which should be made the basis of generalizations about the functions of government, and to present the phenomena of the commercial crisis as reasons for putting industry once more in leading strings. It is only a new foe with an old face. Those who have held the leading strings of industry in time past have always taken rich pay for their services, and they will do it again.
2. The second form of remedy proposed is quite consistent with the last. It consists in rehabilitating the old and decaying superstition of government. It is called the state, and all kinds of poetical and fanciful attributes are ascribed to it. It is presented, of course, as a superior power, able and ready to get us out of trouble. If an individual is in trouble, he has to help himself or secure the help of friends as best he can, but if a group of persons are in trouble together, they constitute a party, a power, and begin to make themselves felt in the state. The state has no means of helping them except by enabling them to throw the risks and losses of their business upon other people who already have the burdens and losses of their own business to bear, but who are less well organized. The “state” assumes to judge what is for the public interest and imposes taxes or interferes with contracts to force individuals to the course which will realize what it has set before itself. When, however, all the fine phrases are stripped away, it appears that the state is only a group of men with human interests, passions, and desires, or, worse yet, the state is, as somebody has said, only an obscure clerk hidden in some corner of a governmental bureau. In either case the assumption of superhuman wisdom and virtue is proved false. The state is only a part of the organization of society in and for itself. That organization secures certain interests and provides for certain functions which are important but which would otherwise be neglected. The task of society, however, has always been and is yet, to secure this organization, and yet to prevent the man in whose hands public power must at last be lodged from using it to plunder the governed—that is, to destroy liberty. This is what despots, oligarchs, aristocrats, and democrats always have done, and the latest development is only a new form of the old abuse. The abuses have always been perpetrated in the name of the public interest. It was for the public interest to support the throne and the altar. It was for the public interest to sustain privileged classes, to maintain an established church, standing armies, and the passport and police system. Now, it is for the public interest to have certain industries carried on, and the holders of the state power apportion their favor without rule or reason, without responsibility, and without any return service. In the end, therefore, the high function of the state to regulate the industrial organization in the public interest is simply that the governing group interferes to make some people give the products of their labor to other people to use and enjoy. Every one sees the evils of the state meddling with his own business and thinks that he ought to be let alone in it, but he sees great public interests which would be served if the state would interfere to make other people do what he wants to have them do.
Now if these two measures could be carried out—if liberty could be brought into misapprehension and contempt, and if the state-superstition could be saved from the decay to which it is doomed, the movements of population and the changes in industry, commerce, and finance, could be arrested. The condemnation of all such projects is, once and for all, that they would arrest the march of civilization. The joy and the fears which have been aroused on one side and on the other by the reactionary propositions which have been made during the last five years are both greatly exaggerated. Such reactionary propositions are in the nature of things at such a time. It must be expected that the pressure of distress and disappointed hopes will produce passionate reaction and senseless outcries. From such phenomena to actual practical measures is a long step. Every step towards practical realization of any reactionary measures will encounter new and multiplying obstacles. A war of tariffs at this time would so fly in the face of all the tendencies of commerce and industry that it would only hasten the downfall of all tariffs. Purely retaliatory tariffs are a case of what the children call “cutting off your nose to spite your face.” Some follies have become physically impossible for great nations nowadays. Germany has been afflicted: first, by too eager hopes, second, by the great calamity of too many and too pedantic doctors, third, by a declining revenue, and fourth, by socialistic agitation amongst the new electors. It appears that she is about to abandon the free-trade policy although she does not embrace protection with much vigor. The project already comes in conflict with numerous and various difficulties which had not been foreseen, and, in its execution, it must meet with many more. The result remains to be studied. France finds that the expiration of each treaty of commerce produces consequences upon her industry which are unendurable, and while the task of adjusting rival and contending interests so as to create a new system drags along, she is compelled to ward off, by temporary arrangements, the revival of the general tariff which the treaties had superseded. In the meantime her economists, who are the most sober and the best trained in the world, are opening a vigorous campaign on the general issue. If England should think of reviving protection, she would not know what to protect. If she wanted to retaliate, she could only tax raw materials and food. The proposition, as soon as it is reduced to practical form, has no footing. As for ourselves we know that our present protective system never could have been fastened upon us if it had not been concealed under the war legislation, and if its effects had not been confused with those of the war. It could not last now if the public mind could be freed from its absorption in sectional politics, so that it would be at liberty to turn to this subject.
In conclusion, let me refer again to another important subject on which I have touched in this paper—what we call the silver question. It would, no doubt, be in the power of civilized nations to take some steps which would alleviate the inconveniences connected with the transition of several important nations from a silver to a gold currency. For one nation, which has no share in the trouble at all, to come forward out of “magnanimity” or any other motive to save the world from the troubles incident to this step, is quixotic and ridiculous. It might properly leave those who are in the trouble to deal with it amongst themselves. Either they or all might, however, do much to modify the effects of the change. The effort to bring about an international union to establish a bimetallic currency at a fixed ratio is quite another thing. It will stand in the history of our time as the most singular folly which has gained any important adherence. As a practical measure the international union is simply impossible. As a scientific proposition, bimetallism is as absurd as perpetual motion. It proposes to establish perpetual rest in the fluctuations of value of two commodities, to do which it must extinguish the economic forces of supply and demand of those commodities upon which value depends. The movement of the great commercial nations towards a single gold currency is the most important event in the monetary history of our time, and one which nothing can possibly arrest. It produces temporary distress, and the means of alleviating that distress are a proper subject of consideration; but the advantages which will be obtained for all time to come immeasurably surpass the present loss and inconvenience.
I return, then, to the propositions with which I set out. Feebleness and vacillation in regard to economic doctrine are natural to a period of commercial crisis, on account of the distress, uncertainty, and disorder which then prevail in industry and trade; but that is just the time also when a tenacious grasp of scientific principles is of the highest importance. The human race must go forward to meet and conquer its problems and difficulties as they arise, to bear the penalties of its follies, and to pay the price of its acquisitions. To shrink from this is simply to go back and to abandon civilization. The path forward, as far as any human foresight can now reach, lies in a better understanding and a better realization of liberty, under which individuals and societies can work out their destiny, subject only to the incorruptible laws of nature.