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diff --git a/.gitattributes b/.gitattributes new file mode 100644 index 0000000..6833f05 --- /dev/null +++ b/.gitattributes @@ -0,0 +1,3 @@ +* text=auto +*.txt text +*.md text diff --git a/33741-8.txt b/33741-8.txt new file mode 100644 index 0000000..ea91b9e --- /dev/null +++ b/33741-8.txt @@ -0,0 +1,5352 @@ +The Project Gutenberg EBook of The Acquisitive Society, by R. H. Tawney + +This eBook is for the use of anyone anywhere at no cost and with +almost no restrictions whatsoever. You may copy it, give it away or +re-use it under the terms of the Project Gutenberg License included +with this eBook or online at www.gutenberg.org + + +Title: The Acquisitive Society + +Author: R. H. Tawney + +Release Date: September 16, 2010 [EBook #33741] + +Language: English + +Character set encoding: ISO-8859-1 + +*** START OF THIS PROJECT GUTENBERG EBOOK THE ACQUISITIVE SOCIETY *** + + + + +Produced by Al Haines + + + + + + + + + +THE ACQUISITIVE SOCIETY + + + +BY + +R. H. TAWNEY + + +FELLOW OF BALLIOL COLLEGE, OXFORD; LATE MEMBER + OF THE COAL INDUSTRY COMMISSION + + + + +NEW YORK + +HARCOURT, BRACE AND COMPANY + + + + +COPYRIGHT, 1920, BY + +HARCOURT, BRACE AND HOWE, INC. + + + +PRINTED IN THE U. S. A. BY + +THE QUINN & BODEN COMPANY + +RAHWAY, N. J. + + + + +CONTENTS + + +CHAPTER + + I INTRODUCTORY + II RIGHTS AND FUNCTIONS + III THE ACQUISITIVE SOCIETY + IV THE NEMESIS OF INDUSTRIALISM + V PROPERTY AND CREATIVE WORK + VI THE FUNCTIONAL SOCIETY + VII INDUSTRY AS A PROFESSION + VIII THE "VICIOUS CIRCLE" + IX THE CONDITION OF EFFICIENCY + X THE POSITION OF THE BRAIN WORKER + XI PORRO UNUM NECESSARIUM + + + + +_The author desires to express his acknowledgments to the Editor of +the_ Hibbert Journal _for permission to reprint an article which +appeared in it_. + + + + +{1} + +THE ACQUISITIVE SOCIETY + + +I + +INTRODUCTORY + +It is a commonplace that the characteristic virtue of Englishmen is +their power of sustained practical activity, and their characteristic +vice a reluctance to test the quality of that activity by reference to +principles. They are incurious as to theory, take fundamentals for +granted, and are more interested in the state of the roads than in +their place on the map. And it might fairly be argued that in ordinary +times that combination of intellectual tameness with practical energy +is sufficiently serviceable to explain, if not to justify, the +equanimity with which its possessors bear the criticism of more +mentally adventurous nations. It is the mood of those who have made +their bargain with fate and are content to take what it offers without +re-opening the deal. It leaves the mind free to concentrate +undisturbed upon profitable activities, because it is not distracted by +a taste for unprofitable speculations. Most generations, it might be +said, walk in a path which they neither make, nor discover, but accept; +the main thing is that they should march. The blinkers worn by +Englishmen enable them to trot all the more steadily along the beaten +{2} road, without being disturbed by curiosity as to their destination. + +But if the medicine of the constitution ought not to be made its daily +food, neither can its daily food be made its medicine. There are times +which are not ordinary, and in such times it is not enough to follow +the road. It is necessary to know where it leads, and, if it leads +nowhere, to follow another. The search for another involves +reflection, which is uncongenial to the bustling people who describe +themselves as practical, because they take things as they are and leave +them as they are. But the practical thing for a traveler who is +uncertain of his path is not to proceed with the utmost rapidity in the +wrong direction: it is to consider how to find the right one. And the +practical thing for a nation which has stumbled upon one of the +turning-points of history is not to behave as though nothing very +important were involved, as if it did not matter whether it turned to +the right or to the left, went up hill or down dale, provided that it +continued doing with a little more energy what it has done hitherto; +but to consider whether what it has done hitherto is wise, and, if it +is not wise, to alter it. When the broken ends of its industry, its +politics, its social organization, have to be pieced together after a +catastrophe, it must make a decision; for it makes a decision even if +it refuses to decide. If it is to make a decision which will wear, it +must travel beyond the philosophy momentarily in favor with the +proprietors of its newspapers. Unless it is to move with the energetic +futility of a squirrel in a revolving cage, it must have a clear +apprehension both of the {3} deficiency of what is, and of the +character of what ought to be. And to obtain this apprehension it must +appeal to some standard more stable than the momentary exigencies of +its commerce or industry or social life, and judge them by it. It +must, in short, have recourse to Principles. + + +Such considerations are, perhaps, not altogether irrelevant at a time +when facts have forced upon Englishmen the reconsideration of their +social institutions which no appeal to theory could induce them to +undertake. An appeal to principles is the condition of any +considerable reconstruction of society, because social institutions are +the visible expression of the scale of moral values which rules the +minds of individuals, and it is impossible to alter institutions +without altering that moral valuation. Parliament, industrial +organizations, the whole complex machinery through which society +expresses itself, is a mill which grinds only what is put into it, and +when nothing is put into it grinds air. There are many, of course, who +desire no alteration, and who, when it is attempted, will oppose it. +They have found the existing economic order profitable in the past. +They desire only such changes as will insure that it is equally +profitable in the future. _Quand le Roi avait bu, la Pologne était +ivre_. They are genuinely unable to understand why their countrymen +cannot bask happily by the fire which warms themselves, and ask, like +the French farmer-general:--"When everything goes so happily, why +trouble to change it?" Such persons are to be pitied, for they lack +the social quality which is {4} proper to man. But they do not need +argument; for Heaven has denied them one of the faculties required to +apprehend it. + +There are others, however, who are conscious of the desire for a new +social order, but who yet do not grasp the implications of their own +desire. Men may genuinely sympathize with the demand for a radical +change. They may be conscious of social evils and sincerely anxious to +remove them. They may set up a new department, and appoint new +officials, and invent a new name to express their resolution to effect +something more drastic than reform, and less disturbing than +revolution. But unless they will take the pains, not only to act, but +to reflect, they end by effecting nothing. For they deliver themselves +bound to those who think they are practical, because they take their +philosophy so much for granted as to be unconscious of its +implications, and directly they try to act, that philosophy re-asserts +itself, and serves as an overruling force which presses their action +more deeply into the old channels. "Unhappy man that I am; who shall +deliver me from the body of this death?" When they desire to place +their economic life on a better foundation, they repeat, like parrots, +the word "Productivity," because that is the word that rises first in +their minds; regardless of the fact that productivity is the foundation +on which it is based already, that increased productivity is the one +characteristic achievement of the age before the war, as religion was +of the Middle Ages or art of classical Athens, and that it is precisely +in the century which has seen the greatest increase in {5} productivity +since the fall of the Roman Empire that economic discontent has been +most acute. When they are touched by social compunction, they can +think of nothing more original than the diminution of poverty, because +poverty, being the opposite of the riches which they value most, seems +to them the most terrible of human afflictions. They do not understand +that poverty is a symptom and a consequence of social disorder, while +the disorder itself is something at once more fundamental and more +incorrigible, and that the quality in their social life which causes it +to demoralize a few by excessive riches, is also the quality which +causes it to demoralize many by excessive poverty. + +"But increased production is important." Of course it is! That plenty +is good and scarcity evil--it needs no ghost from the graves of the +past five years to tell us that. But plenty depends upon co-operative +effort, and co-operation upon moral principles. And moral principles +are what the prophets of this dispensation despise. So the world +"continues in scarcity," because it is too grasping and too +short-sighted to seek that "which maketh men to be of one mind in a +house." The well-intentioned schemes for social reorganization put +forward by its commercial teachers are abortive, because they endeavor +to combine incompatibles, and, if they disturb everything, settle +nothing. They are like a man who, when he finds that his shoddy boots +wear badly, orders a pair two sizes larger instead of a pair of good +leather, or who makes up for putting a bad sixpence in the plate on +Sunday by putting in a bad shilling the next. And when their fit of +feverish energy {6} has spent itself, and there is nothing to show for +it except disillusionment, they cry that reform is impracticable, and +blame human nature, when what they ought to blame is themselves. + +Yet all the time the principles upon which industry should be based are +simple, however difficult it may be to apply them; and if they are +overlooked it is not because they are difficult, but because they are +elementary. They are simple because industry is simple. An industry, +when all is said, is, in its essence, nothing more mysterious than a +body of men associated, in various degrees of competition and +co-operation, to win their living by providing the community with some +service which it requires. Organize it as you will, let it be a group +of craftsmen laboring with hammer and chisel, or peasants plowing their +own fields, or armies of mechanics of a hundred different trades +constructing ships which are miracles of complexity with machines which +are the climax of centuries of invention, its function is service, its +method is association. Because its function is service, an industry as +a whole has rights and duties towards the community, the abrogation of +which involves privilege. Because its method is association, the +different parties within it have rights and duties towards each other; +and the neglect or perversion of these involves oppression. + +The conditions of a right organization of industry are, therefore, +permanent, unchanging, and capable of being apprehended by the most +elementary intelligence, provided it will read the nature of its +countrymen in the large outlines of history, not in the bloodless {7} +abstractions of experts. The first is that it should be subordinated +to the community in such a way as to render the best service +technically possible, that those who render no service should not be +paid at all, because it is of the essence of a function that it should +find its meaning in the satisfaction, not of itself, but of the end +which it serves. The second is that its direction and government +should be in the hands of persons who are responsible to those who are +directed and governed, because it is the condition of economic freedom +that men should not be ruled by an authority which they cannot control. +The industrial problem, in fact, is a problem of right, not merely of +material misery, and because it is a problem of right it is most acute +among those sections of the working classes whose material misery is +least. It is a question, first of Function, and secondly of Freedom. + + + + +{8} + +II + +RIGHTS AND FUNCTIONS + +A function may be defined as an activity which embodies and expresses +the idea of social purpose. The essence of it is that the agent does +not perform it merely for personal gain or to gratify himself, but +recognizes that he is responsible for its discharge to some higher +authority. The purpose of industry is obvious. It is to supply man +with things which are necessary, useful or beautiful, and thus to bring +life to body or spirit. In so far as it is governed by this end, it is +among the most important of human activities. In so far as it is +diverted from it, it may be harmless, amusing, or even exhilarating to +those who carry it on, but it possesses no more social significance +than the orderly business of ants and bees, the strutting of peacocks, +or the struggles of carnivorous animals over carrion. + +Men have normally appreciated this fact, however unwilling or unable +they may have been to act upon it; and therefore from time to time, in +so far as they have been able to control the forces of violence and +greed, they have adopted various expedients for emphasizing the social +quality of economic activity. It is not easy, however, to emphasize it +effectively, because to do so requires a constant effort of will, +against which egotistical instincts are in rebellion, and because, if +that will is to prevail, it must be embodied in some social {9} and +political organization, which may itself become so arbitrary, +tyrannical and corrupt as to thwart the performance of function instead +of promoting it. When this process of degeneration has gone far, as in +most European countries it had by the middle of the eighteenth century, +the indispensable thing is to break the dead organization up and to +clear the ground. In the course of doing so, the individual is +emancipated and his rights are enlarged; but the idea of social purpose +is discredited by the discredit justly attaching to the obsolete order +in which it is embodied. + +It is not surprising, therefore, that in the new industrial societies +which arose on the ruins of the old régime the dominant note should +have been the insistence upon individual rights, irrespective of any +social purpose to which their exercise contributed. The economic +expansion which concentrated population on the coal-measures was, in +essence, an immense movement of colonization drifting from the south +and east to the north and west; and it was natural that in those +regions of England, as in the American settlements, the characteristic +philosophy should be that of the pioneer and the mining camp. The +change of social quality was profound. But in England, at least, it +was gradual, and the "industrial revolution," though catastrophic in +its effects, was only the visible climax of generations of subtle moral +change. The rise of modern economic relations, which may be dated in +England from the latter half of the seventeenth century, was coincident +with the growth of a political theory which replaced the conception of +purpose by that of mechanism. During a great part of history men had +{10} found the significance of their social order in its relation to +the universal purposes of religion. It stood as one rung in a ladder +which stretched from hell to Paradise, and the classes who composed it +were the hands, the feet, the head of a corporate body which was itself +a microcosm imperfectly reflecting a larger universe. When the +Reformation made the Church a department of the secular government, it +undermined the already enfeebled spiritual forces which had erected +that sublime, but too much elaborated, synthesis. But its influence +remained for nearly a century after the roots which fed it had been +severed. It was the atmosphere into which men were born, and from +which, however practical, or even Machiavellian, they could not easily +disengage their spirits. Nor was it inconvenient for the new +statecraft to see the weight of a traditional religious sanction added +to its own concern in the subordination of all classes and interests to +the common end, of which it conceived itself, and during the greater +part of the sixteenth century was commonly conceived, to be the +guardian. The lines of the social structure were no longer supposed to +reproduce in miniature the plan of a universal order. But common +habits, common traditions and beliefs, common pressure from above gave +them a unity of direction, which restrained the forces of individual +variation and lateral expansion; and the center towards which they +converged, formerly a Church possessing some of the characteristics of +a State, was now a State that had clothed itself with many of the +attributes of a Church. + +The difference between the England of Shakespeare, {11} still visited +by the ghosts of the Middle Ages, and the England which merged in 1700 +from the fierce polemics of the last two generations, was a difference +of social and political theory even more than of constitutional and +political arrangements. Not only the facts, but the minds which +appraised them, were profoundly modified. The essence of the change +was the disappearance of the idea that social institutions and economic +activities were related to common ends, which gave them their +significance and which served as their criterion. In the eighteenth +century both the State and the Church had abdicated that part of the +sphere which had consisted in the maintenance of a common body of +social ethics; what was left of it was repression of a class, not the +discipline of a nation. Opinion ceased to regard social institutions +and economic activity as amenable, like personal conduct, to moral +criteria, because it was no longer influenced by the spectacle of +institutions which, arbitrary, capricious, and often corrupt in their +practical operation, had been the outward symbol and expression of the +subordination of life to purposes transcending private interests. That +part of government which had been concerned with social administration, +if it did not end, became at least obsolescent. For such democracy as +had existed in the Middle Ages was dead, and the democracy of the +Revolution was not yet born, so that government passed into the +lethargic hand of classes who wielded the power of the State in the +interests of an irresponsible aristocracy. And the Church was even +more remote from the daily life of mankind than the State. +Philanthropy abounded; but religion, {12} once the greatest social +force, had become a thing as private and individual as the estate of +the squire or the working clothes of the laborer. There were special +dispensations and occasional interventions, like the acts of a monarch +who reprieved a criminal or signed an order for his execution. But +what was familiar, and human and lovable--what was Christian in +Christianity had largely disappeared. God had been thrust into the +frigid altitudes of infinite space. There was a limited monarchy in +Heaven, as well as upon earth. Providence was the spectator of the +curious machine which it had constructed and set in motion, but the +operation of which it was neither able nor willing to control. Like +the occasional intervention of the Crown in the proceedings of +Parliament, its wisdom was revealed in the infrequency of its +interference. + +The natural consequence of the abdication of authorities which had +stood, however imperfectly, for a common purpose in social +organization, was the gradual disappearance from social thought of the +idea of purpose itself. Its place in the eighteenth century was taken +by the idea of mechanism. The conception of men as united to each +other, and of all mankind as united to God, by mutual obligations +arising from their relation to a common end, which vaguely conceived +and imperfectly realized, had been the keystone holding together the +social fabric, ceased to be impressed upon men's minds, when Church and +State withdrew from the center of social life to its circumference. +What remained when the keystone of the arch was removed, was private +rights and private interests, the materials of a society rather {13} +than a society itself. These rights and interests were the natural +order which had been distorted by the ambitions of kings and priests, +and which emerged when the artificial super-structure disappeared, +because they were the creation, not of man, but of Nature herself. +They had been regarded in the past as relative to some public end, +whether religion or national welfare. Henceforward they were thought +to be absolute and indefeasible, and to stand by their own virtue. +They were the ultimate political and social reality; and since they +were the ultimate reality, they were not subordinate to other aspects +of society, but other aspects of society were subordinate to them. + +The State could not encroach upon these rights, for the State existed +for their maintenance. They determined the relation of classes, for +the most obvious and fundamental of all rights was property--property +absolute and unconditioned--and those who possessed it were regarded as +the natural governors of those who did not. Society arose from their +exercise, through the contracts of individual with individual. It +fulfilled its object in so far as, by maintaining contractual freedom, +it secured full scope for their unfettered exercise. It failed in so +far as, like the French monarchy, it overrode them by the use of an +arbitrary authority. Thus conceived, society assumed something of the +appearance of a great joint-stock company, in which political power and +the receipt of dividends were justly assigned to those who held the +most numerous shares. The currents of social activity did not converge +upon common ends, but were dispersed through a multitude of channels, +{14} created by the private interests of the individuals who composed +society. But in their very variety and spontaneity, in the very +absence of any attempt to relate them to a larger purpose than that of +the individual, lay the best security of its attainment. There is a +mysticism of reason as well as of emotion, and the eighteenth century +found, in the beneficence of natural instincts, a substitute for the +God whom it had expelled from contact with society, and did not +hesitate to identify them. + + "Thus God and nature planned the general frame + And bade self-love and social be the same." + + +The result of such ideas in the world of practice was a society which +was ruled by law, not by the caprice of Governments, but which +recognized no moral limitation on the pursuit by individuals of their +economic self-interest. In the world of thought, it was a political +philosophy which made rights the foundation of the social order, and +which considered the discharge of obligations, when it considered it at +all, as emerging by an inevitable process from their free exercise. +The first famous exponent of this philosophy was Locke, in whom the +dominant conception is the indefeasibility of private rights, not the +pre-ordained harmony between private rights and public welfare. In the +great French writers who prepared the way for the Revolution, while +believing that they were the servants of an enlightened absolutism, +there is an almost equal emphasis upon the sanctity of rights and upon +the infallibility of the {15} alchemy by which the pursuit of private +ends is transmuted into the attainment of public good. Though their +writings reveal the influence of the conception of society as a +self-adjusting mechanism, which afterwards became the most +characteristic note of the English individualism, what the French +Revolution burned into the mind of Europe was the former not the +latter. In England the idea of right had been negative and defensive, +a barrier to the encroachment of Governments. The French leapt to the +attack from trenches which the English had been content to defend, and +in France the idea became affirmative and militant, not a weapon of +defense, but a principle of social organization. The attempt to +refound society upon rights, and rights springing not from musty +charters, but from the very nature of man himself, was at once the +triumph and the limitation of the Revolution. It gave it the +enthusiasm and infectious power of religion. + +What happened in England might seem at first sight to have been +precisely the reverse. English practical men, whose thoughts were +pitched in a lower key, were a little shocked by the pomp and +brilliance of that tremendous creed. They had scanty sympathy with the +absolute affirmations of France. What captured their imagination was +not the right to liberty, which made no appeal to their commercial +instincts, but the expediency of liberty, which did; and when the +Revolution had revealed the explosive power of the idea of natural +right, they sought some less menacing formula. It had been offered +them first by Adam Smith and his precursors, who showed how the +mechanism of economic life {16} converted "as with an invisible hand," +the exercise of individual rights into the instrument of public good. +Bentham, who despised metaphysical subtleties, and thought the +Declaration of the Rights of Man as absurd as any other dogmatic +religion, completed the new orientation by supplying the final +criterion of political institutions in the principle of Utility. +Henceforward emphasis was transferred from the right of the individual +to exercise his freedom as he pleased to the expediency of an +undisturbed exercise of freedom to society. + +The change is significant. It is the difference between the universal +and equal citizenship of France, with its five million peasant +proprietors, and the organized inequality of England established +solidly upon class traditions and class institutions; the descent from +hope to resignation, from the fire and passion of an age of illimitable +vistas to the monotonous beat of the factory engine, from Turgot and +Condorcet to the melancholy mathematical creed of Bentham and Ricardo +and James Mill. Mankind has, at least, this superiority over its +philosophers, that great movements spring from the heart and embody a +faith; not the nice adjustments of the hedonistic calculus. So in the +name of the rights of property France abolished in three years a great +mass of property rights which, under the old régime had robbed the +peasant of part of the produce of his labor, and the social +transformation survived a whole world of political changes. In England +the glad tidings of democracy were broken too discreetly to reach the +ears of the hind in the furrow or the shepherd on the hill; {17} there +were political changes without a social transformation. The doctrine +of Utility, though trenchant in the sphere of politics, involved no +considerable interference with the fundamentals of the social fabric. +Its exponents were principally concerned with the removal of political +abuses and legal anomalies. They attacked sinecures and pensions and +the criminal code and the procedure of the law courts. But they +touched only the surface of social institutions. They thought it a +monstrous injustice that the citizen should pay one-tenth of his income +in taxation to an idle Government, but quite reasonable that he should +pay one-fifth of it in rent to an idle landlord. + +The difference, neverthelesss, was one of emphasis and expression, not +of principle. It mattered very little in practice whether private +property and unfettered economic freedom were stated, as in France, to +be natural rights, or whether, as in England, they were merely assumed +once for all to be expedient. In either case they were taken for +granted as the fundamentals upon which social organization was to be +based, and about which no further argument was admissible. Though +Bentham argued that rights were derived from utility, not from nature, +he did not push his analysis so far as to argue that any particular +right was relative to any particular function, and thus endorsed +indiscriminately rights which were not accompanied by service as well +as rights which were. While eschewing, in short, the phraseology of +natural rights, the English Utilitarians retained something not unlike +the substance of them. For they assumed that private property in {18} +land, and the private ownership of capital, were natural institutions, +and gave them, indeed, a new lease of life, by proving to their own +satisfaction that social well-being must result from their continued +exercise. Their negative was as important as their positive teaching. +It was a conductor which diverted the lightning. Behind their +political theory, behind the practical conduct, which as always, +continues to express theory long after it has been discredited in the +world of thought, lay the acceptance of absolute rights to property and +to economic freedom as the unquestioned center of social organization. + +The result of that attitude was momentous. The motive and inspiration +of the Liberal Movement of the eighteenth century had been the attack +on Privilege. But the creed which had exorcised the specter of +agrarian feudalism haunting village and _château_ in France, was +impotent to disarm the new ogre of industrialism which was stretching +its limbs in the north of England. When, shorn of its splendors and +illusions, liberalism triumphed in England in 1832, it carried without +criticism into the new world of capitalist industry categories of +private property and freedom of contract which had been forged in the +simpler economic environment of the pre-industrial era. In England +these categories are being bent and twisted till they are no longer +recognizable, and will, in time, be made harmless. In America, where +necessity compelled the crystallization of principles in a +constitution, they have the rigidity of an iron jacket. The +magnificent formulæ in which a society of farmers {19} and master +craftsmen enshrined its philosophy of freedom are in danger of becoming +fetters used by an Anglo-Saxon business aristocracy to bind insurgent +movements on the part of an immigrant and semi-servile proletariat. + + + + +{20} + +III + +THE ACQUISITIVE SOCIETY + +This doctrine has been qualified in practice by particular limitations +to avert particular evils and to meet exceptional emergencies. But it +is limited in special cases precisely because its general validity is +regarded as beyond controversy, and, up to the eve of the present war, +it was the working faith of modern economic civilization. What it +implies is, that the foundation of society is found, not in functions, +but in rights; that rights are not deducible from the discharge of +functions, so that the acquisition of wealth and the enjoyment of +property are contingent upon the performances of services, but that the +individual enters the world equipped with rights to the free disposal +of his property and the pursuit of his economic self-interest, and that +these rights are anterior to, and independent of, any service which he +may render. True, the service of society will, in fact, it is assumed, +result from their exercise. But it is not the primary motive and +criterion of industry, but a secondary consequence, which emerges +incidentally through the exercise of rights, a consequence which is +attained, indeed, in practice, but which is attained without being +sought. It is not the end at which economic activity aims, or the +standard by which it is judged, but a by-product, as coal-tar is a +by-product of the {21} manufacture of gas; whether that by-product +appears or not, it is not proposed that the rights themselves should be +abdicated. For they are regarded, not as a conditional trust, but as a +property, which may, indeed, give way to the special exigencies of +extraordinary emergencies, but which resumes its sway when the +emergency is over, and in normal times is above discussion. + +That conception is written large over the history of the nineteenth +century, both in England and in America. The doctrine which it +inherited was that property was held by an absolute right on an +individual basis, and to this fundamental it added another, which can +be traced in principle far back into history, but which grew to its +full stature only after the rise of capitalist industry, that societies +act both unfairly and unwisely when they limit opportunities of +economic enterprise. Hence every attempt to impose obligations as a +condition of the tenure of property or of the exercise of economic +activity has been met by uncompromising resistance. The story of the +struggle between humanitarian sentiment and the theory of property +transmitted from the eighteenth century is familiar. No one has +forgotten the opposition offered in the name of the rights of property +to factory legislation, to housing reform, to interference with the +adulteration of goods, even to the compulsory sanitation of private +houses. "May I not do what I like with my own?" was the answer to the +proposal to require a minimum standard of safety and sanitation from +the owners of mills and houses. Even to {22} this day, while an +English urban landlord can cramp or distort the development of a whole +city by withholding land except at fancy prices, English municipalities +are without adequate powers of compulsory purchase, and must either pay +through the nose or see thousands of their members overcrowded. The +whole body of procedure by which they may acquire land, or indeed new +powers of any kind, has been carefully designed by lawyers to protect +owners of property against the possibility that their private rights +may be subordinated to the public interest, because their rights are +thought to be primary and absolute and public interests secondary and +contingent. + +No one needs to be reminded, again, of the influence of the same +doctrine in the sphere of taxation. Thus the income tax was excused as +a temporary measure, because the normal society was conceived to be one +in which the individual spent his whole income for himself and owed no +obligations to society on account of it. The death duties were +denounced as robbery, because they implied that the right to benefit by +inheritance was conditional upon a social sanction. The Budget of 1909 +created a storm, not because the taxation of land was heavy--in amount +the land-taxes were trifling--but because it was felt to involve the +doctrine that property is not an absolute right, but that it may +properly be accompanied by special obligations, a doctrine which, if +carried to its logical conclusion, would destroy its sanctity by making +ownership no longer absolute but conditional. + +{23} + +Such an implication seems intolerable to an influential body of public +opinion, because it has been accustomed to regard the free disposal of +property and the unlimited exploitation of economic opportunities, as +rights which are absolute and unconditioned. On the whole, until +recently, this opinion had few antagonists who could not be ignored. +As a consequence the maintenance of property rights has not been +seriously threatened even in those cases in which it is evident that no +service is discharged, directly or indirectly, by their exercise. No +one supposes, that the owner of urban land, performs _qua_ owner, any +function. He has a right of private taxation; that is all. But the +private ownership of urban land is as secure to-day as it was a century +ago; and Lord Hugh Cecil, in his interesting little book on +Conservatism, declares that whether private property is mischievous or +not, society cannot interfere with it, because to interfere with it is +theft, and theft is wicked. No one supposes that it is for the public +good that large areas of land should be used for parks and game. But +our country gentlemen are still settled heavily upon their villages and +still slay their thousands. No one can argue that a monopolist is +impelled by "an invisible hand" to serve the public interest. But over +a considerable field of industry competition, as the recent Report on +Trusts shows, has been replaced by combination, and combinations are +allowed the same unfettered freedom as individuals in the exploitation +of economic opportunities. No one really believes that the production +of coal depends upon the payment of {24} mining royalties or that ships +will not go to and fro unless ship-owners can earn fifty per cent. upon +their capital. But coal mines, or rather the coal miner, still pay +royalties, and ship-owners still make fortunes and are made Peers. + +At the very moment when everybody is talking about the importance of +increasing the output of wealth, the last question, apparently, which +it occurs to any statesman to ask is why wealth should be squandered on +futile activities, and in expenditure which is either disproportionate +to service or made for no service at all. So inveterate, indeed, has +become the practice of payment in virtue of property rights, without +even the pretense of any service being rendered, that when, in a +national emergency, it is proposed to extract oil from the ground, the +Government actually proposes that every gallon shall pay a tax to +landowners who never even suspected its existence, and the ingenuous +proprietors are full of pained astonishment at any one questioning +whether the nation is under moral obligation to endow them further. +Such rights are, strictly speaking, privileges. For the definition of +a privilege is a right to which no corresponding function is attached. + +The enjoyment of property and the direction of industry are considered, +in short, to require no social justification, because they are regarded +as rights which stand by their own virtue, not functions to be judged +by the success with which they contribute to a social purpose. To-day +that doctrine, if intellectually discredited, is still the practical +foundation of social {25} organization. How slowly it yields even to +the most insistent demonstration of its inadequacy is shown by the +attitude which the heads of the business world have adopted to the +restrictions imposed on economic activity during the war. The control +of railways, mines and shipping, the distribution of raw materials +through a public department instead of through competing merchants, the +regulation of prices, the attempts to check "profiteering"--the +detailed application of these measures may have been effective or +ineffective, wise or injudicious. It is evident, indeed, that some of +them have been foolish, like the restriction of imports when the world +has five years' destruction to repair, and that others, if sound in +conception, have been questionable in their execution. If they were +attacked on the ground that they obstruct the efficient performance of +function--if the leaders of industry came forward and said generally, +as some, to their honor, have:--"We accept your policy, but we will +improve its execution; we desire payment for service and service only +and will help the state to see that it pays for nothing else"--there +might be controversy as to the facts, but there could be none as to the +principle. + +In reality, however, the gravamen of the charges brought against these +restrictions appears generally to be precisely the opposite. They are +denounced by most of their critics not because they limit the +opportunity of service, but because they diminish the opportunity for +gain, not because they prevent the trader enriching the community, but +because they make it {26} more difficult for him to enrich himself; +not, in short, because they have failed to convert economic activity +into a social function, but because they have come too near succeeding. +If the financial adviser to the Coal Controller may be trusted, the +shareholders in coal mines would appear to have done fairly well during +the war. But the proposal to limit their profits to 1/2 per ton is +described by Lord Gainford as "sheer robbery and confiscation." With +some honorable exceptions, what is demanded is that in the future as in +the past the directors of industry should be free to handle it as an +enterprise conducted for their own convenience or advancement, instead +of being compelled, as they have been partially compelled during the +war, to subordinate it to a social purpose. For to admit that the +criterion of commerce and industry is its success in discharging a +social purpose is at once to turn property and economic activity from +rights which are absolute into rights which are contingent and +derivative, because it is to affirm that they are relative to functions +and that they may justly be revoked when the functions are not +performed. It is, in short, to imply that property and economic +activity exist to promote the ends of society, whereas hitherto society +has been regarded in the world of business as existing to promote them. +To those who hold their position, not as functionaries, but by virtue +of their success in making industry contribute to their own wealth and +social influence, such a reversal of means and ends appears little less +than a revolution. For it means that they must justify before a social +tribunal {27} rights which they have hitherto taken for granted as part +of an order which is above criticism. + +During the greater part of the nineteenth century the significance of +the opposition between the two principles of individual rights and +social functions was masked by the doctrine of the inevitable harmony +between private interests and public good. Competition, it was argued, +was an effective substitute for honesty. To-day that subsidiary +doctrine has fallen to pieces under criticism; few now would profess +adherence to the compound of economic optimism and moral bankruptcy +which led a nineteenth century economist to say: "Greed is held in +check by greed, and the desire for gain sets limits to itself." The +disposition to regard individual rights as the center and pivot of +society is still, however, the most powerful element in political +thought and the practical foundation of industrial organization. The +laborious refutation of the doctrine that private and public interests +are co-incident, and that man's self-love is God's Providence, which +was the excuse of the last century for its worship of economic egotism, +has achieved, in fact, surprisingly small results. Economic egotism is +still worshiped; and it is worshiped because that doctrine was not +really the center of the position. It was an outwork, not the citadel, +and now that the outwork has been captured, the citadel is still to win. + +What gives its special quality and character, its toughness and +cohesion, to the industrial system built up in the last century and a +half, is not its exploded theory of economic harmonies. It is the +doctrine that {28} economic rights are anterior to, and independent of +economic functions, that they stand by their own virtue, and need +adduce no higher credentials. The practical result of it is that +economic rights remain, whether economic functions are performed or +not. They remain to-day in a more menacing form than in the age of +early industrialism. For those who control industry no longer compete +but combine, and the rivalry between property in capital and property +in land has long since ended. The basis of the New Conservatism +appears to be a determination so to organize society, both by political +and economic action, as to make it secure against every attempt to +extinguish payments which are made, not for service, but because the +owners possess a right to extract income without it. Hence the fusion +of the two traditional parties, the proposed "strengthening" of the +second chamber, the return to protection, the swift conversion of rival +industrialists to the advantages of monopoly, and the attempts to buy +off with concessions the more influential section of the working +classes. Revolutions, as a long and bitter experience reveals, are apt +to take their color from the régime which they overthrow. Is it any +wonder that the creed which affirms the absolute rights of property +should sometimes be met with a counter-affirmation of the absolute +rights of labor, less anti-social, indeed, and inhuman, but almost as +dogmatic, almost as intolerant and thoughtless as itself? + + +A society which aimed at making the acquisition of wealth contingent +upon the discharge of social {29} obligations, which sought to +proportion remuneration to service and denied it to those by whom no +service was performed, which inquired first not what men possess but +what they can make or create or achieve, might be called a Functional +Society, because in such a society the main subject of social emphasis +would be the performance of functions. But such a society does not +exist, even as a remote ideal, in the modern world, though something +like it has hung, an unrealized theory, before men's minds in the past. +Modern societies aim at protecting economic rights, while leaving +economic functions, except in moments of abnormal emergency, to fulfil +themselves. The motive which gives color and quality to their public +institutions, to their policy and political thought, is not the attempt +to secure the fulfilment of tasks undertaken for the public service, +but to increase the opportunities open to individuals of attaining the +objects which they conceive to be advantageous to themselves. If asked +the end or criterion of social organization, they would give an answer +reminiscent of the formula the greatest happiness of the greatest +number. But to say that the end of social institutions is happiness, +is to say that they have no common end at all. For happiness is +individual, and to make happiness the object of society is to resolve +society itself into the ambitions of numberless individuals, each +directed towards the attainment of some personal purpose. + +Such societies may be called Acquisitive Societies, because their whole +tendency and interest and preoccupation is to promote the acquisition +of wealth. The {30} appeal of this conception must be powerful, for it +has laid the whole modern world under its spell. Since England first +revealed the possibilities of industrialism, it has gone from strength +to strength, and as industrial civilization invades countries hitherto +remote from it, as Russia and Japan and India and China are drawn into +its orbit, each decade sees a fresh extension of its influence. The +secret of its triumph is obvious. It is an invitation to men to use +the powers with which they have been endowed by nature or society, by +skill or energy or relentless egotism or mere good fortune, without +inquiring whether there is any principle by which their exercise should +be limited. It assumes the social organization which determines the +opportunities which different classes shall in fact possess, and +concentrates attention upon the right of those who possess or can +acquire power to make the fullest use of it for their own +self-advancement. By fixing men's minds, not upon the discharge of +social obligations, which restricts their energy, because it defines +the goal to which it should be directed, but upon the exercise of the +right to pursue their own self-interest, it offers unlimited scope for +the acquisition of riches, and therefore gives free play to one of the +most powerful of human instincts. To the strong it promises unfettered +freedom for the exercise of their strength; to the weak the hope that +they too one day may be strong. Before the eyes of both it suspends a +golden prize, which not all can attain, but for which each may strive, +the enchanting vision of infinite expansion. It assures men that there +are no ends other {31} than their ends, no law other than their +desires, no limit other than that which they think advisable. Thus it +makes the individual the center of his own universe, and dissolves +moral principles into a choice of expediences. And it immensely +simplifies the problems of social life in complex communities. For it +relieves them of the necessity of discriminating between different +types of economic activity and different sources of wealth, between +enterprise and avarice, energy and unscrupulous greed, property which +is legitimate and property which is theft, the just enjoyment of the +fruits of labor and the idle parasitism of birth or fortune, because it +treats all economic activities as standing upon the same level, and +suggests that excess or defect, waste or superfluity, require no +conscious effort of the social will to avert them, but are corrected +almost automatically by the mechanical play of economic forces. + +Under the impulse of such ideas men do not become religious or wise or +artistic; for religion and wisdom and art imply the acceptance of +limitations. But they become powerful and rich. They inherit the +earth and change the face of nature, if they do not possess their own +souls; and they have that appearance of freedom which consists in the +absence of obstacles between opportunities for self-advancement and +those whom birth or wealth or talent or good fortune has placed in a +position to seize them. It is not difficult either for individuals or +for societies to achieve their object, if that object be sufficiently +limited and immediate, and if they are not distracted from its {32} +pursuit by other considerations. The temper which dedicates itself to +the cultivation of opportunities, and leaves obligations to take care +of themselves, is set upon an object which is at once simple and +practicable. The eighteenth century defined it. The twentieth century +has very largely attained it. Or, if it has not attained it, it has at +least grasped the possibilities of its attainment. The national output +of wealth per head of population is estimated to have been +approximately $200 in 1914. Unless mankind chooses to continue the +sacrifice of prosperity to the ambitions and terrors of nationalism, it +is possible that by the year 2000 it may be doubled. + + + + +{33} + +IV + +THE NEMESIS OF INDUSTRIALISM + +Such happiness is not remote from achievement. In the course of +achieving it, however, the world has been confronted by a group of +unexpected consequences, which are the cause of its _malaise_, as the +obstruction of economic opportunity was the cause of social _malaise_ +in the eighteenth century. And these consequences are not, as is often +suggested, accidental mal-adjustments, but flow naturally from its +dominant principle: so that there is a sense in which the cause of its +perplexity is not its failure, but the quality of its success, and its +light itself a kind of darkness. The will to economic power, if it is +sufficiently single-minded, brings riches. But if it is single-minded +it destroys the moral restraints which ought to condition the pursuit +of riches, and therefore also makes the pursuit of riches meaningless. +For what gives meaning to economic activity, as to any other activity +is, as we have said, the purpose to which it is directed. But the +faith upon which our economic civilization reposes, the faith that +riches are not a means but an end, implies that all economic activity +is equally estimable, whether it is subordinated to a social purpose or +not. Hence it divorces gain from service, and justifies rewards for +which no function is performed, or which are out of all proportion to +it. Wealth in modern societies is distributed according to {34} +opportunity; and while opportunity depends partly upon talent and +energy, it depends still more upon birth, social position, access to +education and inherited wealth; in a word, upon property. For talent +and energy can create opportunity. But property need only wait for it. +It is the sleeping partner who draws the dividends which the firm +produces, the residuary legatee who always claims his share in the +estate. + +Because rewards are divorced from services, so that what is prized most +is not riches obtained in return for labor but riches the economic +origin of which, being regarded as sordid, is concealed, two results +follow. The first is the creation of a class of pensioners upon +industry, who levy toll upon its product, but contribute nothing to its +increase, and who are not merely tolerated, but applauded and admired +and protected with assiduous care, as though the secret of prosperity +resided in them. They are admired because in the absence of any +principle of discrimination between incomes which are payment for +functions and incomes which are not, all incomes, merely because they +represent wealth, stand on the same level of appreciation, and are +estimated solely by their magnitude, so that in all societies which +have accepted industrialism there is an upper layer which claims the +enjoyment of social life, while it repudiates its responsibilities. +The _rentier_ and his ways, how familiar they were in England before +the war! A public school and then club life in Oxford and Cambridge, +and then another club in town; London in June, when London is pleasant, +the moors in August, and pheasants in October, Cannes in {35} December +and hunting in February and March; and a whole world of rising +bourgeoisie eager to imitate them, sedulous to make their expensive +watches keep time with this preposterous calendar! + +The second consequence is the degradation of those who labor, but who +do not by their labor command large rewards; that is of the great +majority of mankind. And this degradation follows inevitably from the +refusal of men to give the purpose of industry the first place in their +thought about it. When they do that, when their minds are set upon the +fact that the meaning of industry is the service of man, all who labor +appear to them honorable, because all who labor serve, and the +distinction which separates those who serve from those who merely spend +is so crucial and fundamental as to obliterate all minor distinctions +based on differences of income. But when the criterion of function is +forgotten, the only criterion which remains is that of wealth, and an +Acquisitive Society reverences the possession of wealth, as a +Functional Society would honor, even in the person of the humblest and +most laborious craftsman, the arts of creation. + +So wealth becomes the foundation of public esteem, and the mass of men +who labor, but who do not acquire wealth, are thought to be vulgar and +meaningless and insignificant compared with the few who acquire wealth +by good fortune, or by the skilful use of economic opportunities. They +come to be regarded, not as the ends for which alone it is worth while +to produce wealth at all, but as the instruments of its {36} +acquisition by a world that declines to be soiled by contact with what +is thought to be the dull and sordid business of labor. They are not +happy, for the reward of all but the very mean is not merely money, but +the esteem of their fellow-men, and they know they are not esteemed, as +soldiers, for example, are esteemed, though it is because they give +their lives to making civilization that there is a civilization which +it is worth while for soldiers to defend. They are not esteemed, +because the admiration of society is directed towards those who get, +not towards those who give; and though workmen give much they get +little. And the _rentiers_ whom they support are not happy; for in +discarding the idea of function, which sets a limit to the acquisition +of riches, they have also discarded the principle which alone give +riches their meaning. Hence unless they can persuade themselves that +to be rich is in itself meritorious, they may bask in social +admiration, but they are unable to esteem themselves. For they have +abolished the principle which makes activity significant, and therefore +estimable. They are, indeed, more truly pitiable than some of those +who envy them. For like the spirits in the Inferno, they are punished +by the attainment of their desires. + +A society ruled by these notions is necessarily the victim of an +irrational inequality. To escape such inequality it is necessary to +recognize that there is some principle which ought to limit the gains +of particular classes and particular individuals, because gains drawn +from certain sources or exceeding certain amounts are illegitimate. +But such a limitation implies a {37} standard of discrimination, which +is inconsistent with the assumption that each man has a right to what +he can get, irrespective of any service rendered for it. Thus +privilege, which was to have been exorcised by the gospel of 1789, +returns in a new guise, the creature no longer of unequal legal rights +thwarting the natural exercise of equal powers of hand and brain, but +of unequal powers springing from the exercise of equal rights in a +world where property and inherited wealth and the apparatus of class +institutions have made opportunities unequal. Inequality, again, leads +to the mis-direction of production. For, since the demand of one +income of £50,000 is as powerful a magnet as the demand of 500 incomes +of £100, it diverts energy from the creation of wealth to the +multiplication of luxuries, so that, for example, while one-tenth of +the people of England are overcrowded, a considerable part of them are +engaged, not in supplying that deficiency, but in making rich men's +hotels, luxurious yachts, and motorcars like that used by the Secretary +of State for War, "with an interior inlaid with silver in quartered +mahogany, and upholstered in fawn suede and morocco," which was +recently bought by a suburban capitalist, by way of encouraging useful +industries and rebuking public extravagance with an example of private +economy, for the trifling sum of $14,000. + +Thus part of the goods which are annually produced, and which are +called wealth, is, strictly speaking, waste, because it consists of +articles which, though reckoned as part of the income of the nation, +either should not have been produced until other articles had already +{38} been produced in sufficient abundance, or should not have been +produced at all. And some part of the population is employed in making +goods which no man can make with happiness, or indeed without loss of +self-respect, because he knows that they had much better not be made; +and that his life is wasted in making them. Everybody recognizes that +the army contractor who, in time of war, set several hundred navvies to +dig an artificial lake in his grounds, was not adding to, but +subtracting from, the wealth of the nation. But in time of peace many +hundred thousand workmen, if they are not digging ponds, are doing work +which is equally foolish and wasteful; though, in peace, as in war, +there is important work, which is waiting to be done, and which is +neglected. It is neglected because, while the effective demand of the +mass of men is only too small, there is a small class which wears +several men's clothes, eats several men's dinners, occupies several +families' houses, and lives several men's lives. As long as a minority +has so large an income that part of it, if spent at all, must be spent +on trivialities, so long will part of the human energy and mechanical +equipment of the nation be diverted from serious work, which enriches +it, to making trivialities, which impoverishes it, since they can only +be made at the cost of not making other things. And if the peers and +millionaires who are now preaching the duty of production to miners and +dock laborers desire that more wealth, not more waste, should be +produced, the simplest way in which they can achieve their aim is to +transfer to the public their whole incomes over (say) $5,000 a year, in +order that it may {39} be spent in setting to work, not gardeners, +chauffeurs, domestic servants and shopkeepers in the West End of +London, but builders, mechanics and teachers. + +So to those who clamor, as many now do, "Produce! Produce!" one simple +question may be addressed:--"Produce what?" Food, clothing, +house-room, art, knowledge? By all means! But if the nation is +scantily furnished with these things had it not better stop producing a +good many others which fill shop windows in Regent Street? If it +desires to re-equip its industries with machinery and its railways with +wagons, had it not better refrain from holding exhibitions designed to +encourage rich men to re-equip themselves with motor-cars? What can be +more childish than to urge the necessity that productive power should +be increased, if part of the productive power which exists already is +misapplied? Is not _less_ production of futilities as important as, +indeed a condition of, _more_ production of things of moment? Would +not "Spend less on private luxuries" be as wise a cry as "produce +more"? Yet this result of inequality, again, is a phenomenon which +cannot be prevented, or checked, or even recognized by a society which +excludes the idea of purpose from its social arrangements and +industrial activity. For to recognize it is to admit that there is a +principle superior to the mechanical play of economic forces, which +ought to determine the relative importance of different occupations, +and thus to abandon the view that all riches, however composed, are an +end, and that all economic activity is equally justifiable. + +{40} + +The rejection of the idea of purpose involves another consequence which +every one laments, but which no one can prevent, except by abandoning +the belief that the free exercise of rights is the main interest of +society and the discharge of obligations a secondary and incidental +consequence which may be left to take care of itself. It is that +social life is turned into a scene of fierce antagonisms and that a +considerable part of industry is carried on in the intervals of a +disguised social war. The idea that industrial peace can be secured +merely by the exercise of tact and forbearance is based on the idea +that there is a fundamental identity of interest between the different +groups engaged in it, which is occasionally interrupted by regrettable +misunderstandings. Both the one idea and the other are an illusion. +The disputes which matter are not caused by a misunderstanding of +identity of interests, but by a better understanding of diversity of +interests. Though a formal declaration of war is an episode, the +conditions which issue in a declaration of war are permanent; and what +makes them permanent is the conception of industry which also makes +inequality and functionless incomes permanent. It is the denial that +industry has any end or purpose other than the satisfaction of those +engaged in it. + +That motive produces industrial warfare, not as a regrettable incident, +but as an inevitable result. It produces industrial war, because its +teaching is that each individual or group has a right to what they can +get, and denies that there is any principle, other than the mechanism +of the market, which determines what {41} they ought to get. For, +since the income available for distribution is limited, and since, +therefore, when certain limits have been passed, what one group gains +another group must lose, it is evident that if the relative incomes of +different groups are not to be determined by their functions, there is +no method other than mutual self-assertion which is left to determine +them. Self-interest, indeed, may cause them to refrain from using +their full strength to enforce their claims, and, in so far as this +happens, peace is secured in industry, as men have attempted to secure +it in international affairs, by a balance of power. But the +maintenance of such a peace is contingent upon the estimate of the +parties to it that they have more to lose than to gain by an overt +struggle, and is not the result of their acceptance of any standard of +remuneration as an equitable settlement of their claims. Hence it is +precarious, insincere and short. It is without finality, because there +can be no finality in the mere addition of increments of income, any +more than in the gratification of any other desire for material goods. +When demands are conceded the old struggle recommences upon a new +level, and will always recommence as long as men seek to end it merely +by increasing remuneration, not by finding a principle upon which all +remuneration, whether large or small, should be based. + +Such a principle is offered by the idea of function, because its +application would eliminate the surpluses which are the subject of +contention, and would make it evident that remuneration is based upon +service, {42} not upon chance or privilege or the power to use +opportunities to drive a hard bargain. But the idea of function is +incompatible with the doctrine that every person and organization have +an unlimited right to exploit their economic opportunities as fully as +they please, which is the working faith of modern industry; and, since +it is not accepted, men resign themselves to the settlement of the +issue by force, or propose that the State should supersede the force of +private associations by the use of its force, as though the absence of +a principle could be compensated by a new kind of machinery. Yet all +the time the true cause of industrial warfare is as simple as the true +cause of international warfare. It is that if men recognize no law +superior to their desires, then they must fight when their desires +collide. For though groups or nations which are at issue with each +other may be willing to submit to a principle which is superior to them +both, there is no reason why they should submit to each other. + +Hence the idea, which is popular with rich men, that industrial +disputes would disappear if only the output of wealth were doubled, and +every one were twice as well off, not only is refuted by all practical +experience, but is in its very nature founded upon an illusion. For +the question is one not of amounts but of proportions; and men will +fight to be paid $120 a week, instead of $80, as readily as they will +fight to be paid $20 instead of $16, as long as there is no reason why +they should be paid $80 instead of $120, and as long as other men who +do not work are paid anything {43} at all. If miners demanded higher +wages when every superfluous charge upon coal-getting had been +eliminated, there would be a principle with which to meet their claim, +the principle that one group of workers ought not to encroach upon the +livelihood of others. But as long as mineral owners extract royalties, +and exceptionally productive mines pay thirty per cent. to absentee +shareholders, there is no valid answer to a demand for higher wages. +For if the community pays anything at all to those who do not work, it +can afford to pay more to those who do. The naïve complaint, that +workmen are never satisfied, is, therefore, strictly true. It is true, +not only of workmen, but of all classes in a society which conducts its +affairs on the principle that wealth, instead of being proportioned to +function, belongs to those who can get it. They are never satisfied, +nor can they be satisfied. For as long as they make that principle the +guide of their individual lives and of their social order, nothing +short of infinity could bring them satisfaction. + + +So here, again, the prevalent insistence upon rights, and prevalent +neglect of functions, brings men into a vicious circle which they +cannot escape, without escaping from the false philosophy which +dominates them. But it does something more. It makes that philosophy +itself seem plausible and exhilarating, and a rule not only for +industry, in which it had its birth, but for politics and culture and +religion and the whole compass of social life. The possibility that +one aspect of human life may be so exaggerated as to overshadow, {44} +and in time to atrophy, every other, has been made familiar to +Englishmen by the example of "Prussian militarism." Militarism is the +characteristic, not of an army, but of a society. Its essence is not +any particular quality or scale of military preparation, but a state of +mind, which, in its concentration on one particular element in social +life, ends finally by exalting it until it becomes the arbiter of all +the rest. The purpose for which military forces exist is forgotten. +They are thought to stand by their own right and to need no +justification. Instead of being regarded as an instrument which is +necessary in an imperfect world, they are elevated into an object of +superstitious veneration, as though the world would be a poor insipid +place without them, so that political institutions and social +arrangements and intellect and morality and religion are crushed into a +mold made to fit one activity, which in a sane society is a subordinate +activity, like the police, or the maintenance of prisons, or the +cleansing of sewers, but which in a militarist state is a kind of +mystical epitome of society itself. + +Militarism, as Englishmen see plainly enough, is fetich worship. It is +the prostration of men's souls before, and the laceration of their +bodies to appease, an idol. What they do not see is that their +reverence for economic activity and industry and what is called +business is also fetich worship, and that in their devotion to that +idol they torture themselves as needlessly and indulge in the same +meaningless antics as the Prussians did in their worship of militarism. +For what the military tradition and spirit have done for Prussia, {45} +with the result of creating militarism, the commercial tradition and +spirit have done for England, with the result of creating +industrialism. Industrialism is no more a necessary characteristic of +an economically developed society than militarism is a necessary +characteristic of a nation which maintains military forces. It is no +more the result of applying science to industry than militarism is the +result of the application of science to war, and the idea that it is +something inevitable in a community which uses coal and iron and +machinery, so far from being the truth, is itself a product of the +perversion of mind which industrialism produces. Men may use what +mechanical instruments they please and be none the worse for their use. +What kills their souls is when they allow their instruments to use +_them_. The essence of industrialism, in short, is not any particular +method of industry, but a particular estimate of the importance of +industry, which results in it being thought the only thing that is +important at all, so that it is elevated from the subordinate place +which it should occupy among human interests and activities into being +the standard by which all other interests and activities are judged. + +When a Cabinet Minister declares that the greatness of this country +depends upon the volume of its exports, so that France, with exports +comparatively little, and Elizabethan England, which exported next to +nothing, are presumably to be pitied as altogether inferior +civilizations, that is Industrialism. It is the confusion of one minor +department of life with the {46} whole of life. When manufacturers cry +and cut themselves with knives, because it is proposed that boys and +girls of fourteen shall attend school for eight hours a week, and the +President of the Board of Education is so gravely impressed by their +apprehensions, that he at once allows the hours to be reduced to seven, +that is Industrialism. It is fetich worship. When the Government +obtains money for a war, which costs $28,000,000 a day, by closing the +Museums, which cost $80,000 a year, that is Industrialism. It is a +contempt for all interests which do not contribute obviously to +economic activity. When the Press clamors that the one thing needed to +make this island an Arcadia is productivity, and more productivity, and +yet more productivity, that is Industrialism. It is the confusion of +means with ends. + +Men will always confuse means with ends if they are without any clear +conception that it is the ends, not the means, which matter--if they +allow their minds to slip from the fact that it is the social purpose +of industry which gives it meaning and makes it worth while to carry it +on at all. And when they do that, they will turn their whole world +upside down, because they do not see the poles upon which it ought to +move. So when, like England, they are thoroughly industrialized, they +behave like Germany, which was thoroughly militarized. They talk as +though man existed for industry, instead of industry existing for man, +as the Prussians talked of man existing for war. They resent any +activity which is not colored by the predominant interest, because it +seems a rival to it. So they {47} destroy religion and art and +morality, which cannot exist unless they are disinterested; and having +destroyed these, which are the end, for the sake of industry, which is +a means, they make their industry itself what they make their cities, a +desert of unnatural dreariness, which only forgetfulness can make +endurable, and which only excitement can enable them to forget. + +Torn by suspicions and recriminations, avid of power, and oblivious of +duties, desiring peace, but unable to "seek peace and ensue it," +because unwilling to surrender the creed which is the cause of war, to +what can one compare such a society but to the international world, +which also has been called a society and which also is social in +nothing but name? And the comparison is more than a play upon words. +It is an analogy which has its roots in the facts of history. It is +not a chance that the last two centuries, which saw the new growth of a +new system of industry, saw also the growth of the system of +international politics which came to a climax in the period from 1870 +to 1914. Both the one and the other are the expression of the same +spirit and move in obedience to similar laws. The essence of the +former was the repudiation of any authority superior to the individual +reason. It left men free to follow their own interests or ambitions or +appetites, untrammeled by subordination to any common center of +allegiance. The essence of the latter was the repudiation of any +authority superior to the sovereign state, which again was conceived as +a compact self-contained unit--a unit {48} which would lose its very +essence if it lost its independence of other states. Just as the one +emancipated economic activity from a mesh of antiquated traditions, so +the other emancipated nations from arbitrary subordination to alien +races or Governments, and turned them into nationalities with a right +to work out their own destiny. + +Nationalism is, in fact, the counterpart among nations of what +individualism is within them. It has similar origins and tendencies, +similar triumphs and defects. For nationalism, like individualism, +lays its emphasis on the rights of separate units, not on their +subordination to common obligations, though its units are races or +nations, not individual men. Like individualism it appeals to the +self-assertive instincts, to which it promises opportunities of +unlimited expansion. Like individualism it is a force of immense +explosive power, the just claims of which must be conceded before it is +possible to invoke any alternative principle to control its operations. +For one cannot impose a supernational authority upon irritated or +discontented or oppressed nationalities any more than one can +subordinate economic motives to the control of society, until society +has recognized that there is a sphere which they may legitimately +occupy. And, like individualism, if pushed to its logical conclusion, +it is self-destructive. For as nationalism, in its brilliant youth, +begins as a claim that nations, because they are spiritual beings, +shall determine themselves, and passes too often into a claim that they +shall dominate others, so individualism begins by asserting the right +of men to {49} make of their own lives what they can, and ends by +condoning the subjection of the majority of men to the few whom good +fortune or special opportunity or privilege have enabled most +successfully to use their rights. They rose together. It is probable +that, if ever they decline, they will decline together. For life +cannot be cut in compartments. In the long run the world reaps in war +what it sows in peace. And to expect that international rivalry can be +exorcised as long as the industrial order within each nation is such as +to give success to those whose existence is a struggle for +self-aggrandizement is a dream which has not even the merit of being +beautiful. + +So the perversion of nationalism is imperialism, as the perversion of +individualism is industrialism. And the perversion comes, not through +any flaw or vice in human nature, but by the force of the idea, because +the principle is defective and reveals its defects as it reveals its +power. For it asserts that the rights of nations and individuals are +absolute, which is false, instead of asserting that they are absolute +in their own sphere, but that their sphere itself is contingent upon +the part which they play in the community of nations and individuals, +which is true. Thus it constrains them to a career of indefinite +expansion, in which they devour continents and oceans, law, morality +and religion, and last of all their own souls, in an attempt to attain +infinity by the addition to themselves of all that is finite. In the +meantime their rivals, and their subjects, and they themselves are +conscious of the danger of opposing forces, and seek to {50} purchase +security and to avoid a collision by organizing a balance of power. +But the balance, whether in international politics or in industry, is +unstable, because it reposes not on the common recognition of a +principle by which the claims of nations and individuals are limited, +but on an attempt to find an equipoise which may avoid a conflict +without adjuring the assertion of unlimited claims. No such equipoise +can be found, because, in a world where the possibilities of increasing +military or industrial power are illimitable, no such equipoise can +exist. + +Thus, as long as men move on this plane, there is no solution. They +can obtain peace only by surrendering the claim to the unfettered +exercise of their rights, which is the cause of war. What we have been +witnessing, in short, during the past five years, both in international +affairs and in industry, is the breakdown of the organization of +society on the basis of rights divorced from obligations. Sooner or +later the collapse was inevitable, because the basis was too narrow. +For a right is simply a power which is secured by legal sanctions, "a +capacity," as the lawyers define it, "residing in one man, of +controlling, with the assistance of the State, the action of others," +and a right should not be absolute for the same reason that a power +should not be absolute. No doubt it is better that individuals should +have absolute rights than that the State or the Government should have +them; and it was the reaction against the abuses of absolute power by +the State which led in the eighteenth century to the declaration of the +absolute rights of individuals. {51} The most obvious defense against +the assertion of one extreme was the assertion of the other. Because +Governments and the relics of feudalism had encroached upon the +property of individuals it was affirmed that the right of property was +absolute; because they had strangled enterprise, it was affirmed that +every man had a natural right to conduct his business as he pleased. +But, in reality, both the one assertion and the other are false, and, +if applied to practice, must lead to disaster. The State has no +absolute rights; they are limited by its commission. The individual +has no absolute rights; they are relative to the function which he +performs in the community of which he is a member, because, unless they +are so limited, the consequences must be something in the nature of +private war. All rights, in short, are conditional and derivative, +because all power should be conditional and derivative. They are +derived from the end or purpose of the society in which they exist. +They are conditional on being used to contribute to the attainment of +that end, not to thwart it. And this means in practice that, if +society is to be healthy, men must regard themselves not as the owners +of rights, but as trustees for the discharge of functions and the +instruments of a social purpose. + + + + +{52} + +V + +PROPERTY AND CREATIVE WORK + +The application of the principle that society should be organized upon +the basis of functions, is not recondite, but simple and direct. It +offers in the first place, a standard for discriminating between those +types of private property which are legitimate and those which are not. +During the last century and a half, political thought has oscillated +between two conceptions of property, both of which, in their different +ways, are extravagant. On the one hand, the practical foundation of +social organization has been the doctrine that the particular forms of +private property which exist at any moment are a thing sacred and +inviolable, that anything may properly become the object of property +rights, and that, when it does, the title to it is absolute and +unconditioned. The modern industrial system took shape in an age when +this theory of property was triumphant. The American Constitution and +the French Declaration of the Rights of Man both treated property as +one of the fundamental rights which Governments exist to protect. The +English Revolution of 1688, undogmatic and reticent though it was, had +in effect done the same. The great individualists from Locke to +Turgot, Adam Smith and Bentham all repeated, in different language, a +similar conception. Though what gave the Revolution its {53} +diabolical character in the eyes of the English upper classes was its +treatment of property, the dogma of the sanctity of private property +was maintained as tenaciously by French Jacobins as by English Tories; +and the theory that property is an absolute, which is held by many +modern Conservatives, is identical, if only they knew it, with that not +only of the men of 1789, but of the Convention itself. + +On the other hand, the attack has been almost as undiscriminating as +the defense. "Private property" has been the central position against +which the social movement of the last hundred years has directed its +forces. The criticism of it has ranged from an imaginative communism +in the most elementary and personal of necessaries, to prosaic and +partially realized proposals to transfer certain kinds of property from +private to public ownership, or to limit their exploitation by +restrictions imposed by the State. But, however varying in emphasis +and in method, the general note of what may conveniently be called the +Socialist criticism of property is what the word Socialism itself +implies. Its essence is the statement that the economic evils of +society are primarily due to the unregulated operation, under modern +conditions of industrial organization, of the institution of private +property. + +The divergence of opinion is natural, since in most discussions of +property the opposing theorists have usually been discussing different +things. Property is the most ambiguous of categories. It covers a +multitude of rights which have nothing in common except that they are +exercised by persons and enforced by the State. {54} Apart from these +formal characteristics, they vary indefinitely in economic character, +in social effect, and in moral justification. They may be conditional +like the grant of patent rights, or absolute like the ownership of +ground rents, terminable like copyright, or permanent like a freehold, +as comprehensive as sovereignty or as restricted as an easement, as +intimate and personal as the ownership of clothes and books, or as +remote and intangible as shares in a gold mine or rubber plantation. +It is idle, therefore, to present a case for or against private +property without specifying the particular forms of property to which +reference is made, and the journalist who says that "private property +is the foundation of civilization" agrees with Proudhon, who said it +was theft, in this respect at least that, without further definition, +the words of both are meaningless. Arguments which support or demolish +certain kinds of property may have no application to others; +considerations which are conclusive in one stage of economic +organization may be almost irrelevant in the next. The course of +wisdom is neither to attack private property in general nor to defend +it in general; for things are not similar in quality, merely because +they are identical in name. It is to discriminate between the various +concrete embodiments of what, in itself, is, after all, little more +than an abstraction. + +The origin and development of different kinds of proprietary rights is +not material to this discussion. Whatever may have been the historical +process by which they have been established and recognized, the {55} +_rationale_ of private property traditional in England is that which +sees in it the security that each man will reap where he has sown. "If +I despair of enjoying the fruits of labor," said Bentham, repeating +what were in all essentials the arguments of Locke, "I shall only live +from day to day; I shall not undertake labors which will only benefit +my enemies." Property, it is argued, is a moral right, and not merely +a legal right, because it insures that the producer will not be +deprived by violence of the result of his efforts. The period from +which that doctrine was inherited differed from our own in three +obvious, but significant, respects. Property in land and in the simple +capital used in most industries was widely distributed. Before the +rise of capitalist agriculture and capitalist industry, the ownership, +or at any rate the secure and effective occupation, of land and tools +by those who used them, was a condition precedent to effective work in +the field or in the workshop. The forces which threatened property +were the fiscal policy of Governments and in some countries, for +example France, the decaying relics of feudalism. The interference +both of the one and of the other involved the sacrifice of those who +carried on useful labor to those who did not. To resist them was to +protect not only property but industry, which was indissolubly +connected with it. Too often, indeed, resistance was ineffective. +Accustomed to the misery of the rural proprietor in France, Voltaire +remarked with astonishment that in England the peasant may be rich, and +"does not fear to increase the number of his beasts or to cover his +roof with tiles." And {56} the English Parliamentarians and the French +philosophers who made the inviolability of property rights the center +of their political theory, when they defended those who owned, were +incidentally, if sometimes unintentionally, defending those who +labored. They were protecting the yeoman or the master craftsman or +the merchant from seeing the fruits of his toil squandered by the +hangers-on at St. James or the courtly parasites of Versailles. + +In such circumstances the doctrine which found the justification of +private property in the fact that it enabled the industrious man to +reap where he had sown, was not a paradox, but, as far as the mass of +the population was concerned, almost a truism. Property was defended +as the most sacred of rights. But it was defended as a right which was +not only widely exercised, but which was indispensable to the +performance of the active function of providing food and clothing. For +it consisted predominantly of one of two types, land or tools which +were used by the owner for the purpose of production, and personal +possessions which were the necessities or amenities of civilized +existence. The former had its _rationale_ in the fact that the land of +the peasant or the tools of the craftsman were the condition of his +rendering the economic services which society required; the latter +because furniture and clothes are indispensable to a life of decency +and comfort. The proprietary rights--and, of course, they were +numerous--which had their source, not in work, but in predatory force, +were protected from criticism by the wide distribution of some kind +{57} of property among the mass of the population, and in England, at +least, the cruder of them were gradually whittled down. When property +in land and what simple capital existed were generally diffused among +all classes of society, when, in most parts of England, the typical +workman was not a laborer but a peasant or small master, who could +point to the strips which he had plowed or the cloth which he had +woven, when the greater part of the wealth passing at death consisted +of land, household furniture and a stock in trade which was hardly +distinguishable from it, the moral justification of the title to +property was self-evident. It was obviously, what theorists said that +it was, and plain men knew it to be, the labor spent in producing, +acquiring and administering it. + +Such property was not a burden upon society, but a condition of its +health and efficiency, and indeed, of its continued existence. To +protect it was to maintain the organization through which public +necessities were supplied. If, as in Tudor England, the peasant was +evicted from his holding to make room for sheep, or crushed, as in +eighteenth century France, by arbitrary taxation and seigneurial dues, +land went out of cultivation and the whole community was short of food. +If the tools of the carpenter or smith were seized, plows were not +repaired or horses shod. Hence, before the rise of a commercial +civilization, it was the mark of statesmanship, alike in the England of +the Tudors and in the France of Henry IV, to cherish the small +property-owner even to the point of offending the great. Popular +sentiment idealized the {58} yeoman--"the Joseph of the country who +keeps the poor from starving"--not merely because he owned property, +but because he worked on it, denounced that "bringing of the livings of +many into the hands of one," which capitalist societies regard with +equanimity as an inevitable, and, apparently, a laudable result of +economic development, cursed the usurer who took advantage of his +neighbor's necessities to live without labor, was shocked by the +callous indifference to public welfare shown by those who "not having +before their eyes either God or the profit and advantage of the realm, +have enclosed with hedges and dykes towns and hamlets," and was +sufficiently powerful to compel Governments to intervene to prevent the +laying of field to field, and the engrossing of looms--to set limits, +in short, to the scale to which property might grow. + +When Bacon, who commended Henry VII for protecting the tenant right of +the small farmer, and pleaded in the House of Commons for more drastic +land legislation, wrote "Wealth is like muck. It is not good but if it +be spread," he was expressing in an epigram what was the commonplace of +every writer on politics from Fortescue at the end of the fifteenth +century to Harrington in the middle of the seventeenth. The modern +conservative, who is inclined to take _au pied de la lettre_ the +vigorous argument in which Lord Hugh Cecil denounces the doctrine that +the maintenance of proprietary rights ought to be contingent upon the +use to which they are put, may be reminded that Lord Hugh's own theory +is of a kind to make his ancestors turn in their graves. Of the two +members of the {59} family who achieved distinction before the +nineteenth century, the elder advised the Crown to prevent landlords +evicting tenants, and actually proposed to fix a pecuniary maximum to +the property which different classes might possess, while the younger +attacked enclosing in Parliament, and carried legislation compelling +landlords to build cottages, to let them with small holdings, and to +plow up pasture. + +William and Robert Cecil were sagacious and responsible men, and their +view that the protection of property should be accompanied by the +enforcement of obligations upon its owners was shared by most of their +contemporaries. The idea that the institution of private property +involves the right of the owner to use it, or refrain from using it, in +such a way as he may please, and that its principal significance is to +supply him with an income, irrespective of any duties which he may +discharge, would not have been understood by most public men of that +age, and, if understood, would have been repudiated with indignation by +the more reputable among them. They found the meaning of property in +the public purposes to which it contributed, whether they were the +production of food, as among the peasantry, or the management of public +affairs, as among the gentry, and hesitated neither to maintain those +kinds of property which met these obligations nor to repress those uses +of it which appeared likely to conflict with them. Property was to be +an aid to creative work, not an alternative to it. The patentee was +secured protection for a new invention, in order to secure him the +fruits of his own brain, but the monopolist who grew {60} fat on the +industry of others was to be put down. The law of the village bound +the peasant to use his land, not as he himself might find most +profitable, but to grow the corn the village needed. Long after +political changes had made direct interference impracticable, even the +higher ranks of English landowners continued to discharge, however +capriciously and tyrannically, duties which were vaguely felt to be the +contribution which they made to the public service in virtue of their +estates. When as in France, the obligations of ownership were +repudiated almost as completely as they have been by the owner of +to-day, nemesis came in an onslaught upon the position of a _noblesse_ +which had retained its rights and abdicated its functions. Property +reposed, in short, not merely upon convenience, or the appetite for +gain, but on a moral principle. It was protected not only for the sake +of those who owned, but for the sake of those who worked and of those +for whom their work provided. It was protected, because, without +security for property, wealth could not be produced or the business of +society carried on. + + +Whatever the future may contain, the past has shown no more excellent +social order than that in which the mass of the people were the masters +of the holdings which they plowed and of the tools with which they +worked, and could boast, with the English freeholder, that "it is a +quietness to a man's mind to live upon his own and to know his heir +certain." With this conception of property and its practical +expression in social institutions those who urge that society should be +{61} organized on the basis of function have no quarrel. It is in +agreement with their own doctrine, since it justifies property by +reference to the services which it enables its owner to perform. All +that they need ask is that it should be carried to its logical +conclusion. + +For the argument has evidently more than one edge. If it justifies +certain types of property, it condemns others; and in the conditions of +modern industrial civilization, what it justifies is less than what it +condemns. The truth is, indeed, that this theory of property and the +institutions in which it is embodied have survived into an age in which +the whole structure of society is radically different from that in +which it was formulated, and which made it a valid argument, if not for +all, at least for the most common and characteristic kinds of property. +It is not merely that the ownership of any substantial share in the +national wealth is concentrated to-day in the hands of a few hundred +thousand families, and that at the end of an age which began with an +affirmation of the rights of property, proprietary rights are, in fact, +far from being widely distributed. Nor is it merely that what makes +property insecure to-day is not the arbitrary taxation of +unconstitutional monarchies or the privileges of an idle _noblesse_, +but the insatiable expansion and aggregation of property itself, which +menaces with absorption all property less than the greatest, the small +master, the little shopkeeper, the country bank, and has turned the +mass of mankind into a proletariat working under the agents and for the +profit of those who own. + +The characteristic fact, which differentiates most {62} modern property +from that of the pre-industrial age, and which turns against it the +very reasoning by which formerly it was supported, is that in modern +economic conditions ownership is not active, but passive, that to most +of those who own property to-day it is not a means of work but an +instrument for the acquisition of gain or the exercise of power, and +that there is no guarantee that gain bears any relation to service, or +power to responsibility. For property which can be regarded as a +condition of the performance of function, like the tools of the +craftsman, or the holding of the peasant, or the personal possessions +which contribute to a life of health and efficiency, forms an +insignificant proportion, as far as its value is concerned, of the +property rights existing at present. In modern industrial societies +the great mass of property consists, as the annual review of wealth +passing at death reveals, neither of personal acquisitions such as +household furniture, nor of the owner's stock-in-trade, but of rights +of various kinds, such as royalties, ground-rents, and, above all, of +course shares in industrial undertakings which yield an income +irrespective of any personal service rendered by their owners. +Ownership and use are normally divorced. The greater part of modern +property has been attenuated to a pecuniary lien or bond on the product +of industry which carries with it a right to payment, but which is +normally valued precisely because it relieves the owner from any +obligation to perform a positive or constructive function. + +Such property may be called passive property, or property for +acquisition, for exploitation, or for power, {63} to distinguish it +from the property which is actively used by its owner for the conduct +of his profession or the upkeep of his household. To the lawyer the +first is, of course, as fully property as the second. It is +questionable, however, whether economists shall call it "Property" at +all, and not rather, as Mr. Hobson has suggested, "Improperty," since +it is not identical with the rights which secure the owner the produce +of his toil, but is opposite of them. A classification of proprietary +rights based upon this difference would be instructive. If they were +arranged according to the closeness with which they approximate to one +or other of these two extremes, it would be found that they were spread +along a line stretching from property which is obviously the payment +for, and condition of, personal services, to property which is merely a +right to payment from the services rendered by others, in fact a +private tax. The rough order which would emerge, if all details and +qualification were omitted, might be something as follows:-- + +1. Property in payments made for personal services. + +2. Property in personal possessions necessary to health and comfort. + +3. Property in land and tools used by their owners. + +4. Property in copyright and patent rights owned by authors and +inventors. + +5. Property in pure interest, including much agricultural rent. + +6. Property in profits of luck and good fortune: "quasi-rents." + +7. Property in monopoly profits. + +{64} + +8. Property in urban ground rents. + +9. Property in royalties. + +The first four kinds of property obviously accompany, and in some sense +condition, the performance of work. The last four obviously do not. +Pure interest has some affinities with both. It represents a necessary +economic cost, the equivalent of which must be born, whatever the legal +arrangements under which property is held, and is thus unlike the +property represented by profits (other than the equivalent of salaries +and payment for necessary risk), urban ground-rents and royalties. It +relieves the recipient from personal services, and thus resembles them. + +The crucial question for any society is, under which each of these two +broad groups of categories the greater part (measured in value) of the +proprietary rights which it maintains are at any given moment to be +found. If they fall in the first group creative work will be +encouraged and idleness will be depressed; if they fall in the second, +the result will be the reverse. The facts vary widely from age to age +and from country to country. Nor have they ever been fully revealed; +for the lords of the jungle do not hunt by daylight. It is probable, +at least, that in the England of 1550 to 1750, a larger proportion of +the existing property consisted of land and tools used by their owners +than either in contemporary France, where feudal dues absorbed a +considerable proportion of the peasants' income, or than in the England +of 1800 to 1850, where the new capitalist manufacturers made hundreds +per cent. while manual workers were goaded by starvation into +ineffectual {65} revolt. It is probable that in the nineteenth +century, thanks to the Revolution, France and England changed places, +and that in this respect not only Ireland but the British Dominions +resemble the former rather than the latter. The transformation can be +studied best of all in the United States, in parts of which the +population of peasant proprietors and small masters of the early +nineteenth century were replaced in three generations by a propertyless +proletariat and a capitalist plutocracy. The abolition of the economic +privileges of agrarian feudalism, which, under the name of equality, +was the driving force of the French Revolution, and which has taken +place, in one form or another, in all countries touched by its +influence, has been largely counter-balanced since 1800 by the growth +of the inequalities springing from Industrialism. + +In England the general effect of recent economic development has been +to swell proprietary rights which entitle the owners to payment without +work, and to diminish those which can properly be described as +functional. The expansion of the former, and the process by which the +simpler forms of property have been merged in them, are movements the +significance of which it is hardly possible to over-estimate. There +is, of course, a considerable body of property which is still of the +older type. But though working landlords, and capitalists who manage +their own businesses, are still in the aggregate a numerous body, the +organization for which they stand is not that which is most +representative of the modern economic world. The general tendency for +the ownership and administration of {66} property to be separated, the +general refinement of property into a claim on goods produced by an +unknown worker, is as unmistakable as the growth of capitalist industry +and urban civilization themselves. Villages are turned into towns and +property in land changes from the holding worked by a farmer or the +estate administered by a landlord into "rents," which are advertised +and bought and sold like any other investment. Mines are opened and +the rights of the landowner are converted into a tribute for every ton +of coal which is brought to the surface. As joint-stock companies take +the place of the individual enterprise which was typical of the earlier +years of the factory system, organization passes from the employer who +both owns and manages his business, into the hands of salaried +officials, and again the mass of property-owners is swollen by the +multiplication of _rentiers_ who put their wealth at the disposal of +industry, but who have no other connection with it. The change is +taking place in our day most conspicuously, perhaps, through the +displacement in retail trade of the small shopkeeper by the multiple +store, and the substitution in manufacturing industry of combines and +amalgamations for separate businesses conducted by competing employers. +And, of course, it is not only by economic development that such claims +are created. "Out of the eater came forth meat, and out of the strong +came forth sweetness." It is probable that war, which in barbarous +ages used to be blamed as destructive of property, has recently created +more titles to property than almost all other causes put together. + +Infinitely diverse as are these proprietary rights, they {67} have the +common characteristic of being so entirely separated from the actual +objects over which they are exercised, so rarified and generalized, as +to be analogous almost to a form of currency rather than to the +property which is so closely united to its owner as to seem a part of +him. Their isolation from the rough environment of economic life, +where the material objects of which they are the symbol are shaped and +handled, is their charm. It is also their danger. The hold which a +class has upon the future depends on the function which it performs. +What nature demands is work: few working aristocracies, however +tyrannical, have fallen; few functionless aristocracies have survived. +In society, as in the world of organic life, atrophy is but one stage +removed from death. In proportion as the landowner becomes a mere +_rentier_ and industry is conducted, not by the rude energy of the +competing employers who dominated its infancy, but by the salaried +servants of shareholders, the argument for private property which +reposes on the impossibility of finding any organization to supersede +them loses its application, for they are already superseded. + +Whatever may be the justification of these types of property, it cannot +be that which was given for the property of the peasant or the +craftsman. It cannot be that they are necessary in order to secure to +each man the fruits of his own labor. For if a legal right which gives +$200,000 a year to a mineral owner in the North of England and to a +ground landlord in London "secures the fruits of labor" at all, the +fruits are the proprietor's and the labor that of some one else. +Property {68} has no more insidious enemies than those well-meaning +anarchists who, by defending all forms of it as equally valid, involve +the institution in the discredit attaching to its extravagances. In +reality, whatever conclusion may be drawn from the fact, the greater +part of modern property, whether, like mineral rights and urban +ground-rents, it is merely a form of private taxation which the law +allows certain persons to levy on the industry of others, or whether, +like property in capital, it consists of rights to payment for +instruments which the capitalist cannot himself use but puts at the +disposal of those who can, has as its essential feature that it confers +upon its owners income unaccompanied by personal service. In this +respect the ownership of land and the ownership of capital are normally +similar, though from other points of view their differences are +important. To the economist rent and interest are distinguished by the +fact that the latter, though it is often accompanied by surplus +elements which are merged with it in dividends, is the price of an +instrument of production which would not be forthcoming for industry if +the price were not paid, while the former is a differential surplus +which does not affect the supply. To the business community and the +solicitor land and capital are equally investments, between which, +since they possess the common characteristic of yielding income without +labor, it is inequitable to discriminate; and though their significance +as economic categories may be different, their effect as social +institutions is the same. It is to separate property from creative +ability, and to divide society into two classes, of which one has its +{69} primary interest in passive ownership, while the other is mainly +dependent upon active work. + +Hence the real analogy to many kinds of modern property is not the +simple property of the small land-owner or the craftsman, still less +the household goods and dear domestic amenities, which is what the word +suggests to the guileless minds of clerks and shopkeepers, and which +stampede them into displaying the ferocity of terrified sheep when the +cry is raised that "Property" is threatened. It is the feudal dues +which robbed the French peasant of part of his produce till the +Revolution abolished them. How do royalties differ from _quintaines_ +and _lods et ventes_? They are similar in their origin and similar in +being a tax levied on each increment of wealth which labor produces. +How do urban ground-rents differ from the payments which were made to +English sinecurists before the Reform Bill of 1832? They are equally +tribute paid by those who work to those who do not. If the monopoly +profits of the owner of _banalités_, whose tenant must grind corn at +his mill and make wine at his press, were an intolerable oppression, +what is the sanctity attaching to the monopoly profits of the +capitalists, who, as the Report of the Government Committee on trusts +tells us, "in soap, tobacco, wallpaper, salt, cement and in the textile +trades ... are in a position to control output and prices" or, in other +words, can compel the consumer to buy from them, at the figure they +fix, on pain of not buying at all? + +All these rights--royalties, ground-rents, monopoly profits--are +"Property." The criticism most fatal to them is not that of +Socialists. It is contained in the {70} arguments by which property is +usually defended. For if the meaning of the institution is to +encourage industry by securing that the worker shall receive the +produce of his toil, then precisely in proportion as it is important to +preserve the property which a man has in the results of his own +efforts, is it important to abolish that which he has in the results of +the efforts of some one else. The considerations which justify +ownership as a function are those which condemn it as a tax. Property +is not theft, but a good deal of theft becomes property. The owner of +royalties who, when asked why he should be paid £50,000 a year from +minerals which he has neither discovered nor developed nor worked but +only owned, replies "But it's Property!" may feel all the awe which his +language suggests. But in reality he is behaving like the snake which +sinks into its background by pretending that it is the dead branch of a +tree, or the lunatic who tried to catch rabbits by sitting behind a +hedge and making a noise like a turnip. He is practising +protective--and sometimes aggressive--mimicry. His sentiments about +property are those of the simple toiler who fears that what he has sown +another may reap. His claim is to be allowed to continue to reap what +another has sown. + +It is sometimes suggested that the less attractive characteristics of +our industrial civilization, its combination of luxury and squalor, its +class divisions and class warfare, are accidental maladjustments which +are not rooted in the center of its being, but are excrescences which +economic progress itself may in time be expected to correct. That +agreeable optimism will not survive an {71} examination of the +operation of the institution of private property in land and capital in +industrialized communities. In countries where land is widely +distributed, in France or in Ireland, its effect may be to produce a +general diffusion of wealth among a rural middle class who at once work +and own. In countries where the development of industrial organization +has separated the ownership of property and the performance of work, +the normal effect of private property is to transfer to functionless +owners the surplus arising from the more fertile sites, the better +machinery, the more elaborate organization. No clearer +exemplifications of this "law of rent" has been given than the figures +supplied to the Coal Industry Commission by Sir Arthur Lowes Dickenson, +which showed that in a given quarter the costs per ton of producing +coal varied from $3.12 to $12 per ton, and the profits from nil to +$4.12. The distribution in dividends to shareholders of the surplus +accruing from the working of richer and more accessible seams, from +special opportunities and access to markets, from superior machinery, +management and organization, involves the establishment of Privilege as +a national institution, as much as the most arbitrary exactions of a +feudal _seigneur_. It is the foundation of an inequality which is not +accidental or temporary, but necessary and permanent. And on this +inequality is erected the whole apparatus of class institutions, which +make not only the income, but the housing, education, health and +manners, indeed the very physical appearance of different classes of +Englishmen almost as different from each other as though the minority +were {72} alien settlers established amid the rude civilization of a +race of impoverished aborigines. + + +So the justification of private property traditional in England, which +saw in it the security that each man would enjoy the fruits of his own +labor, though largely applicable to the age in which it was formulated, +has undergone the fate of most political theories. It has been refuted +not by the doctrines of rival philosophers, but by the prosaic course +of economic development. As far as the mass of mankind are concerned, +the need which private property other than personal possessions does +still often satisfy, though imperfectly and precariously, is the need +for security. To the small investors, who are the majority of +property-owners, though owning only an insignificant fraction of the +property in existence, its meaning is simple. It is not wealth or +power, or even leisure from work. It is safety. They work hard. They +save a little money for old age, or for sickness, or for their +children. They invest it, and the interest stands between them and all +that they dread most. Their savings are of convenience to industry, +the income from them is convenient to themselves. "Why," they ask, +"should we not reap in old age the advantage of energy and thrift in +youth?" And this hunger for security is so imperious that those who +suffer most from the abuses of property, as well as those who, if they +could profit by them, would be least inclined to do so, will tolerate +and even defend them, for fear lest the knife which trims dead matter +should cut into the quick. They have seen too many men drown to be +{73} critical of dry land, though it be an inhospitable rock. They are +haunted by the nightmare of the future, and, if a burglar broke it, +would welcome a burglar. + +This need for security is fundamental, and almost the gravest +indictment of our civilization is that the mass of mankind are without +it. Property is one way of organizing it. It is quite comprehensible +therefore, that the instrument should be confused with the end, and +that any proposal to modify it should create dismay. In the past, +human beings, roads, bridges and ferries, civil, judicial and clerical +offices, and commissions in the army have all been private property. +Whenever it was proposed to abolish the rights exercised over them, it +was protested that their removal would involve the destruction of an +institution in which thrifty men had invested their savings, and on +which they depended for protection amid the chances of life and for +comfort in old age. In fact, however, property is not the only method +of assuring the future, nor, when it is the way selected, is security +dependent upon the maintenance of all the rights which are at present +normally involved in ownership. In so far as its psychological +foundation is the necessity for securing an income which is stable and +certain, which is forthcoming when its recipient cannot work, and which +can be used to provide for those who cannot provide for themselves, +what is really demanded is not the command over the fluctuating +proceeds of some particular undertaking, which accompanies the +ownership of capital, but the security which is offered by an annuity. +Property is the instrument, security is the object, and when some +alternative way is forthcoming {74} of providing the latter, it does +not appear in practice that any loss of confidence, or freedom or +independence is caused by the absence of the former. + +Hence not only the manual workers, who since the rise of capitalism, +have rarely in England been able to accumulate property sufficient to +act as a guarantee of income when their period of active earning is +past, but also the middle and professional classes, increasingly seek +security to-day, not in investment, but in insurance against sickness +and death, in the purchase of annuities, or in what is in effect the +same thing, the accumulation of part of their salary towards a pension +which is paid when their salary ceases. The professional man may buy +shares in the hope of making a profit on the transaction. But when +what he desires to buy is security, the form which his investment takes +is usually one kind or another of insurance. The teacher, or nurse, or +government servant looks forward to a pension. Women, who fifty years +ago would have been regarded as dependent almost as completely as if +femininity were an incurable disease with which they had been born, and +whose fathers, unless rich men, would have been tormented with anxiety +for fear lest they should not save sufficient to provide for them, now +receive an education, support themselves in professions, and save in +the same way. It is still only in comparatively few cases that this +type of provision is made; almost all wage-earners outside government +employment, and many in it, as well as large numbers of professional +men, have nothing to fall back upon in sickness or old age. But that +does not alter the fact {75} that, when it is made, it meets the need +for security, which, apart, of course, from personal possessions and +household furniture, is the principal meaning of property to by far the +largest element in the population, and that it meets it more completely +and certainly than property itself. + +Nor, indeed, even when property is the instrument used to provide for +the future, is such provision dependent upon the maintenance in its +entirety of the whole body of rights which accompany ownership to-day. +Property is not simple but complex. That of a man who has invested his +savings as an ordinary shareholder comprises at least three rights, the +right to interest, the right to profits, the right to control. In so +far as what is desired is the guarantee for the maintenance of a stable +income, not the acquisition of additional wealth without labor--in so +far as his motive is not gain but security--the need is met by interest +on capital. It has no necessary connection either with the right to +residuary profits or the right to control the management of the +undertaking from which the profits are derived, both of which are +vested to-day in the shareholder. If all that were desired were to use +property as an instrument for purchasing security, the obvious +course--from the point of view of the investor desiring to insure his +future the safest course--would be to assimilate his position as far as +possible to that of a debenture holder or mortgagee, who obtains the +stable income which is his motive for investment, but who neither +incurs the risks nor receives the profits of the speculator. To insist +that the elaborate apparatus of proprietary rights which {76} +distributes dividends of thirty per cent to the shareholders in Coats, +and several thousands a year to the owner of mineral royalties and +ground-rents, and then allows them to transmit the bulk of gains which +they have not earned to descendants who in their turn will thus be +relieved from the necessity of earning, must be maintained for the sake +of the widow and the orphan, the vast majority of whom have neither and +would gladly part with them all for a safe annuity if they had, is, to +say the least of it, extravagantly _mal-à-propos_. It is like pitching +a man into the water because he expresses a wish for a bath, or +presenting a tiger cub to a householder who is plagued with mice, on +the ground that tigers and cats both belong to the genus _felis_. The +tiger hunts for itself not for its masters, and when game is scarce +will hunt them. The classes who own little or no property may +reverence it because it is security. But the classes who own much +prize it for quite different reasons, and laugh in their sleeve at the +innocence which supposes that anything as vulgar as the savings of the +_petite bourgeoisie_ have, except at elections, any interest for them. +They prize it because it is the order which quarters them on the +community and which provides for the maintenance of a leisure class at +the public expense. + +"Possession," said the Egoist, "without obligation to the object +possessed, approaches felicity." Functionless property appears natural +to those who believe that society should be organized for the +acquisition of private wealth, and attacks upon it perverse or +malicious, because the question which they ask of any institution is, +"What does it yield?" And such property yields much {77} to those who +own it. Those, however, who hold that social unity and effective work +are possible only if society is organized and wealth distributed on the +basis of function, will ask of an institution, not, "What dividends +does it pay?" but "What service does it perform?" To them the fact +that much property yields income irrespective of any service which is +performed or obligation which is recognized by its owners will appear +not a quality but a vice. They will see in the social confusion which +it produces, payments disproportionate to service here, and payments +without any service at all there, and dissatisfaction everywhere, a +convincing confirmation of their argument that to build on a foundation +of rights and of rights alone is to build on a quicksand. + +From the portentous exaggeration into an absolute of what once was, and +still might be, a sane and social institution most other social evils +follow the power of those who do not work over those who do, the +alternate subservience and rebelliousness of those who work towards +those who do not, the starving of science and thought and creative +effort for fear that expenditure upon them should impinge on the +comfort of the sluggard and the _fainéant_, and the arrangement of +society in most of its subsidiary activities to suit the convenience +not of those who work usefully but of those who spend gaily, so that +the most hideous, desolate and parsimonious places in the country are +those in which the greatest wealth is produced, the Clyde valley, or +the cotton towns of Lancashire, or the mining villages of Scotland and +Wales, and the gayest and most luxurious {78} those in which it is +consumed. From the point of view of social health and economic +efficiency, society should obtain its material equipment at the +cheapest price possible, and after providing for depreciation and +expansion should distribute the whole product to its working members +and their dependents. What happens at present, however, is that its +workers are hired at the cheapest price which the market (as modified +by organization) allows, and that the surplus, somewhat diminished by +taxation, is distributed to the owners of property. Profits may vary +in a given year from a loss to 100 per cent. But wages are fixed at a +level which will enable the marginal firm to continue producing one +year with another; and the surplus, even when due partly to efficient +management, goes neither to managers nor manual workers, but to +shareholders. The meaning of the process becomes startlingly apparent +when, as in Lancashire to-day, large blocks of capital change hands at +a period of abnormal activity. The existing shareholders receive the +equivalent of the capitalized expectation of future profits. The +workers, as workers, do not participate in the immense increment in +value; and when, in the future, they demand an advance in wages, they +will be met by the answer that profits, which before the transaction +would have been reckoned large, yield shareholders after it only a low +rate of interest on their investment. + +The truth is that whereas in earlier ages the protection of property +was normally the protection of work, the relationship between them has +come in the course of the economic development of the last two +centuries to {79} be very nearly reversed. The two elements which +compose civilization are active effort and passive property, the labor +of human things and the tools which human beings use. Of these two +elements those who supply the first maintain and improve it, those who +own the second normally dictate its character, its development and its +administration. Hence, though politically free, the mass of mankind +live in effect under rules imposed to protect the interests of the +small section among them whose primary concern is ownership. From this +subordination of creative activity to passive property, the worker who +depends upon his brains, the organizer, inventor, teacher or doctor +suffers almost as much embarrassment as the craftsman. The real +economic cleavage is not, as is often said, between employers and +employed, but between all who do constructive work, from scientist to +laborer, on the one hand, and all whose main interest is the +preservation of existing proprietary rights upon the other, +irrespective of whether they contribute to constructive work or not. + +If, therefore, under the modern conditions which have concentrated any +substantial share of property in the hands of a small minority of the +population, the world is to be governed for the advantages of those who +own, it is only incidentally and by accident that the results will be +agreeable to those who work. In practice there is a constant collision +between them. Turned into another channel, half the wealth distributed +in dividends to functionless shareholders, could secure every child a +good education up to 18, could re-endow English Universities, and +(since more efficient production is {80} important) could equip English +industries for more efficient production. Half the ingenuity now +applied to the protection of property could have made most industrial +diseases as rare as smallpox, and most English cities into places of +health and even of beauty. What stands in the way is the doctrine that +the rights of property are absolute, irrespective of any social +function which its owners may perform. So the laws which are most +stringently enforced are still the laws which protect property, though +the protection of property is no longer likely to be equivalent to the +protection of work, and the interests which govern industry and +predominate in public affairs are proprietary interests. A mill-owner +may poison or mangle a generation of operatives; but his brother +magistrates will let him off with a caution or a nominal fine to poison +and mangle the next. For he is an owner of property. A landowner may +draw rents from slums in which young children die at the rate of 200 +per 1000; but he will be none the less welcome in polite society. For +property has no obligations and therefore can do no wrong. Urban land +may be held from the market on the outskirts of cities in which human +beings are living three to a room, and rural land may be used for sport +when villagers are leaving it to overcrowd them still more. No public +authority intervenes, for both are property. To those who believe that +institutions which repudiate all moral significance must sooner or +later collapse, a society which confuses the protection of property +with the preservation of its functionless perversions will appear as +precarious as that which has left the memorials of its {81} tasteless +frivolity and more tasteless ostentation in the gardens of Versailles. + +Do men love peace? They will see the greatest enemy of social unity in +rights which involve no obligation to co-operate for the service of +society. Do they value equality? Property rights which dispense their +owners from the common human necessity of labor make inequality an +institution permeating every corner of society, from the distribution +of material wealth to the training of intellect itself. Do they desire +greater industrial efficiency? There is no more fatal obstacle to +efficiency than the revelation that idleness has the same privileges as +industry, and that for every additional blow with the pick or hammer an +additional profit will be distributed among shareholders who wield +neither. + +Indeed, functionless property is the greatest enemy of legitimate +property itself. It is the parasite which kills the organism that +produced it. Bad money drives out good, and, as the history of the +last two hundred years shows, when property for acquisition or power +and property for service or for use jostle each other freely in the +market, without restrictions such as some legal systems have imposed on +alienation and inheritance, the latter tends normally to be absorbed by +the former, because it has less resisting power. Thus functionless +property grows, and as it grows it undermines the creative energy which +produced property and which in earlier ages it protected. It cannot +unite men, for what unites them is the bond of service to a common +purpose, and that bond it repudiates, since its very {82} essence is +the maintenance of rights irrespective of service. It cannot create; +it can only spend, so that the number of scientists, inventors, artists +or men of letters who have sprung in the course of the last century +from hereditary riches can be numbered on one hand. It values neither +culture nor beauty, but only the power which belongs to wealth and the +ostentation which is the symbol of it. + +So those who dread these qualities, energy and thought and the creative +spirit--and they are many--will not discriminate, as we have tried to +discriminate, between different types and kinds of property, in order +that they may preserve those which are legitimate and abolish those +which are not. They will endeavor to preserve all private property, +even in its most degenerate forms. And those who value those things +will try to promote them by relieving property of its perversions, and +thus enabling it to return to its true nature. They will not desire to +establish any visionary communism, for they will realize that the free +disposal of a sufficiency of personal possessions is the condition of a +healthy and self-respecting life, and will seek to distribute more +widely the property rights which make them to-day the privilege of a +minority. But they will refuse to submit to the naïve philosophy which +would treat all proprietary rights as equal in sanctity merely because +they are identical in name. They will distinguish sharply between +property which is used by its owner for the conduct of his profession +or the upkeep of his household, and property which is merely a claim on +wealth produced by another's labor. They will insist that {83} +property is moral and healthy only when it is used as a condition not +of idleness but of activity, and when it involves the discharge of +definite personal obligations. They will endeavor, in short, to base +it upon the principle of function. + + + + +{84} + +VI + +THE FUNCTIONAL SOCIETY + +The application to property and industry of the principle of function +is compatible with several different types of social organization, and +is as unlikely as more important revelations to be the secret of those +who cry "Lo here!" and "Lo there!" The essential thing is that men +should fix their minds upon the idea of purpose, and give that idea +pre-eminence over all subsidiary issues. If, as is patent, the purpose +of industry is to provide the material foundation of a good social +life, then any measure which makes that provision more effective, so +long as it does not conflict with some still more important purpose, is +wise, and any institution which thwarts or encumbers it is foolish. It +is foolish, for example, to cripple education, as it is crippled in +England for the sake of industry; for one of the uses of industry is to +provide the wealth which may make possible better education. It is +foolish to maintain property rights for which no service is performed, +for payment without service is waste; and if it is true, as +statisticians affirm, that, even were income equally divided, income +per head would be small, then it is all the more foolish, for sailors +in a boat have no room for first-class passengers, and it is all the +more important that none of the small national income should be +misapplied. It is foolish to leave the direction of industry {85} in +the hands of servants of private property-owners who themselves know +nothing about it but its balance sheets, because this is to divert it +from the performance of service to the acquisition of gain, and to +subordinate those who do creative work to those who do not. + +The course of wisdom in the affairs of industry is, after all, what it +is in any other department of organized life. It is to consider the +end for which economic activity is carried on and then to adapt +economic organization to it. It is to pay for service and for service +only, and when capital is hired to make sure that it is hired at the +cheapest possible price. It is to place the responsibility for +organizing industry on the shoulders of those who work and use, not of +those who own, because production is the business of the producer and +the proper person to see that he discharges his business is the +consumer for whom, and not for the owner of property, it ought to be +carried on. Above all it is to insist that all industries shall be +conducted in complete publicity as to costs and profits, because +publicity ought to be the antiseptic both of economic and political +abuses, and no man can have confidence in his neighbor unless both work +in the light. + +As far as property is concerned, such a policy would possess two edges. +On the one hand, it would aim at abolishing those forms of property in +which ownership is divorced from obligations. On the other hand, it +would seek to encourage those forms of economic organization under +which the worker, whether owner or not, is free to carry on his work +without sharing its control or its profits with the mere _rentier_. +Thus, if in certain {86} spheres it involved an extension of public +ownership, it would in others foster an extension of private property. +For it is not private ownership, but private ownership divorced from +work, which is corrupting to the principle of industry; and the idea of +some socialists that private property in land or capital is necessarily +mischievous is a piece of scholastic pedantry as absurd as that of +those conservatives who would invest all property with some kind of +mysterious sanctity. It all depends what sort of property it is and +for what purpose it is used. Provided that the State retains its +eminent domain, and controls alienation, as it does under the Homestead +laws of the Dominions, with sufficient stringency to prevent the +creation of a class of functionless property-owners, there is no +inconsistency between encouraging simultaneously a multiplication of +peasant farmers and small masters who own their own farms or shops, and +the abolition of private ownership in those industries, unfortunately +to-day the most conspicuous, in which the private owner is an absentee +shareholder. + +Indeed, the second reform would help the first. In so far as the +community tolerates functionless property it makes difficult, if not +impossible, the restoration of the small master in agriculture or in +industry, who cannot easily hold his own in a world dominated by great +estates or capitalist finance. In so far as it abolishes those kinds +of property which are merely parasitic, it facilitates the restoration +of the small property-owner in those kinds of industry for which small +ownership is adapted. A socialistic policy towards the former is not +{87} antagonistic to the "distributive state," but, in modern economic +conditions, a necessary preliminary to it, and if by "Property" is +meant the personal possessions which the word suggests to nine-tenths +of the population, the object of socialists is not to undermine +property but to protect and increase it. The boundary between large +scale and small scale production will always be uncertain and +fluctuating, depending, as it does, on technical conditions which +cannot be foreseen: a cheapening of electrical power, for example, +might result in the decentralization of manufactures, as steam resulted +in their concentration. The fundamental issue, however, is not between +different scales of ownership, but between ownership of different +kinds, not between the large farmer or master and the small, but +between property which is used for work and property which yields +income without it. The Irish landlord was abolished, not because he +owned a large scale, but because he was an owner and nothing more; if, +and when English land-ownership has been equally attenuated, as in +towns it already has been, it will deserve to meet the same fate. Once +the issue of the character of ownership has been settled, the question +of the size of the economic unit can be left to settle itself. + +The first step, then, towards the organization of economic life for the +performance of function is to abolish those types of private property +in return for which no function is performed. The man who lives by +owning without working is necessarily supported by the industry of some +one else, and is, therefore, too expensive a luxury to be encouraged. +Though he deserves to be {88} treated with the leniency which ought to +be, and usually is not, shown to those who have been brought up from +infancy to any other disreputable trade, indulgence to individuals must +not condone the institution of which both they and their neighbors are +the victims. Judged by this standard, certain kinds of property are +obviously anti-social. The rights in virtue of which the owner of the +surface is entitled to levy a tax, called a royalty, on every ton of +coal which the miner brings to the surface, to levy another tax, called +a way-leave, on every ton of coal transported under the surface of his +land though its amenity and value may be quite unaffected, to distort, +if he pleases, the development of a whole district by refusing access +to the minerals except upon his own terms, and to cause some 3,500 to +4,000 million tons to be wasted in barriers between different +properties, while he in the meantime contributes to a chorus of +lamentation over the wickedness of the miners in not producing more +tons of coal for the public and incidentally more private taxes for +himself--all this adds an agreeable touch of humor to the drab quality +of our industrial civilization for which mineral owners deserve perhaps +some recognition, though not the $400,000 odd a year which is paid to +each of the four leading players, or the $24,000,000 a year which is +distributed among the crowd. + +The alchemy by which a gentleman who has never seen a coal mine +distills the contents of that place of gloom into elegant chambers in +London and a place in the country is not the monopoly of royalty +owners. A similar feat of prestidigitation is performed by the {89} +owner of urban ground-rents. In rural districts some landlords, +perhaps many landlords, are partners in the hazardous and difficult +business of agriculture, and, though they may often exercise a power +which is socially excessive, the position which they hold and the +income which they receive are, in part at last, a return for the +functions which they perform. The ownership of urban land has been +refined till of that crude ore only the pure gold is left. It is the +perfect sinecure, for the only function it involves is that of +collecting its profits, and in an age when the struggle of Liberalism +against sinecures was still sufficiently recent to stir some chords of +memory, the last and greatest of liberal thinkers drew the obvious +deduction. "The reasons which form the justification ... of property +in land," wrote Mill in 1848, "are valid only in so far as the +proprietor of land is its improver.... In no sound theory of private +property was it ever contemplated that the proprietor of land should be +merely a sinecurist quartered on it." Urban ground-rents and royalties +are, in fact, as the Prime Minister in his unregenerate days suggested, +a tax which some persons are permitted by the law to levy upon the +industry of others. They differ from public taxation only in that +their amount increases in proportion not to the nation's need of +revenue but to its need of the coal and space on which they are levied, +that their growth inures to private gain not to public benefit, and +that if the proceeds are wasted on frivolous expenditure no one has any +right to complain, because the arrangement by which Lord Smith spends +wealth produced by Mr. Brown on objects which do no good to either is +part {90} of the system which, under the name of private property, Mr. +Brown as well as Lord Smith have learned to regard as essential to the +higher welfare of mankind. + +But if we accept the principle of function we shall ask what is the +_purpose_ of this arrangement, and for what end the inhabitants of, for +example, London pay $64,000,000 a year to their ground landlords. And +if we find that it is for no purpose and no end, but that these things +are like the horseshoes and nails which the City of London presents to +the Crown on account of land in the Parish of St. Clement Danes, then +we shall not deal harshly with a quaint historical survival, but +neither shall we allow it to distract us from the business of the +present, as though there had been history but there were not history +any longer. We shall close these channels through which wealth leaks +away by resuming the ownership of minerals and of urban land, as some +communities in the British Dominions and on the Continent of Europe +have resumed it already. We shall secure that such large accumulations +as remain change hands at least once in every generation, by increasing +our taxes on inheritance till what passes to the heir is little more +than personal possessions, not the right to a tribute from industry +which, though qualified by death-duties, is what the son of a rich man +inherits to-day. We shall treat mineral owners and land-owners, in +short, as Plato would have treated the poets, whom in their ability to +make something out of nothing and to bewitch mankind with words they a +little resemble, and crown them with flowers and usher them politely +out of the State. + + + + +{91} + +VII + +INDUSTRY AS A PROFESSION + +Rights without functions are like the shades in Homer which drank blood +but scattered trembling at the voice of a man. To extinguish royalties +and urban ground-rents is merely to explode a superstition. It needs +as little--and as much--resolution as to put one's hand through any +other ghost. In all industries except the diminishing number in which +the capitalist is himself the manager, property in capital is almost +equally passive. Almost, but not quite. For, though the majority of +its owners do not themselves exercise any positive function, they +appoint those who do. It is true, of course, that the question of how +capital is to be owned is distinct from the question of how it is to be +administered, and that the former can be settled without prejudice to +the latter. To infer, because shareholders own capital which is +indispensable to industry, that therefore industry is dependent upon +the maintenance of capital in the hands of shareholders, to write, with +some economists, as though, if private property in capital were further +attenuated or abolished altogether, the constructive energy of the +managers who may own capital or may not, but rarely, in the more +important industries, own more than a small fraction of it, must +necessarily be impaired, is to be guilty of a robust _non-sequitur_ and +to ignore the most obvious facts of {92} contemporary industry. The +less the mere capitalist talks about the necessity for the consumer of +an efficient organization of industry, the better; for, whatever the +future of industry may be, an efficient organization is likely to have +no room for _him_. But though shareholders do not govern, they reign, +at least to the extent of saying once a year "_le roy le veult_." If +their rights are pared down or extinguished, the necessity for some +organ to exercise them will still remain. And the question of the +ownership of capital has this much in common with the question of +industrial organization, that the problem of the constitution under +which industry is to be conducted is common to both. + +That constitution must be sought by considering how industry can be +organized to express most perfectly the principle of purpose. The +application to industry of the principle of purpose is simple, however +difficult it may be to give effect to it. It is to turn it into a +Profession. A Profession may be defined most simply as a trade which +is organized, incompletely, no doubt, but genuinely, for the +performance of function. It is not simply a collection of individuals +who get a living for themselves by the same kind of work. Nor is it +merely a group which is organized exclusively for the economic +protection of its members, though that is normally among its purposes. +It is a body of men who carry on their work in accordance with rules +designed to enforce certain standards both for the better protection of +its members and for the better service of the public. The standards +which it maintains may be high or low: all professions have some rules +which protect the interests {93} of the community and others which are +an imposition on it. Its essence is that it assumes certain +responsibilities for the competence of its members or the quality of +its wares, and that it deliberately prohibits certain kinds of conduct +on the ground that, though they may be profitable to the individual, +they are calculated to bring into disrepute the organization to which +he belongs. While some of its rules are trade union regulations +designed primarily to prevent the economic standards of the profession +being lowered by unscrupulous competition, others have as their main +object to secure that no member of the profession shall have any but a +purely professional interest in his work, by excluding the incentive of +speculative profit. + +The conception implied in the words "unprofessional conduct" is, +therefore, the exact opposite of the theory and practice which assume +that the service of the public is best secured by the unrestricted +pursuit on the part of rival traders of their pecuniary self-interest, +within such limits as the law allows. It is significant that at the +time when the professional classes had deified free competition as the +arbiter of commerce and industry, they did not dream of applying it to +the occupations in which they themselves were primarily interested, but +maintained, and indeed, elaborated machinery through which a +professional conscience might find expression. The rules themselves +may sometimes appear to the layman arbitrary and ill-conceived. But +their object is clear. It is to impose on the profession itself the +obligation of maintaining the quality of the service, and to prevent +its common purpose being frustrated through {94} the undue influence of +the motive of pecuniary gain upon the necessities or cupidity of the +individual. + +The difference between industry as it exists to-day and a profession +is, then, simple and unmistakable. The essence of the former is that +its only criterion is the financial return which it offers to its +shareholders. The essence of the latter, is that, though men enter it +for the sake of livelihood, the measure of their success is the service +which they perform, not the gains which they amass. They may, as in +the case of a successful doctor, grow rich; but the meaning of their +profession, both for themselves and for the public, is not that they +make money but that they make health, or safety, or knowledge, or good +government or good law. They depend on it for their income, but they +do not consider that any conduct which increases their income is on +that account good. And while a boot-manufacturer who retires with half +a million is counted to have achieved success, whether the boots which +he made were of leather or brown paper, a civil servant who did the +same would be impeached. + +So, if they are doctors, they recognize that there are certain kinds of +conduct which cannot be practised, however large the fee offered for +them, because they are unprofessional; if scholars and teachers, that +it is wrong to make money by deliberately deceiving the public, as is +done by makers of patent medicines, however much the public may clamor +to be deceived; if judges or public servants, that they must not +increase their incomes by selling justice for money; if soldiers, that +the service comes first, and their private inclinations, {95} even the +reasonable preference of life to death, second. Every country has its +traitors, every army its deserters, and every profession its blacklegs. +To idealize the professional spirit would be very absurd; it has its +sordid side, and, if it is to be fostered in industry, safeguards will +be needed to check its excesses. But there is all the difference +between maintaining a standard which is occasionally abandoned, and +affirming as the central truth of existence that there is no standard +to maintain. The meaning of a profession is that it makes the traitors +the exception, not as they are in industry, the rule. It makes them +the exception by upholding as the criterion of success the end for +which the profession, whatever it may be, is carried on, and +subordinating the inclination, appetites and ambitions of individuals +to the rules of an organization which has as its object to promote the +performance of function. + + +There is no sharp line between the professions and the industries. A +hundred years ago the trade of teaching, which to-day is on the whole +an honorable public service, was rather a vulgar speculation upon +public credulity; if Mr. Squeers was a caricature, the Oxford of Gibbon +and Adam Smith was a solid port-fed reality; no local authority could +have performed one-tenth of the duties which are carried out by a +modern municipal corporation every day, because there was no body of +public servants to perform them, and such as there were took bribes. +It is conceivable, at least, that some branches of medicine might have +developed on the lines of industrial capitalism, with hospitals as +factories, {96} doctors hired at competitive wages as their "hands," +large dividends paid to shareholders by catering for the rich, and the +poor, who do not offer a profitable market, supplied with an inferior +service or with no service at all. + +The idea that there is some mysterious difference between making +munitions of war and firing them, between building schools and teaching +in them when built, between providing food and providing health, which +makes it at once inevitable and laudable that the former should be +carried on with a single eye to pecuniary gain, while the latter are +conducted by professional men who expect to be paid for service but who +neither watch for windfalls nor raise their fees merely because there +are more sick to be cured, more children to be taught, or more enemies +to be resisted, is an illusion only less astonishing than that the +leaders of industry should welcome the insult as an honor and wear +their humiliation as a kind of halo. The work of making boots or +building a house is in itself no more degrading than that of curing the +sick or teaching the ignorant. It is as necessary and therefore as +honorable. It should be at least equally bound by rules which have as +their object to maintain the standards of professional service. It +should be at least equally free from the vulgar subordination of moral +standards to financial interests. + +If industry is to be organized as a profession, two changes are +requisite, one negative and one positive. The first, is that it should +cease to be conducted by the agents of property-owners for the +advantage of property-owners, {97} and should be carried on, instead, +for the service of the public. The second, is that, subject to +rigorous public supervision, the responsibility for the maintenance of +the service should rest upon the shoulders of those, from organizer and +scientist to laborer, by whom, in effect, the work is conducted. + +The first change is necessary because the conduct of industry for the +public advantage is impossible as long as the ultimate authority over +its management is vested in those whose only connection with it, and +interest in it, is the pursuit of gain. As industry is at present +organized, its profits and its control belong by law to that element in +it which has least to do with its success. Under the joint-stock +organization which has become normal in all the more important +industries except agriculture, it is managed by the salaried agents of +those by whom the property is owned. It is successful if it returns +large sums to shareholders, and unsuccessful if it does not. If an +opportunity presents itself to increase dividends by practices which +deteriorate the service or degrade the workers, the officials who +administer industry act strictly within their duty if they seize it, +for they are the servants of their employers, and their obligation to +their employers is to provide dividends not to provide service. But +the owners of the property are, _qua_ property-owners functionless, not +in the sense, of course, that the tools of which they are proprietors +are not useful, but in the sense that since work and ownership are +increasingly separated, the efficient use of the tools is not dependent +on the maintenance of the proprietary rights exercised over them. {98} +Of course there are many managing directors who both own capital and +administer the business. But it is none the less the case that most +shareholders in most large industries are normally shareholders and +nothing more. + +Nor is their economic interest identical, as is sometimes assumed, with +that of the general public. A society is rich when material goods, +including capital, are cheap, and human beings dear: indeed the word +"riches" has no other meaning. The interest of those who own the +property used in industry, though not, of course, of the managers who +administer industry and who themselves are servants, and often very +ill-paid servants at that, is that their capital should be dear and +human beings cheap. Hence, if the industry is such as to yield a +considerable return, or if one unit in the industry, owing to some +special advantage, produces more cheaply than its neighbors, while +selling at the same price, or if a revival of trade raises prices, or +if supplies are controlled by one of the combines which are now the +rule in many of the more important industries, the resulting surplus +normally passes neither to the managers, nor to the other employees, +nor to the public, but to the shareholders. Such an arrangement is +preposterous in the literal sense of being the reverse of that which +would be established by considerations of equity and common sense, and +gives rise (among other things) to what is called "the struggle between +labor and capital." The phrase is apposite, since it is as absurd as +the relations of which it is intended to be a description. To deplore +"ill-feeling" or to advocate {99} "harmony" between "labor and capital" +is as rational as to lament the bitterness between carpenters and +hammers or to promote a mission for restoring amity between mankind and +its boots. The only significance of these _clichés_ is that their +repetition tends to muffle their inanity, even to the point of +persuading sensible men that capital "employs" labor, much as our pagan +ancestors imagined that the other pieces of wood and iron, which they +deified in their day, sent their crops and won their battles. When men +have gone so far as to talk as though their idols have come to life, it +is time that some one broke them. Labor consists of persons, capital +of things. The only use of things is to be applied to the service of +persons. The business of persons is to see that they are there to use, +and that no more than need be is paid for using them. + +Thus the application to industry of the principle of function involves +an alteration of proprietary rights, because those rights do not +contribute, as they now are, to the end which industry exists to serve. +What gives unity to any activity, what alone can reconcile the +conflicting claims of the different groups engaged in it, is the +purpose for which it is carried on. If men have no common goal it is +no wonder that they should fall out by the way, nor are they likely to +be reconciled by a redistribution of their provisions. If they are not +content both to be servants, one or other must be master, and it is +idle to suppose that mastership can be held in a state of suspense +between the two. There can be a division of functions between +different grades of workers, or between worker and consumer, and each +can {100} have in his own sphere the authority needed to enable him to +fill it. But there cannot be a division of functions between the +worker and the owner who is owner and nothing else, for what function +does such an owner perform? The provision of capital? Then pay him +the sum needed to secure the use of his capital, but neither pay him +more nor admit him to a position of authority over production for which +merely as an owner he is not qualified. For this reason, while an +equilibrium between worker and manager is possible, because both are +workers, that which it is sought to establish between worker and owner +is not. It is like the proposal of the Germans to negotiate with +Belgium from Brussels. Their proposals may be excellent: but it is not +evident why they are where they are, or how, since they do not +contribute to production, they come to be putting forward proposals at +all. As long as they are in territory where they have no business to +be, their excellence as individuals will be overlooked in annoyance at +the system which puts them where they are. + +It is fortunate indeed, if nothing worse than this happens. For one +way of solving the problem of the conflict of rights in industry is not +to base rights on functions, as we propose, but to base them on force. +It is to re-establish in some veiled and decorous form the institution +of slavery, by making labor compulsory. In nearly all countries a +concerted refusal to work has been made at one time or another a +criminal offense. There are to-day parts of the world in which +European capitalists, unchecked by any public opinion or authority +{101} independent of themselves, are free to impose almost what terms +they please upon workmen of ignorant and helpless races. In those +districts of America where capitalism still retains its primitive +lawlessness, the same result appears to be produced upon immigrant +workmen by the threat of violence. + +In such circumstances the conflict of rights which finds expression in +industrial warfare does not arise, because the rights of one party have +been extinguished. The simplicity of the remedy is so attractive that +it is not surprising that the Governments of industrial nations should +coquet from time to time with the policy of compulsory arbitration. +After all, it is pleaded, it is only analogous to the action of a +supernational authority which should use its common force to prevent +the outbreak of war. In reality, compulsory arbitration is the +opposite of any policy which such an authority could pursue either with +justice or with hope of success. For it takes for granted the +stability of existing relationships and intervenes to adjust incidental +disputes upon the assumption that their equity is recognized and their +permanence desired. In industry, however, the equity of existing +relationships is precisely the point at issue. A League of Nations +which adjusted between a subject race and its oppressors, between Slavs +and Magyars, or the inhabitants of what was once Prussian Poland and +the Prussian Government, on the assumption that the subordination of +Slavs to Magyars and Poles to Prussians was part of an unchangeable +order, would rightly be resisted by all those who think liberty more +precious than peace. A State which, in the {102} name of peace, should +make the concerted cessation of work a legal offense would be guilty of +a similar betrayal of freedom. It would be solving the conflict of +rights between those who own and those who work by abolishing the +rights of those who work. + + +So here again, unless we are prepared to re-establish some form of +forced labor, we reach an impasse. But it is an impasse only in so +long as we regard the proprietary rights of those who own the capital +used in industry as absolute and an end in themselves. If, instead of +assuming that all property, merely because it is property, is equally +sacred, we ask what is the _purpose_ for which capital is used, what is +its _function_, we shall realize that it is not an end but a means to +an end, and that its function is to serve and assist (as the economists +tell us) the labor of human beings, not the function of human beings to +serve those who happen to own it. And from this truth two consequences +follow. The first is that since capital is a thing, which ought to be +used to help industry as a man may use a bicycle to get more quickly to +his work, it ought, when it is employed, to be employed on the cheapest +terms possible. The second is that those who own it should no more +control production than a man who lets a house controls the meals which +shall be cooked in the kitchen, or the man who lets a boat the speed at +which the rowers shall pull. In other words, capital should always be +got at cost price, which means, unless the State finds it wise, as it +very well may, to own the capital used in certain industries, it should +be paid the lowest interest {103} for which it can be obtained, but +should carry no right either to residuary dividends or to the control +of industry. + +There are, in theory, five ways by which the control of industry by the +agents of private property-owners can be terminated. They may be +expropriated without compensation. They may voluntarily surrender it. +They may be frozen out by action on the part of the working +_personnel_, which itself undertakes such functions, if any, as they +have performed, and makes them superfluous by conducting production +without their assistance. Their proprietary interest may be limited or +attenuated to such a degree that they become mere _rentiers_, who are +guaranteed a fixed payment analogous to that of the debenture-holder, +but who receive no profits and bear no responsibility for the +organization of industry. They may be bought out. The first +alternative is exemplified by the historical confiscations of the past, +such as, for instance, by the seizure of ecclesiastical property by the +ruling classes of England, Scotland and most other Protestant states. +The second has rarely, if ever, been tried--the nearest approach to it, +perhaps, was the famous abdication of August 4th, 1789. The third is +the method apparently contemplated by the building guilds which are now +in process of formation in Great Britain. The fourth method of +treating the capitalist is followed by the co-operative movement. It +is also that proposed by the committee of employers and trade-unionists +in the building industry over which Mr. Foster presided, and which +proposed that employers should be paid a fixed salary, and a fixed rate +of {104} interest on their capital, but that all surplus profits should +be pooled and administered by a central body representing employers and +workers. The fifth has repeatedly been practised by municipalities, +and somewhat less often by national governments. + +Which of these alternative methods of removing industry from the +control of the property-owner is adopted is a matter of expediency to +be decided in each particular case. "Nationalization," therefore, +which is sometimes advanced as the only method of extinguishing +proprietary rights, is merely one species of a considerable genus. It +can be used, of course, to produce the desired result. But there are +some industries, at any rate, in which nationalization is not necessary +in order to bring it about, and since it is at best a cumbrous process, +when other methods are possible, other methods should be used. +Nationalization is a means to an end, not an end in itself. Properly +conceived its object is not to establish state management of industry, +but to remove the dead hand of private ownership, when the private +owner has ceased to perform any positive function. It is unfortunate, +therefore, that the abolition of obstructive property rights, which is +indispensable, should have been identified with a single formula, which +may be applied with advantage in the special circumstances of some +industries, but need not necessarily be applied in all. Ownership is +not a right, but a bundle of rights, and it is possible to strip them +off piecemeal as well as to strike them off simultaneously. The +ownership of capital involves, as we have said, three main claims; the +right to interest as the price of capital, the right to {105} profits, +and the right to control, in virtue of which managers and workmen are +the servants of shareholders. These rights in their fullest degree are +not the invariable accompaniment of ownership, nor need they +necessarily co-exist. The ingenuity of financiers long ago devised +methods of grading stock in such a way that the ownership of some +carries full control, while that of others does not, that some bear all +the risk and are entitled to all the profits, while others are limited +in respect to both. All are property, but not all carry proprietary +rights of the same degree. + +As long as the private ownership of industrial capital remains, the +object of reformers should be to attenuate its influence by insisting +that it shall be paid not more than a rate of interest fixed in +advance, and that it should carry with it no right of control. In such +circumstances the position of the ordinary shareholder would +approximate to that of the owner of debentures; the property in the +industry would be converted into a mortgage on its profits, while the +control of its administration and all profits in excess of the minimum +would remain to be vested elsewhere. So, of course, would the risks. +But risks are of two kinds, those of the individual business and those +of the industry. The former are much heavier than the latter, for +though a coal mine is a speculative investment, coal mining is not, and +as long as each business is managed as a separate unit, the payments +made to shareholders must cover both. If the ownership of capital in +each industry were unified, which does not mean centralized, those +risks which are incidental to individual competition would be {106} +eliminated, and the credit of each unit would be that of the whole. + +Such a change in the character of ownership would have three +advantages. It would abolish the government of industry by property. +It would end the payment of profits to functionless shareholders by +turning them into creditors paid a fixed rate of interest. It would +lay the only possible foundations for industrial peace by making it +possible to convert industry into a profession carried on by all grades +of workers for the service of the public, not for the gain of those who +own capital. The organization which it would produce will be +described, of course, as impracticable. It is interesting, therefore, +to find it is that which experience has led practical men to suggest as +a remedy for the disorders of one of the most important of national +industries, that of building. The question before the Committee of +employers and workmen, which issued last August a Report upon the +Building Trade, was "Scientific Management and the Reduction of +Costs."[1] These are not phrases which suggest an economic revolution; +but it is something little short of a revolution that the signatories +of the report propose. For, as soon as they came to grips with the +problem, they found that it was impossible to handle it effectively +without reconstituting the general fabric of industrial relationships +which is its setting. Why is the service supplied by the industry +ineffective? Partly because the workers do not give their full +energies to the performance of their part in production. {107} Why do +they not give their best energies? Because of "the fear of +unemployment, the disinclination of the operatives to make unlimited +profit for private employers, the lack of interest evinced by +operatives owing to their non-participation in control, inefficiency +both managerial and operative." How are these psychological obstacles +to efficiency to be counteracted? By increased supervision and +speeding up, by the allurements of a premium bonus system, or the other +devices by which men who are too ingenious to have imagination or moral +insight would bully or cajole poor human nature into doing what--if +only the systems they invent would let it!--it desires to do, simple +duties and honest work? Not at all. By turning the building of houses +into what teaching now is, and Mr. Squeers thought it could never be, +an honorable profession. + +"We believe," they write, "that the great task of our Industrial +Council is to develop an entirely new system of industrial control by +the members of the industry itself--the actual producers, whether by +hand or brain, and to bring them into co-operation with the State as +the central representative of the community whom they are organized to +serve." Instead of unlimited profits, so "indispensable as an +incentive to efficiency," the employer is to be paid a salary for his +services as manager, and a rate of interest on his capital which is to +be both fixed and (unless he fails to earn it through his own +inefficiency) guaranteed; anything in excess of it, any "profits" in +fact, which in other industries are distributed as dividends to +shareholders, he is to {108} surrender to a central fund to be +administered by employers and workmen for the benefit of the industry +as a whole. Instead of the financial standing of each firm being +treated as an inscrutable mystery to the public, with the result that +it is sometimes a mystery to itself, there is to be a system of public +costing and audit, on the basis of which the industry will assume a +collective liability for those firms which are shown to be competently +managed. Instead of the workers being dismissed in slack times to +struggle along as best they can, they are to be maintained from a fund +raised by a levy on employers and administered by the trade unions. +There is to be publicity as to costs and profits, open dealing and +honest work and mutual helpfulness, instead of the competition which +the nineteenth century regarded as an efficient substitute for them. +"Capital" is not to "employ labor." Labor, which includes managerial +labor, is to employ capital; and to employ it at the cheapest rate at +which, in the circumstances of the trade, it can be got. If it employs +it so successfully that there is a surplus when it has been fairly paid +for its own services, then that surplus is not to be divided among +shareholders, for, when they have been paid interest, they have been +paid their due; it is to be used to equip the industry to provide still +more effective service in the future. + +So here we have the majority of a body of practical men, who care +nothing for socialist theories, proposing to establish "organized +Public Service in the Building Industry," recommending, in short, that +their industry shall be turned into a profession. And they do it, it +{109} will be observed, by just that functional organization, just that +conversion of full proprietary rights into a mortgage secured (as far +as efficient firms are concerned) on the industry as a whole, just that +transference of the control of production from the owner of capital to +those whose business is production, which we saw is necessary if +industry is to be organized for the performance of service, not for the +pecuniary advantage of those who hold proprietary rights. Their Report +is of the first importance as offering a policy for attenuating private +property in capital in the important group of industries in which +private ownership, in one form or another, is likely for some +considerable time to continue, and a valuable service would be rendered +by any one who would work out in detail the application of its +principle to other trades. + +Not, of course, that this is the only way, or in highly capitalized +industries the most feasible way, in which the change can be brought +about. Had the movement against the control of production by property +taken place before the rise of limited companies, in which ownership is +separated from management, the transition to the organization of +industry as a profession might also have taken place, as the employers +and workmen in the building trade propose that it should, by limiting +the rights of private ownership without abolishing it. But that is not +what has actually happened, and therefore the proposals of the building +trade are not of universal application. It is possible to retain +private ownership in building and in industries like building, {110} +while changing its character, precisely because in building the +employer is normally not merely an owner, but something else as well. +He is a manager; that is, he is a workman. And because he is a +workman, whose interests, and still more whose professional spirit as a +workman may often outweigh his interests and merely financial spirit as +an owner, he can form part of the productive organization of the +industry, after his rights as an owner have been trimmed and limited. + +But that dual position is abnormal, and in the highly organized +industries is becoming more abnormal every year. In coal, in cotton, +in ship-building, in many branches of engineering the owner of capital +is not, as he is in building, an organizer or manager. His connection +with the industry and interest in it is purely financial. He is an +owner and nothing more. And because his interest is merely financial, +so that his concern is dividends and production only as a means to +dividends, he cannot be worked into an organization of industry which +vests administration in a body representing all grades of producers, or +producers and consumers together, for he has no purpose in common with +them; so that while joint councils between workers and managers may +succeed, joint councils between workers and owners or agents of owners, +like most of the so-called Whitley Councils, will not, because the +necessity for the mere owner is itself one of the points in dispute. +The master builder, who owns the capital used, can be included, not +_qua_ capitalist, but _qua_ builder, if he surrenders some of the +rights of ownership, as the Building Industry Committee proposed that +he should. But {111} if the shareholder in a colliery or a shipyard +abdicates the control and unlimited profits to which, _qua_ capitalist, +he is at present entitled, he abdicates everything that makes him what +he is, and has no other standing in the industry. He cannot share, +like the master builder, in its management, because he has no +qualifications which would enable him to do so. His object is profit; +and if industry is to become, as employers and workers in the building +trade propose, an "organized public service," then its subordination to +the shareholder whose object is profit, is, as they clearly see, +precisely what must be eliminated. The master builders propose to give +it up. They can do so because they have their place in the industry in +virtue of their function as workmen. But if the shareholder gave it +up, he would have no place at all. + +Hence in coal mining, where ownership and management are sharply +separated, the owners will not admit the bare possibility of any system +in which the control of the administration of the mines is shared +between the management and the miners. "I am authorized to state on +behalf of the Mining Association," Lord Gainford, the chief witness on +behalf of the mine-owners, informed the Coal Commission, "that if the +owners are not to be left complete executive control they will decline +to accept the responsibility for carrying on the industry."[2] So the +mine-owners blow away in a sentence the whole body of plausible +make-believe which rests on the idea that, while private ownership +remains {112} unaltered, industrial harmony can be produced by the +magic formula of joint control. And they are right. The +representatives of workmen and shareholders, in mining and in other +industries, can meet and negotiate and discuss. But joint +administration of the shareholders' property by a body representing +shareholders and workmen is impossible, because there is no purpose in +common between them. For the only purpose which could unite all +persons engaged in industry, and overrule their particular and +divergent interests, is the provision of service. And the object of +shareholders, the whole significance and _métier_ of industry to them, +is not the provision of service but the provision of dividends. + + +In industries where management is divorced from ownership, as in most +of the highly organized trades it is to-day, there is no obvious +halfway house, therefore, between the retention of the present system +and the complete extrusion of the capitalist from the control of +production. The change in the character of ownership, which is +necessary in order that coal or textiles and ship-building may be +organized as professions for the service of the public, cannot easily +spring from within. The stroke needed to liberate them from the +control of the property-owner must come from without. In theory it +might be struck by action on the part of organized workers, who would +abolish residuary profits and the right of control by the mere +procedure of refusing to work as long as they were maintained, on the +historical analogy offered by peasants who have destroyed {113} +predatory property in the past by declining to pay its dues and admit +its government, in which case Parliament would intervene only to +register the community's assent to the _fait accompli_. In practice, +however, the conditions of modern industry being what they are, that +course, apart from its other disadvantages, is so unlikely to be +attempted, or, if attempted, to succeed, that it can be neglected. The +alternative to it is that the change in the character of property +should be affected by legislation in virtue of which the rights of +ownership in an industry are bought out simultaneously. + +In either case, though the procedure is different, the result of the +change, once it is accomplished, is the same. Private property in +capital, in the sense of the right to profits and control, is +abolished. What remains of it is, at most, a mortgage in favor of the +previous proprietors, a dead leaf which is preserved, though the sap of +industry no longer feeds it, as long as it is not thought worth while +to strike it off. And since the capital needed to maintain and equip a +modern industry could not be provided by any one group of workers, even +were it desirable on other grounds that they should step completely +into the position of the present owners, the complex of rights which +constitutes ownership remains to be shared between them and whatever +organ may act on behalf of the general community. The former, for +example, may be the heir of the present owners as far as the control of +the routine and administration of industry is concerned: the latter may +succeed to their right to dispose of residuary profits. The elements +composing property, have, in fact, to be {114} disentangled: and the +fact that to-day, under the common name of ownership, several different +powers are vested in identical hands, must not be allowed to obscure +the probability that, once private property in capital has been +abolished, it may be expedient to re-allocate those powers in detail as +well as to transfer them _en bloc_. + +The essence of a profession is, as we have suggested, that its members +organize themselves for the performance of function. It is essential +therefore, if industry is to be professionalized, that the abolition of +functionless property should not be interpreted to imply a continuance +under public ownership of the absence of responsibility on the part of +the _personnel_ of industry, which is the normal accompaniment of +private ownership working through the wage-system. It is the more +important to emphasize that point, because such an implication has +sometimes been conveyed in the past by some of those who have presented +the case for some such change in the character of ownership as has been +urged above. The name consecrated by custom to the transformation of +property by public and external action is nationalization. But +nationalization is a word which is neither very felicitous nor free +from ambiguity. Properly used, it means merely ownership by a body +representing the nation. But it has come in practice to be used as +equivalent to a particular method of administration, under which +officials employed by the State step into the position of the present +directors of industry, and exercise all the power which they exercised. +So those who desire to maintain the system under which industry is +carried on, not as a profession {115} serving the public, but for the +advantage of shareholders, attack nationalization on the ground that +state management is necessarily inefficient, and tremble with +apprehension whenever they post a letter in a letter-box; and those who +desire to change it reply that state services are efficient and praise +God whenever they use a telephone; as though either private or public +administration had certain peculiar and unalterable characteristics, +instead of depending for its quality, like an army or railway company +or school, and all other undertakings, public and private alike, not on +whether those who conduct it are private officials or state officials, +but on whether they are properly trained for their work and can command +the good will and confidence of their subordinates. + +The arguments on both sides are ingenious, but in reality nearly all of +them are beside the point. The merits of nationalization do not stand +or fall with the efficiency or inefficiency of existing state +departments as administrators of industry. For nationalization, which +means public ownership, is compatible with several different types of +management. The constitution of the industry may be "unitary," as is +(for example) that of the post-office. Or it may be "federal," as was +that designed by Mr. Justice Sankey for the Coal Industry. +Administration may be centralized or decentralized. The authorities to +whom it is intrusted may be composed of representatives of the +consumers, or of representatives of professional associations, or of +state officials, or of all three in several different proportions. +Executive work may be placed in the hands of civil {116} servants, +trained, recruited and promoted as in the existing state departments, +or a new service may be created with a procedure and standards of its +own. It may be subject to Treasury control, or it may be financially +autonomous. The problem is, in fact, of a familiar, though difficult, +order. It is one of constitution-making. + +It is commonly assumed by controversialists that the organization and +management of a nationalized industry must, for some undefined reason, +be similar to that of the post-office. One might as reasonably suggest +that the pattern exemplar of private enterprise must be the Steel +Corporation or the Imperial Tobacco Company. The administrative +systems obtaining in a society which has nationalized its foundation +industries will, in fact, be as various as in one that resigns them to +private ownership; and to discuss their relative advantages without +defining what particular type of each is the subject of reference is +to-day as unhelpful as to approach a modern political problem in terms +of the Aristotelian classification of constitutions. The highly +abstract dialectics as to "enterprise," "initiative," "bureaucracy," +"red tape," "democratic control," "state management," which fill the +press of countries occupied with industrial problems, really belong to +the dark ages of economic thought. The first task of the student, +whatever his personal conclusions, is, it may be suggested, to +contribute what he can to the restoration of sanity by insisting that +instead of the argument being conducted with the counters of a highly +inflated and rapidly depreciating verbal currency, the exact situation, +{117} in so far as is possible, shall be stated as it is; uncertainties +(of which there are many) shall be treated as uncertain, and the +precise meaning of alternative proposals shall be strictly defined. +Not the least of the merits of Mr. Justice Sankey's report was that, by +stating in great detail the type of organization which he recommended +for the Coal Industry, he imparted a new precision and reality into the +whole discussion. Whether his conclusions are accepted or not, it is +from the basis of clearly defined proposals such as his that the future +discussion of these problems must proceed. It may not find a solution. +It will at least do something to create the temper in which alone a +reasonable solution can be sought. + +Nationalization, then, is not an end, but a means to an end, and when +the question of ownership has been settled the question of +administration remains for solution. As a means it is likely to be +indispensable in those industries in which the rights of private +proprietors cannot easily be modified without the action of the State, +just as the purchase of land by county councils is a necessary step to +the establishment of small holders, when landowners will not +voluntarily part with their property for the purpose. But the object +in purchasing land is to establish small holders, not to set up farms +administered by state officials; and the object of nationalizing mining +or railways or the manufacture of steel should not be to establish any +particular form of state management, but to release those who do +constructive work from the control of those whose sole interest is +pecuniary gain, in order that they may be free to {118} apply their +energies to the true purpose of industry, which is the provision of +service, not the provision of dividends. When the transference of +property has taken place, it will probably be found that the necessary +provision for the government of industry will involve not merely the +freedom of the producers to produce, but the creation of machinery +through which the consumer, for whom he produces, can express his +wishes and criticize the way in which they are met, as at present he +normally cannot. But that is the second stage in the process of +reorganizing industry for the performance of function, not the first. +The first is to free it from subordination to the pecuniary interests +of the owner of property, because they are the magnetic pole which sets +all the compasses wrong, and which causes industry, however swiftly it +may progress, to progress in the wrong direction. + +Nor does this change in the character of property involve a breach with +the existing order so sharp as to be impracticable. The phraseology of +political controversy continues to reproduce the conventional +antitheses of the early nineteenth century; "private enterprise" and +"public ownership" are still contrasted with each other as light with +darkness or darkness with light. But, in reality, behind the formal +shell of the traditional legal system the elements of a new body of +relationship have already been prepared, and find piece-meal +application through policies devised, not by socialists, but by men who +repeat the formulæ of individualism, at the very moment when they are +undermining it. The Esch-Cummins Act in America, the {119} Act +establishing a Ministry of Transport in England, Sir Arthur Duckham's +scheme for the organization of the coal mines, the proposals with +regard to the coal industry of the British Government itself, appear to +have the common characteristic of retaining private ownership in name, +while attenuating it in fact, by placing its operators under the +supervision, accompanied sometimes by a financial guarantee, of a +public authority. Schemes of this general character appear, indeed, to +be the first instinctive reaction produced by the discovery that +private enterprise is no longer functioning effectively; it is probable +that they possess certain merits of a technical order analogous to +those associated with the amalgamation of competing firms into a single +combination. It is questionable, however, whether the compromise which +they represent is permanently tenable. What, after all, it may be +asked, are the advantages of private ownership when it has been pared +down to the point which policies of this order propose? May not the +"owner" whose rights they are designed to protect not unreasonably +reply to their authors, "Thank you for nothing"? Individual enterprise +has its merits: so also, perhaps, has public ownership. But, by the +time these schemes have done with it, not much remains of "the simple +and obvious system of natural liberty," while their inventors are +precluded from appealing to the motives which are emphasized by +advocates of nationalization. It is one thing to be an entrepreneur +with a world of adventure and unlimited profits--if they can be +achieved--before one. It is quite another to be a director of a +railway company or coal {120} corporation with a minimum rate of profit +guaranteed by the State, and a maximum rate of profit which cannot be +exceeded. Hybrids are apt to be sterile. It may be questioned +whether, in drawing the teeth of private capitalism, this type of +compromise does not draw out most of its virtues as well. + +So, when a certain stage of economic development has been reached, +private ownership, by the admission of its defenders, can no longer be +tolerated in the only form in which it is free to display the +characteristic, and quite genuine, advantages for the sake of which it +used to be defended. And, as step by step it is whittled down by tacit +concessions to the practical necessity of protecting the consumer, or +eliminating waste, or meeting the claims of the workers, public +ownership becomes, not only on social grounds, but for reasons of +economic efficiency, the alternative to a type of private ownership +which appears to carry with it few rights of ownership and to be +singularly devoid of privacy. Inevitably and unfortunately the change +must be gradual. But it should be continuous. When, as in the last +few years, the State has acquired the ownership of great masses of +industrial capital, it should retain it, instead of surrendering it to +private capitalists, who protest at once that it will be managed so +inefficiently that it will not pay and managed so efficiently that it +will undersell them. When estates are being broken up and sold, as +they are at present, public bodies should enter the market and acquire +them. Most important of all, the ridiculous barrier, inherited from an +age in which municipal corporations were corrupt oligarchies, which +{121} at present prevents England's Local Authorities from acquiring +property in land and industrial capital, except for purposes specified +by Act of Parliament, should be abolished, and they should be free to +undertake such services as the citizens may desire. The objection to +public ownership, in so far as it is intelligent, is in reality largely +an objection to over-centralization. But the remedy for +over-centralization, is not the maintenance of functionless property in +private hands, but the decentralized ownership of public property, and +when Birmingham and Manchester and Leeds are the little republics which +they should be, there is no reason to anticipate that they will tremble +at a whisper from Whitehall. + +These things should be done steadily and continuously quite apart from +the special cases like that of the mines and railways, where the +private ownership of capital is stated by the experts to have been +responsible for intolerable waste, or the manufacture of ornaments +[Transcriber's note: armaments?] and alcoholic liquor, which are +politically and socially too dangerous to be left in private hands. +They should be done not in order to establish a single form of +bureaucratic management, but in order to release the industry from the +domination of proprietary interests, which, whatever the form of +management, are not merely troublesome in detail but vicious in +principle, because they divert it from the performance of function to +the acquisition of gain. If at the same time private ownership is +shaken, as recently it has been, by action on the part of particular +groups of workers, so much the better. There are more ways of killing +a cat than {122} drowning it in cream, and it is all the more likely to +choose the cream if they are explained to it. But the two methods are +complementary, not alternative, and the attempt to found rival schools +on an imaginary incompatibility between them is a bad case of the +_odium sociologicum_ which afflicts reformers. + + + +[1] Reprinted in _The Industrial Council for the Building Industry_. + +[2] _Coal Industry Commission, Minutes of Evidence_, Vol. I, p. 2506. + + + + +{123} + +VIII + +THE "VICIOUS CIRCLE" + +What form of management should replace the administration of industry +by the agents of shareholders? What is most likely to hold it to its +main purpose, and to be least at the mercy of predatory interests and +functionless supernumeraries, and of the alternations of sullen +dissatisfaction and spasmodic revolt which at present distract it? +Whatever the system upon which industry is administered, one thing is +certain. Its economic processes and results must be public, because +only if they are public can it be known whether the service of industry +is vigilant, effective and honorable, whether its purpose is being +realized and its function carried out. The defense of secrecy in +business resembles the defense of adulteration on the ground that it is +a legitimate weapon of competition; indeed it has even less +justification than that famous doctrine, for the condition of effective +competition is publicity, and one motive for secrecy is to prevent it. + +Those who conduct industry at the present time and who are most +emphatic that, as the Duke of Wellington said of the unreformed House +of Commons, they "have never read or heard of any measure up to the +present moment which can in any degree satisfy the mind" that the +method of conducting it can in any way be improved, are also those +apparently who, with some {124} honorable exceptions, are most +reluctant that the full facts about it should be known. And it is +crucial that they should be known. It is crucial not only because, in +the present ignorance of the real economic situation, all industrial +disagreements tend inevitably to be battles in the dark, in which +"ignorant armies clash by night," but because, unless there is complete +publicity as to profits and costs, it is impossible to form any +judgment either of the reasonableness of the prices which are charged +or of the claims to remuneration of the different parties engaged in +production. For balance sheets, with their opportunities for +concealing profits, give no clear light upon the first, and no light at +all upon the second. And so, when the facts come out, the public is +aghast at revelations which show that industry is conducted with +bewildering financial extravagance. If the full facts had been +published, as they should have been, quarter by quarter, these +revelations would probably not have been made at all, because publicity +itself would have been an antiseptic and there would have been nothing +sensational to reveal. + +The events of the last few years are a lesson which should need no +repetition. The Government, surprised at the price charged for making +shells at a time when its soldiers were ordered by Headquarters not to +fire more than a few rounds per day, whatever the need for retaliation, +because there were not more than a few to fire, establishes a costing +department to analyze the estimates submitted by manufacturers and to +compare them, item by item, with the costs in its own factories. It +finds that, through the mere pooling of knowledge, {125} "some of the +reductions made in the price of shells and similar munitions," as the +Chartered Accountant employed by the Department tells us, "have been as +high as 50% of the original price." The household consumer grumbles at +the price of coal. For once in a way, amid a storm of indignation from +influential persons engaged in the industry, the facts are published. +And what do they show? That, after 2/6 has been added to the already +high price of coal because the poorer mines are alleged not to be +paying their way, 21% of the output examined by the Commission was +produced at a profit of 1/- to 3/- per ton, 32% at a profit of 3/- to +5/-, 13% at a profit of 5/- to 7/-, and 14% at a profit of 7/- per ton +and over, while the profits of distributors in London alone amount in +the aggregate to over $3,200,000, and the co-operative movement, which +aims not at profit, but at service, distributes household coal at a +cost of from 2/- to 4/- less per ton than is charged by the coal +trade![1] + +"But these are exceptions." They may be. It is possible that in the +industries, in which, as the recent Committee on Trusts has told us, +"powerful Combinations or Consolidations of one kind or another are in +a position effectively to control output and prices," not only costs +are cut to the bare minimum but profits are inconsiderable. But then +why insist on this humiliating tradition of secrecy with regard to +them, when every one who uses their products, and every one who renders +honest service to production, stands to gain by publicity? If industry +is to become a profession, whatever its {126} management, the first of +its professional rules should be, as Sir John Mann told the Coal +Commission, that "all cards should be placed on the table." If it were +the duty of a Public Department to publish quarterly exact returns as +to costs of production and profits in all the firms throughout an +industry, the gain in mere productive efficiency, which should appeal +to our enthusiasts for output, would be considerable; for the +organization whose costs were least would become the standard with +which all other types of organization would be compared. The gain in +_morale_, which is also, absurd though it may seem, a condition of +efficiency, would be incalculable. For industry would be conducted in +the light of day. Its costs, necessary or unnecessary, the +distribution of the return to it, reasonable or capricious, would be a +matter of common knowledge. It would be held to its purpose by the +mere impossibility of persuading those who make its products or those +who consume them to acquiesce, as they acquiesce now, in expenditure +which is meaningless because it has contributed nothing to the service +which the industry exists to perform. + +The organization of industry as a profession does not involve only the +abolition of functionless property, and the maintenance of publicity as +the indispensable condition of a standard of professional honor. It +implies also that those who perform its work should undertake that its +work is performed effectively. It means that they should not merely be +held to the service of the public by fear of personal inconvenience or +penalties, but that they should treat the discharge of professional +{127} responsibilities as an obligation attaching not only to a small +_élite_ of intellectuals, managers or "bosses," who perform the +technical work of "business management," but as implied by the mere +entry into the industry and as resting on the corporate consent and +initiative of the rank and file of workers. It is precisely, indeed, +in the degree to which that obligation is interpreted as attaching to +all workers, and not merely to a select class, that the difference +between the existing industrial order, collectivism and the +organization of industry as a profession resides. The first involves +the utilization of human beings for the purpose of private gain; the +second their utilization for the purpose of public service; the third +the association in the service of the public of their professional +pride, solidarity and organization. + +The difference in administrative machinery between the second and third +might not be considerable. Both involve the drastic limitation or +transference to the public of the proprietary rights of the existing +owners of industrial capital. Both would necessitate machinery for +bringing the opinion of the consumers to bear upon the service supplied +them by the industry. The difference consists in the manner in which +the obligations of the producer to the public are conceived. He may +either be the executant of orders transmitted to him by its agents; or +he may, through his organization, himself take a positive part in +determining what those orders should be. In the former case he is +responsible for his own work, but not for anything else. If he hews +his stint of coal, it is no business of his whether the pit is a {128} +failure; if he puts in the normal number of rivets, he disclaims all +further interest in the price or the sea-worthiness of the ship. In +the latter his function embraces something more than the performance of +the specialized piece of work allotted to him. It includes also a +responsibility for the success of the undertaking as a whole. And +since responsibility is impossible without power, his position would +involve at least so much power as is needed to secure that he can +affect in practice the conduct of the industry. It is this collective +liability for the maintenance of a certain quality of service which is, +indeed, the distinguishing feature of a profession. It is compatible +with several different kinds of government, or indeed, when the unit of +production is not a group, but an individual, with hardly any +government at all. What it does involve is that the individual, merely +by entering the profession should have committed himself to certain +obligations in respect of its conduct, and that the professional +organization, whatever it may be, should have sufficient power to +enable it to maintain them. + +The demand for the participation of the workers in the control of +industry is usually advanced in the name of the producer, as a plea for +economic freedom or industrial democracy. "Political freedom," writes +the Final Report of the United States Commission of Industrial +Relations, which was presented in 1916, "can exist only where there is +industrial freedom.... There are now within the body of our Republic +industrial communities which are virtually Principalities, oppressive +to those dependent upon them for a livelihood {129} and a dreadful +menace to the peace and welfare of the nation." The vanity of +Englishmen may soften the shadows and heighten the lights. But the +concentration of authority is too deeply rooted in the very essence of +Capitalism for differences in the degree of the arbitrariness with +which it is exercised to be other than trivial. The control of a large +works does, in fact, confer a kind of private jurisdiction in matters +concerning the life and livelihood of the workers, which, as the United +States' Commission suggests, may properly be described as "industrial +feudalism." It is not easy to understand how the traditional liberties +of Englishmen are compatible with an organization of industry which, +except in so far as it has been qualified by law or trade unionism, +permits populations almost as large as those of some famous cities of +the past to be controlled in their rising up and lying down, in their +work, economic opportunities, and social life by the decisions of a +Committee of half-a-dozen Directors. + +The most conservative thinkers recognize that the present organization +of industry is intolerable in the sacrifice of liberty which it entails +upon the producer. But each effort which he makes to emancipate +himself is met by a protest that if the existing system is incompatible +with freedom, it at least secures efficient service, and that efficient +service is threatened by movements which aim at placing a greater +measure of industrial control in the hands of the workers. The attempt +to drive a wedge between the producer and the consumer is obviously the +cue of all the interests which are conscious that by themselves they +are unable to hold back {130} the flood. It is natural, therefore, +that during the last few months they should have concentrated their +efforts upon representing that every advance in the demands and in the +power of any particular group of workers is a new imposition upon the +general body of the public. Eminent persons, who are not obviously +producing more than they consume, explain to the working classes that +unless they produce more they must consume less. Highly syndicated +combinations warn the public against the menace of predatory +syndicalism. The owners of mines and minerals, in their new role as +protectors of the poor, lament the "selfishness" of the miners, as +though nothing but pure philanthropy had hitherto caused profits and +royalties to be reluctantly accepted by themselves. + +The assumption upon which this body of argument rests is simple. It is +that the existing organization of industry is the safeguard of +productive efficiency, and that from every attempt to alter it the +workers themselves lose more as consumers than they can gain as +producers. The world has been drained of its wealth and demands +abundance of goods. The workers demand a larger income, greater +leisure, and a more secure and dignified status. These two demands, it +is argued, are contradictory. For how can the consumer be supplied +with cheap goods, if, as a worker, he insists on higher wages and +shorter hours? And how can the worker secure these conditions, if as a +consumer, he demands cheap goods? So industry, it is thought, moves in +a vicious circle of shorter hours and higher wages and less production, +which in time must mean {131} longer hours and lower wages; and every +one receives less, because every one demands more. + +The picture is plausible, but it is fallacious. It is fallacious not +merely in its crude assumption that a rise in wages necessarily +involves an increase in costs, but for another and more fundamental +reason. In reality the cause of economic confusion is not that the +demands of producer and consumer meet in blunt opposition; for, if they +did, their incompatibility, when they were incompatible, would be +obvious, and neither could deny his responsibility to the other, +however much he might seek to evade it. It is that they do not, but +that, as industry is organized to-day, what the worker foregoes the +general body of consumers does not necessarily gain, and what the +consumer pays the general body of workers does not necessarily receive. +If the circle is vicious, its vice is not that it is closed, but that +it is always half open, so that part of production leaks away in +consumption which adds nothing to productive energies, and that the +producer, because he knows this, does not fully use even the productive +energy which he commands. + +It is the consciousness of this leak which sets every one at cross +purposes. No conceivable system of industrial organization can secure +industrial peace, if by "peace" is meant a complete absence of +disagreement. What could be secured would be that disagreements should +not flare up into a beacon of class warfare. If every member of a +group puts something into a common pool on condition of taking +something out, they may still quarrel about the size of the shares, as +children quarrel {132} over cake; but if the total is known and the +claims admitted, that is all they can quarrel about, and, since they +all stand on the same footing, any one who holds out for more than his +fellows must show some good reason why he should get it. But in +industry the claims are not all admitted, for those who put nothing in +demand to take something out; both the total to be divided and the +proportion in which the division takes place are sedulously concealed; +and those who preside over the distribution of the pool and control +what is paid out of it have a direct interest in securing as large a +share as possible for themselves and in allotting as small a share as +possible to others. If one contributor takes less, so far from it +being evident that the gain will go to some one who has put something +in and has as good a right as himself, it may go to some one who has +put in nothing and has no right at all. If another claims more, he may +secure it, without plundering a fellow-worker, at the expense of a +sleeping partner who is believed to plunder both. In practice, since +there is no clear principle determining what they ought to take, both +take all that they can get. + +In such circumstances denunciations of the producer for exploiting the +consumer miss the mark. They are inevitably regarded as an economic +version of the military device used by armies which advance behind a +screen of women and children, and then protest at the brutality of the +enemy in shooting non-combatants. They are interpreted as evidence, +not that a section of the producers are exploiting the remainder, but +that a minority of property-owners, which is in opposition to {133} +both, can use its economic power to make efforts directed against those +who consume much and produce little rebound on those who consume little +and produce much. And the grievance, of which the Press makes so much, +that some workers may be taking too large a share compared with others, +is masked by the much greater grievance, of which it says nothing +whatever, that some idlers take any share at all. The abolition of +payments which are made without any corresponding economic service is +thus one of the indispensable conditions both of economic efficiency +and industrial peace, because their existence prevents different +classes of workers from restraining each other, by uniting them all +against the common enemy. Either the principle of industry is that of +function, in which case slack work is only less immoral than no work at +all; or it is that of grab, in which case there is no morality in the +matter. But it cannot be both. And it is useless either for +property-owners or for Governments to lament the mote in the eye of the +trade unions as long as, by insisting on the maintenance of +functionless property, they decline to remove the beam in their own. + +The truth is that only workers can prevent the abuse of power by +workers, because only workers are recognized as possessing any title to +have their claims considered. And the first step to preventing the +exploitation of the consumer by the producer is simple. It is to turn +all men into producers, and thus to remove the temptation for +particular groups of workers to force their claims at the expense of +the public, by removing the valid excuse that such gains as they may +get are {134} taken from those who at present have no right to them, +because they are disproportionate to service or obtained for no service +at all. Indeed, if work were the only title to payment, the danger of +the community being exploited by highly organized groups of producers +would largely disappear. For, when no payments were made to +non-producers, there would be no debatable ground for which to +struggle, and it would become evident that if any one group of +producers took more, another must put up with less. + +Under such conditions a body of workers who used their strong strategic +position to extort extravagant terms for themselves at the expense of +their fellow-workers might properly be described as exploiting the +community. But at present such a statement is meaningless. It is +meaningless because before the community can be exploited the community +must exist, and its existence in the sphere of economics is to-day not +a fact but only an aspiration. The procedure by which, whenever any +section of workers advance demands which are regarded as inconvenient +by their masters, they are denounced as a band of anarchists who are +preying on the public may be a convenient weapon in an emergency, but, +once it is submitted to analysis, it is logically self-destructive. It +has been applied within recent years, to the postmen, to the engineers, +to the policemen, to the miners and to the railway men, a population +with their dependents, of some eight million persons; and in the case +of the last two the whole body of organized labor made common cause +with those of whose exorbitant demands it was alleged to be the victim. +But when these {135} workers and their sympathizers are deducted, what +is "the community" which remains? It is a naïve arithmetic which +produces a total by subtracting one by one all the items which compose +it; and the art which discovers the public interest by eliminating the +interests of successive sections of the public smacks of the +rhetorician rather than of the statesman. + +The truth is that at present it is idle to seek to resist the demands +of any group of workers by appeals to "the interests of society," +because to-day, as long as the economic plane alone is considered, +there is not one society but two, which dwell together in uneasy +juxtaposition, like Sinbad and the Old Man of the Sea, but which in +spirit, in ideals, and in economic interest, are worlds asunder. There +is the society of those who live by labor, whatever their craft or +profession, and the society of those who live on it. All the latter +cannot command the sacrifices or the loyalty which are due to the +former, for they have no title which will bear inspection. The +instinct to ignore that tragic division instead of ending it is +amiable, and sometimes generous. But it is a sentimentality which is +like the morbid optimism of the consumptive who dares not admit even to +himself the virulence of his disease. As long as the division exists, +the general body of workers, while it may suffer from the struggles of +any one group within it, nevertheless supports them by its sympathy, +because all are interested in the results of the contest carried on by +each. Different sections of workers will exercise mutual restraint +only when the termination of the {136} struggle leaves them face to +face with each other, and not as now, with the common enemy. The ideal +of a united society in which no one group uses its power to encroach +upon the standards of another is, in short, unattainable, except +through the preliminary abolition of functionless property. + +Those to whom a leisure class is part of an immutable order without +which civilization is inconceivable, dare not admit, even to +themselves, that the world is poorer, not richer, because of its +existence. So, when, as now it is important that productive energy +should be fully used, they stamp and cry, and write to _The Times_ +about the necessity for increased production, though all the time they +themselves, their way of life and expenditure, and their very existence +as a leisure class, are among the causes why production is not +increased. In all their economic plans they make one reservation, +that, however necessitous the world may be, it shall still support +them. But men who work do not make that reservation, nor is there any +reason why they should; and appeals to them to produce more wealth +because the public needs it usually fall upon deaf ears, even when such +appeals are not involved in the ignorance and misapprehensions which +often characterize them. + +For the workman is not the servant of the consumer, for whose sake +greater production is demanded, but of shareholders, whose primary aim +is dividends, and to whom all production, however futile or frivolous, +so long as it yields dividends, is the same. It is useless to urge +that he should produce more wealth for the {137} community, unless at +the same time he is assured that it is the community which will benefit +in proportion as more wealth is produced. If every unnecessary charge +upon coal-getting had been eliminated, it would be reasonable that the +miners should set a much needed example by refusing to extort better +terms for themselves at the expense of the public. But there is no +reason why they should work for lower wages or longer hours as long as +those who are to-day responsible for the management of the industry +conduct it with "the extravagance and waste" stigmatized by the most +eminent official witness before the Coal Commission, or why the +consumer should grumble at the rapacity of the miner as long as he +allows himself to be mulcted by swollen profits, the costs of an +ineffective organization, and unnecessary payments to superfluous +middlemen. + +If to-day the miner or any other workman produces more, he has no +guarantee that the result will be lower prices rather than higher +dividends and larger royalties, any more than, as a workman, he can +determine the quality of the wares which his employer supplies to +customers, or the price at which they are sold. Nor, as long as he is +directly the servant of a profit-making company, and only indirectly +the servant of the community, can any such guarantee be offered him. +It can be offered only in so far as he stands in an immediate and +direct relation to the public for whom industry is carried on, so that, +when all costs have been met, any surplus will pass to it, and not to +private individuals. It will be accepted only in so far as the workers +in each industry are not merely servants executing orders, but {138} +themselves have a collective responsibility for the character of the +service, and can use their organizations not merely to protect +themselves against exploitation, but to make positive contributions to +the administration and development of their industry. + + + +[1] _Coal Industry Commission, Minutes of Evidence_, pp. 9261-9. + + + + +{139} + +IX + +THE CONDITION OF EFFICIENCY + +Thus it is not only for the sake of the producers, on whom the old +industrial order weighed most heavily, that a new industrial order is +needed. It is needed for the sake of the consumers, because the +ability on which the old industrial order prided itself most and which +is flaunted most as an argument against change, the ability to serve +them effectively, is itself visibly breaking down. It is breaking down +at what was always its most vulnerable point, the control of the human +beings whom, with characteristic indifference to all but their economic +significance, it distilled for its own purposes into an abstraction +called "Labor." The first symptom of its collapse is what the first +symptom of economic collapses has usually been in the past--the failure +of customary stimuli to evoke their customary response in human effort. + +Till that failure is recognized and industry reorganized so that new +stimuli may have free play, the collapse will not correct itself, but, +doubtless with spasmodic revivals and flickerings of energy, will +continue and accelerate. The cause of it is simple. It is that those +whose business it is to direct economic activity are increasingly +incapable of directing the men upon whom economic activity depends. +The fault is not that of individuals, but of a system, of Industrialism +itself. {140} During the greater part of the nineteenth century +industry was driven by two forces, hunger and fear, and the employer +commanded them both. He could grant or withhold employment as he +pleased. If men revolted against his terms he could dismiss them, and +if they were dismissed what confronted them was starvation or the +workhouse. Authority was centralized; its instruments were passive; +the one thing which they dreaded was unemployment. And since they +could neither prevent its occurrence nor do more than a little to +mitigate its horrors when it occurred, they submitted to a discipline +which they could not resist, and industry pursued its course through +their passive acquiescence in a power which could crush them +individually if they attempted to oppose it. + +That system might be lauded as efficient or denounced as inhuman. But, +at least, as its admirers were never tired of pointing out, it worked. +And, like the Prussian State, which alike in its virtues and +deficiencies it not a little resembled, as long as it worked it +survived denunciations of its methods, as a strong man will throw off a +disease. But to-day it is ceasing to have even the qualities of its +defects. It is ceasing to be efficient. It no longer secures the +ever-increasing output of wealth which it offered in its golden prime, +and which enabled it to silence criticism by an imposing spectacle of +material success. Though it still works, it works unevenly, amid +constant friction and jolts and stoppages, without the confidence of +the public and without full confidence even in itself, a tyrant who +must intrigue and cajole where formerly he commanded, a gaoler who, if +not yet {141} deprived of whip, dare only administer moderate +chastisement, and who, though he still protests that he alone can keep +the treadmill moving and get the corn ground, is compelled to surrender +so much of his authority as to make it questionable whether he is worth +his keep. For the instruments through which Capitalism exercised +discipline are one by one being taken from it. It cannot pay what +wages it likes or work what hours it likes. In well-organized +industries the power of arbitrary dismissal, the very center of its +authority, is being shaken, because men will no longer tolerate a +system which makes their livelihood dependent on the caprices of an +individual. In all industries alike the time is not far distant when +the dread of starvation can no longer be used to cow dissatisfied +workers into submission, because the public will no longer allow +involuntary unemployment to result in starvation. + +And if Capitalism is losing its control of men's bodies, still more has +it lost its command of their minds. The product of a civilization +which regarded "the poor" as instruments, at worst of the luxuries, at +best of the virtues, of the rich, its psychological foundation fifty +years ago was an ignorance in the mass of mankind which led them to +reverence as wisdom the very follies of their masters, and an almost +animal incapacity for responsibility. Education and experience have +destroyed the passivity which was the condition of the perpetuation of +industrial government in the hands of an oligarchy of private +capitalists. The workman of to-day has as little belief in the +intellectual superiority of many of those who direct industry as he has +in the morality of {142} the system. It appears to him to be not only +oppressive, but wasteful, unintelligent and inefficient. In the light +of his own experience in the factory and the mine, he regards the claim +of the capitalist to be the self-appointed guardian of public interests +as a piece of sanctimonious hypocrisy. For he sees every day that +efficiency is sacrificed to shortsighted financial interests; and while +as a man he is outraged by the inhumanity of the industrial order, as a +professional who knows the difference between good work and bad he has +a growing contempt at once for its misplaced parsimony and its +misplaced extravagance, for the whole apparatus of adulteration, +advertisement and quackery which seems inseparable from the pursuit of +profit as the main standard of industrial success. + +So Capitalism no longer secures strenuous work by fear, for it is +ceasing to be formidable. And it cannot secure it by respect, for it +has ceased to be respected. And the very victories by which it seeks +to reassert its waning prestige are more disastrous than defeats. +Employers may congratulate themselves that they have maintained intact +their right to freedom of management, or opposed successfully a demand +for public ownership, or broken a movement for higher wages and shorter +hours. But what is success in a trade dispute or in a political +struggle is often a defeat in the workshop: the workmen may have lost, +but it does not follow that their employers, still less that the +public, which is principally composed of workmen, have won. For the +object of industry is to produce goods, and to produce them at the +lowest cost in human effort. {143} But there is no alchemy which will +secure efficient production from the resentment or distrust of men who +feel contempt for the order under which they work. It is a commonplace +that credit is the foundation of industry. But credit is a matter of +psychology, and the workman has his psychology as well as the +capitalist. If confidence is necessary to the investment of capital, +confidence is not less necessary to the effective performance of labor +by men whose sole livelihood depends upon it. If they are not yet +strong enough to impose their will, they are strong enough to resist +when their masters would impose theirs. They may work rather than +strike. But they will work to escape dismissal, not for the greater +glory of a system in which they do not believe; and, if they are +dismissed, those who take their place will do the same. + +That this is one cause of a low output has been stated both by +employers and workers in the building industry, and by the +representatives of the miners before the Coal Commission. It was +reiterated with impressive emphasis by Mr. Justice Sankey. Nor is it +seriously contested by employers themselves. What else, indeed, do +their repeated denunciations of "restriction of output" mean except +that they have failed to organize industry so as to secure the +efficient service which it is their special function to provide? Nor +is it appropriate to the situation to indulge in full-blooded +denunciations of the "selfishness" of the working classes. "To draw an +indictment against a whole nation" is a procedure which is as +impossible in industry as it is in politics. Institutions must be +adapted to human nature, not {144} human nature to institutions. If +the effect of the industrial system is such that a large and increasing +number of ordinary men and women find that it offers them no adequate +motive for economic effort, it is mere pedantry to denounce men and +women instead of amending the system. + +Thus the time has come when absolutism in industry may still win its +battles, but loses the campaign, and loses it on the very ground of +economic efficiency which was of its own selection. In the period of +transition, while economic activity is distracted by the struggle +between those who have the name and habit of power, but no longer the +full reality of it, and those who are daily winning more of the reality +of power but are not yet its recognized repositories, it is the +consumer who suffers. He has neither the service of docile obedience, +nor the service of intelligent co-operation. For slavery will work--as +long as the slaves will let it; and freedom will work when men have +learned to be free; but what will not work is a combination of the two. +So the public goes short of coal not only because of the technical +deficiencies of the system under which it is raised and distributed, +but because the system itself has lost its driving force--because the +coal owners can no longer persuade the miners into producing more +dividends for them and more royalties for the owners of minerals, while +the public cannot appeal to them to put their whole power into serving +itself, because it has chosen that they should be the servants, not of +itself, but of shareholders. + +And, this dilemma is not, as some suppose, temporary, {145} the +aftermath of war, or peculiar to the coal industry, as though the +miners alone were the children of sin which in the last few months they +have been described to be. It is permanent; it has spread far; and, as +sleeping spirits are stirred into life by education and one industry +after another develops a strong corporate consciousness, it will spread +further. Nor will it be resolved by lamentations or menaces or +denunciations of leaders whose only significance is that they say +openly what plain men feel privately. For the matter at bottom is one +of psychology. What has happened is that the motives on which the +industrial system relied for several generations to secure efficiency, +secure it no longer. And it is as impossible to restore them, to +revive by mere exhortation the complex of hopes and fears and ignorance +and patient credulity and passive acquiescence, which together made +men, fifty years ago, plastic instruments in the hands of +industrialism, as to restore innocence to any others of those who have +eaten of the tree of knowledge. + +The ideal of some intelligent and respectable business men, the +restoration of the golden sixties, when workmen were docile and +confiding, and trade unions were still half illegal, and foreign +competition meant English competition in foreign countries, and prices +were rising a little and not rising too much, is the one Utopia which +can never be realized. The King may walk naked as long as his +courtiers protest that he is clad; but when a child or a fool has +broken the spell a tailor is more important than all their admiration. +If the public, which suffers from the slackening of economic activity, +{146} desires to end its _malaise_, it will not laud as admirable and +all-sufficient the operation of motives which are plainly ceasing to +move. It will seek to liberate new motives and to enlist them in its +service. It will endeavor to find an alternative to incentives which +were always degrading, to those who used them as much as to those upon +whom they were used, and which now are adequate incentives no longer. +And the alternative to the discipline which Capitalism exercised +through its instruments of unemployment and starvation is the +self-discipline of responsibility and professional pride. + +So the demand which aims at stronger organization, fuller +responsibility, larger powers for the sake of the producer as a +condition of economic liberty, the demand for freedom, is not +antithetic to the demand for more effective work and increased output +which is being made in the interests of the consumer. It is +complementary to it, as the insistence by a body of professional men, +whether doctors or university teachers, on the maintenance of their +professional independence and dignity against attempts to cheapen the +service is not hostile to an efficient service, but, in the long run, a +condition of it. The course of wisdom for the consumer would be to +hasten, so far as he can, the transition. For, as at present +conducted, industry is working against the grain. It is compassing sea +and land in its efforts to overcome, by ingenious financial and +technical expedients, obstacles which should never have existed. It is +trying to produce its results by conquering professional feeling +instead of using it. It is carrying not only its inevitable economic +burdens, but an ever increasing {147} load of ill will and skepticism. +It has in fact "shot the bird which caused the wind to blow" and goes +about its business with the corpse round its neck. Compared with that +psychological incubus, the technical deficiencies of industry, serious +though they often are, are a bagatelle, and the business men who preach +the gospel of production without offering any plan for dealing with +what is now the central fact in the economic situation, resemble a +Christian apologist who should avoid disturbing the equanimity of his +audience by carefully omitting all reference either to the fall of man +or the scheme of salvation. If it is desired to increase the output of +wealth, it is not a paradox, but the statement of an elementary +economic truism to say that active and constructive co-operation on the +part of the rank and file of workers would do more to contribute to +that result than the discovery of a new coal-field or a generation of +scientific invention. + + +The first condition of enlisting on the side of constructive work the +professional feeling which is now apathetic, or even hostile to it, is +to secure that when it is given its results accrue to the public, not +to the owner of property in capital, in land, or in other resources. +For this reason the attenuation of the rights at present involved in +the private ownership of industrial capital, or their complete +abolition, is not the demand of idealogues, but an indispensable +element in a policy of economic efficiency, since it is the condition +of the most effective functioning of the human beings upon whom, +though, like other truisms, it is often forgotten, {148} economic +efficiency ultimately depends. But it is only one element. +Co-operation may range from mere acquiescence to a vigilant and zealous +initiative. The criterion of an effective system of administration is +that it should succeed in enlisting in the conduct of industry the +latent forces of professional pride to which the present industrial +order makes little appeal, and which, indeed, Capitalism, in its war +upon trade union organization, endeavored for many years to stamp out +altogether. + +Nor does the efficacy of such an appeal repose upon the assumption of +that "change in human nature," which is the triumphant _reductio ad +absurdum_ advanced by those who are least satisfied with the working of +human nature as it is. What it does involve is that certain elementary +facts should be taken into account, instead of, as at present, being +ignored. That all work is distasteful and that "every man desires to +secure the largest income with the least effort" may be as axiomatic as +it is assumed to be. But in practice it makes all the difference to +the attitude of the individual whether the collective sentiment of the +group to which he belongs is on the side of effort or against it, and +what standard of effort it sets. That, as employers complain, the +public opinion of considerable groups of workers is against an +intensification of effort as long as part of its result is increased +dividends for shareholders, is no doubt, as far as mere efficiency is +concerned, the gravest indictment of the existing industrial order. +But, even when public ownership has taken the place of private +capitalism, its ability to command {149} effective service will depend +ultimately upon its success in securing not merely that professional +feeling is no longer an opposing force, but that it is actively +enlisted upon the side of maintaining the highest possible standard of +efficiency which can reasonably be demanded. + +To put the matter concretely, while the existing ownership of mines is +a positive inducement to inefficient work, public ownership +administered by a bureaucracy, if it would remove the technical +deficiencies emphasized by Sir Richard Redmayne as inseparable from the +separate administration of 3,000 pits by 1,500 different companies, +would be only too likely to miss a capital advantage which a different +type of administration would secure. It would lose both the assistance +to be derived from the technical knowledge of practical men who know by +daily experience the points at which the details of administration can +be improved, and the stimulus to efficiency springing from the +corporate pride of a profession which is responsible for maintaining +and improving the character of its service. Professional spirit is a +force like gravitation, which in itself is neither good nor bad, but +which the engineer uses, when he can, to do his work for him. If it is +foolish to idealize it, it is equally shortsighted to neglect it. In +what are described _par excellence_ as "the services" it has always +been recognized that _esprit de corps_ is the foundation of efficiency, +and all means, some wise and some mischievous, are used to encourage +it: in practice, indeed, the power upon which the country relied as its +main safeguard in an emergency was the professional zeal of the navy +and nothing else. Nor is {150} that spirit peculiar to the professions +which are concerned with war. It is a matter of common training, +common responsibilities, and common dangers. In all cases where +difficult and disagreeable work is to be done, the force which elicits +it is normally not merely money, but the public opinion and tradition +of the little society in which the individual moves, and in the esteem +of which he finds that which men value in success. + +To ignore that most powerful of stimuli as it is ignored to-day, and +then to lament that the efforts which it produces are not forthcoming, +is the climax of perversity. To aim at eliminating from industry the +growth and action of corporate feeling, for fear lest an organized body +of producers should exploit the public, is a plausible policy. But it +is short-sighted. It is "to pour away the baby with the bath," and to +lower the quality of the service in an attempt to safeguard it. A wise +system of administration would recognize that professional solidarity +can do much of its work for it more effectively than it can do it +itself, because the spirit of his profession is part of the individual +and not a force outside him, and would make it its object to enlist +that temper in the public service. It is only by that policy, indeed, +that the elaboration of cumbrous regulations to prevent men doing what +they should not, with the incidental result of sometimes preventing +them from doing what they should--it is only by that policy that what +is mechanical and obstructive in bureaucracy can be averted. For +industry cannot run without laws. It must either control itself by +professional standards, or it must be controlled by officials who are +not of the {151} craft and who, however zealous and well-meaning, can +hardly have the feel of it in their fingers. Public control and +criticism are indispensable. But they should not be too detailed, or +they defeat themselves. It would be better that, once fair standards +have been established, the professional organization should check +offenses against prices and quality than that it should be necessary +for the State to do so. The alternative to minute external supervision +is supervision from within by men who become imbued with the public +obligations of their trade in the very process of learning it. It is, +in short, professional in industry. + +For this reason collectivism by itself is too simple a solution. Its +failure is likely to be that of other rationalist systems. + + "Dann hat er die Theile in seiner Hand, + Fehlt leider! nur das geistige Band." + +If industrial reorganization is to be a living reality, and not merely +a plan upon paper, its aim must be to secure not only that industry is +carried on for the service of the public, but that it shall be carried +on with the active co-operation of the organizations of producers. But +co-operation involves responsibility, and responsibility involves +power. It is idle to expect that men will give their best to any +system which they do not trust, or that they will trust any system in +the control of which they do not share. Their ability to carry +professional obligations depends upon the power which they possess to +remove the obstacles which prevent those obligations from being +discharged, and upon their willingness, when they possess the power, to +use it. + +{152} + +Two causes appear to have hampered the committees which were +established in connection with coal mines during the war to increase +the output of coal. One was the reluctance of some of them to +discharge the invidious task of imposing penalties for absenteeism on +their fellow-workmen. The other was the exclusion of faults of +management from the control of many committees. In some cases all went +well till they demanded that, if the miners were penalized for +absenteeism which was due to them, the management should be penalized +similarly when men who desired to work were sent home because, as a +result of defective organization, there was no work for them to do. +Their demand was resisted as "interference with the management," and +the attempt to enforce regularity of attendance broke down. Nor, to +take another example from the same industry, is it to be expected that +the weight of the miners' organization will be thrown on to the side of +greater production, if it has no power to insist on the removal of the +defects of equipment and organization, the shortage of trams, rails, +tubs and timber, the "creaming" of the pits by the working of easily +got coal to their future detriment, their wasteful layout caused by the +vagaries of separate ownership, by which at present the output is +reduced. + +The public cannot have it both ways. If it allows workmen to be +treated as "hands" it cannot claim the service of their wills and their +brains. If it desires them to show the zeal of skilled professionals, +it must secure that they have sufficient power to allow of their +discharging professional responsibilities. In order that workmen may +abolish any restrictions on output which {153} may be imposed by them, +they must be able to insist on the abolition of the restrictions, more +mischievous because more effective, which, as the Committee on Trusts +has recently told us, are imposed by organizations of employers. In +order that the miners' leaders, instead of merely bargaining as to +wages, hours and working conditions, may be able to appeal to their +members to increase the supply of coal, they must be in a position to +secure the removal of the causes of low output which are due to the +deficiencies of the management, and which are to-day a far more serious +obstacle than any reluctance on the part of the miner. If the workmen +in the building trade are to take combined action to accelerate +production, they must as a body be consulted as to the purpose to which +their energy is to be applied, and must not be expected to build +fashionable houses, when what are required are six-roomed cottages to +house families which are at present living with three persons to a room. + +It is deplorable, indeed, that any human beings should consent to +degrade themselves by producing the articles which a considerable +number of workmen turn out to-day, boots which are partly brown paper, +and furniture which is not fit to use. The revenge of outraged +humanity is certain, though it is not always obvious; and the penalty +paid by the consumer for tolerating an organization of industry which, +in the name of efficiency, destroyed the responsibility of the workman, +is that the service with which he is provided is not even efficient. +He has always paid it, though he has not seen it, in quality. To-day +he is beginning to {154} realize that he is likely to pay it in +quantity as well. If the public is to get efficient service, it can +get it only from human beings, with the initiative and caprices of +human beings. It will get it, in short, in so far as it treats +industry as a responsible profession. + +The collective responsibility of the workers for the maintenance of the +standards of their profession is, then, the alternative to the +discipline which Capitalism exercised in the past, and which is now +breaking down. It involves a fundamental change in the position both +of employers and of trade unions. As long as the direction of industry +is in the hands of property-owners or their agents, who are concerned +to extract from it the maximum profit for themselves, a trade union is +necessarily a defensive organization. Absorbed, on the one hand, in +the struggle to resist the downward thrust of Capitalism upon the +workers' standard of life, and denounced, on the other, if it presumes, +to "interfere with management," even when management is most obviously +inefficient, it is an opposition which never becomes a government and +which has neither the will nor the power to assume responsibility for +the quality of the service offered to the consumer. If the abolition +of functionless property transferred the control of production to +bodies representing those who perform constructive work and those who +consume the goods produced, the relation of the worker to the public +would no longer be indirect but immediate, and associations which are +now purely defensive would be in a position not merely to criticize and +oppose but to advise, to initiate and to enforce upon their own members +the obligations of the craft. + +{155} + +It is obvious that in such circumstances the service offered the +consumer, however carefully safeguarded by his representation on the +authorities controlling each industry, would depend primarily upon the +success of professional organizations in finding a substitute for the +discipline exercised to-day by the agents of property-owners. It would +be necessary for them to maintain by their own action the zeal, +efficiency and professional pride which, when the barbarous weapons of +the nineteenth century have been discarded, would be the only guarantee +of a high level of production. Nor, once this new function has been +made possible for professional organizations, is there any extravagance +in expecting them to perform it with reasonable competence. How far +economic motives are balked to-day and could be strengthened by a +different type of industrial organization, to what extent, and under +what conditions, it is possible to enlist in the services of industry +motives which are not purely economic, can be ascertained only after a +study of the psychology of work which has not yet been made. Such a +study, to be of value, must start by abandoning the conventional +assumptions, popularized by economic textbooks and accepted as +self-evident by practical men, that the motives to effort are simple +and constant in character, like the pressure of steam in a boiler, that +they are identical throughout all ranges of economic activity, from the +stock exchange to the shunting of wagons or laying of bricks, and that +they can be elicited and strengthened only by directly economic +incentives. In so far as motives in industry have been considered +hitherto, it has usually been done {156} by writers who, like most +exponents of scientific management, have started by assuming that the +categories of business psychology could be offered with equal success +to all classes of workers and to all types of productive work. Those +categories appear to be derived from a simplified analysis of the +mental processes of the company promoter, financier or investor, and +their validity as an interpretation of the motives and habits which +determine the attitude to his work of the bricklayer, the miner, the +dock laborer or the engineer, is precisely the point in question. + +Clearly there are certain types of industry to which they are only +partially relevant. It can hardly be assumed, for example, that the +degree of skill and energy brought to his work by a surgeon, a +scientific investigator, a teacher, a medical officer of health, an +Indian civil servant and a peasant proprietor are capable of being +expressed precisely and to the same degree in terms of the economic +advantage which those different occupations offer. Obviously those who +pursue them are influenced to some considerable, though uncertain, +extent by economic incentives. Obviously, again, the precise character +of each process or step in the exercise of their respective avocations, +the performance of an operation, the carrying out of a piece of +investigation, the selection of a particular type of educational +method, the preparation of a report, the decision of a case or the care +of live stock, is not immediately dependent upon an exact calculation +of pecuniary gain or loss. What appears to be the case is that in +certain walks of life, while the occupation is chosen after a +consideration of {157} its economic advantages, and while economic +reasons exact the minimum degree of activity needed to avert dismissal +from it or "failure," the actual level of energy or proficiency +displayed depend largely upon conditions of a different order. Among +them are the character of the training received before and after +entering the occupation, the customary standard of effort demanded by +the public opinion of one's fellows, the desire for the esteem of the +small circle in which the individual moves and to be recognized as +having "made good" and not to have "failed," interest in one's work, +ranging from devotion to a determination to "do justice" to it, the +pride of the craftsman, the "tradition of the service." + +It would be foolish to suggest that any considerable body of men are +uninfluenced by economic considerations. But to represent them as +amenable to such incentives only is to give a quite unreal and bookish +picture of the actual conditions under which the work of the world is +carried on. How large a part such considerations play varies from one +occupation to another, according to the character of the work which it +does and the manner in which it is organized. In what is called _par +excellence_ industry, calculations of pecuniary gain and loss are more +powerful than in most of the so-called professions, though even in +industry they are more constantly present to the minds of the business +men who "direct" it, than to those of the managers and technicians, +most of whom are paid fixed salaries, or to the rank and file of +wage-workers. In the professions of teaching and medicine, in many +branches of the {158} public service, the necessary qualities are +secured, without the intervention of the capitalist employer, partly by +pecuniary incentives, partly by training and education, partly by the +acceptance on the part of those entering them of the traditional +obligations of their profession as part of the normal framework of +their working lives. But this difference is not constant and +unalterable. It springs from the manner in which different types of +occupation are organized, on the training which they offer, and the +_morale_ which they cultivate among their members. The psychology of a +vocation can in fact be changed; new motives can be elicited, provided +steps are taken to allow them free expression. It is as feasible to +turn building into an organized profession, with a relatively high code +of public honor, as it was to do the same for medicine or teaching. + +The truth is that we ought radically to revise the presuppositions as +to human motives on which current presentations of economic theory are +ordinarily founded and in terms of which the discussion of economic +question is usually carried on. The assumption that the stimulus of +imminent personal want is either the only spur, or a sufficient spur, +to productive effort is a relic of a crude psychology which has little +warrant either in past history or in present experience. It derives +what plausibility it possesses from a confusion between work in the +sense of the lowest _quantum_ of activity needed to escape actual +starvation, and the work which is given, irrespective of the fact that +elementary wants may already have been satisfied, through the natural +disposition of ordinary men to maintain, and of extraordinary {159} men +to improve upon, the level of exertion accepted as reasonable by the +public opinion of the group of which they are members. It is the old +difference, forgotten by society as often as it is learned, between the +labor of the free man and that of the slave. Economic fear may secure +the minimum effort needed to escape economic penalties. What, however, +has made progress possible in the past, and what, it may be suggested, +matters to the world to-day, is not the bare minimum which is required +to avoid actual want, but the capacity of men to bring to bear upon +their tasks a degree of energy, which, while it can be stimulated by +economic incentives, yields results far in excess of any which are +necessary merely to avoid the extremes of hunger or destitution. + +That capacity is a matter of training, tradition and habit, at least as +much as of pecuniary stimulus, and the ability of a professional +association representing the public opinion of a group of workers to +raise it is, therefore, considerable. Once industry has been liberated +from its subservience to the interests of the functionless +property-owner, it is in this sphere that trade unions may be expected +increasingly to find their function. Its importance both for the +general interests of the community and for the special interests of +particular groups of workers can hardly be exaggerated. Technical +knowledge and managerial skill are likely to be available as readily +for a committee appointed by the workers in an industry as for a +committee appointed, as now, by the shareholders. But it is more and +more evident to-day that the crux of the economic situation is not +{160} the technical deficiencies of industrial organization, but the +growing inability of those who direct industry to command the active +good will of the _personnel_. Their co-operation is promised by the +conversion of industry into a profession serving the public, and +promised, as far as can be judged, by that alone. + +Nor is the assumption of the new and often disagreeable obligations of +internal discipline and public responsibility one which trade unionism +can afford, once the change is accomplished, to shirk, however alien +they may be to its present traditions. For ultimately, if by slow +degrees, power follows the ability to wield it; authority goes with +function. The workers cannot have it both ways. They must choose +whether to assume the responsibility for industrial discipline and +become free, or to repudiate it and continue to be serfs. If, +organized as professional bodies, they can provide a more effective +service than that which is now, with increasing difficulty, extorted by +the agents of capital, they will have made good their hold upon the +future. If they cannot, they will remain among the less calculable +instruments of production which many of them are to-day. The instinct +of mankind warns it against accepting at their face value spiritual +demands which cannot justify themselves by practical achievements. And +the road along which the organized workers, like any other class, must +climb to power, starts from the provision of a more effective economic +service than their masters, as their grip upon industry becomes +increasingly vacillating and uncertain, are able to supply. + + + + +{161} + +X + +THE POSITION OF THE BRAIN WORKER + +The conversion of industry into a profession will involve at least as +great a change in the position of the management as in that of the +manual workers. As each industry is organized for the performance of +function, the employer will cease to be a profit maker and become what, +in so far as he holds his position by a reputable title, he already is, +one workman among others. In some industries, where the manager is a +capitalist as well, the alteration may take place through such a +limitation of his interest as a capitalist as it has been proposed by +employers and workers to introduce into the building industry. In +others, where the whole work of administration rests on the shoulders +of salaried managers, it has already in part been carried out. The +economic conditions of this change have, indeed, been prepared by the +separation of ownership from management, and by the growth of an +intellectual proletariat to whom the scientific and managerial work of +industry is increasingly intrusted. The concentration of businesses, +the elaboration of organization, and the developments springing from +the application of science to industry have resulted in the +multiplication of a body of industrial brain workers who make the old +classifications into "employers and workmen," which is still current in +common speech, an absurdly {162} misleading description of the +industrial system as it exists to-day. + +To complete the transformation all that is needed is that this new +class of officials, who fifty years ago were almost unknown, should +recognize that they, like the manual workers, are the victims of the +domination of property, and that both professional pride and economic +interest require that they should throw in their lot with the rest of +those who are engaged in constructive work. Their position to-day is +often, indeed, very far from being a happy one. Many of them, like +some mine managers, are miserably paid. Their tenure of their posts is +sometimes highly insecure. Their opportunities for promotion may be +few, and distributed with a singular capriciousness. They see the +prizes of industry awarded by favoritism, or by the nepotism which +results in the head of a business unloading upon it a family of sons +whom it would be economical to pay to keep out of it, and which, +indignantly denounced on the rare occasions on which it occurs in the +public service, is so much the rule in private industry that no one +even questions its propriety. During the war they have found that, +while the organized workers have secured advances, their own salaries +have often remained almost stationary, because they have been too +genteel to take part in trade unionism, and that to-day they are +sometimes paid less than the men for whose work they are supposed to be +responsible. Regarded by the workmen as the hangers-on of the masters, +and by their employers as one section among the rest of the "hands," +they have the odium of capitalism without its power or its profits. + +{163} + +From the conversion of industry into a profession those who at present +do its intellectual work have as much to gain as the manual workers. +For the principle of function, for which we have pleaded as the basis +of industrial organization, supplies the only intelligible standard by +which the powers and duties of the different groups engaged in industry +can be determined. At the present time no such standard exists. The +social order of the pre-industrial era, of which faint traces have +survived in the forms of academic organization, was marked by a careful +grading of the successive stages in the progress from apprentice to +master, each of which was distinguished by clearly defined rights and +duties, varying from grade to grade and together forming a hierarchy of +functions. The industrial system which developed in the course of the +nineteenth century did not admit any principle of organization other +than the convenience of the individual, who by enterprise, skill, good +fortune, unscrupulous energy or mere nepotism, happened at any moment +to be in a position to wield economic authority. His powers were what +he could exercise; his rights were what at any time he could assert. +The Lancashire mill-owner of the fifties was, like the Cyclops, a law +unto himself. Hence, since subordination and discipline are +indispensable in any complex undertaking, the subordination which +emerged in industry was that of servant to master, and the discipline +such as economic strength could impose upon economic weakness. + +The alternative to the allocation of power by the struggle of +individuals for self-aggrandizement is its {164} allocation according +to function, that each group in the complex process of production +should wield so much authority as, and no more authority than, is +needed to enable it to perform the special duties for which it is +responsible. An organization of industry based on this principle does +not imply the merging of specialized economic functions in an +undifferentiated industrial democracy, or the obliteration of the brain +workers beneath the sheer mass of artisans and laborers. But it is +incompatible with the unlimited exercise of economic power by any class +or individual. It would have as its fundamental rule that the only +powers which a man can exercise are those conferred upon him in virtue +of his office. There would be subordination. But it would be +profoundly different from that which exists to-day. For it would not +be the subordination of one man to another, but of all men to the +purpose for which industry is carried on. There would be authority. +But it would not be the authority of the individual who imposes rules +in virtue of his economic power for the attainment of his economic +advantage. It would be the authority springing from the necessity of +combining different duties to attain a common end. There would be +discipline. But it would be the discipline involved in pursuing that +end, not the discipline enforced upon one man for the convenience or +profit of another. Under such an organization of industry the brain +worker might expect, as never before, to come to his own. He would be +estimated and promoted by his capacity, not by his means. He would be +less likely than at present to find doors closed to him because of +poverty. His {165} judges would be his colleagues, not an owner of +property intent on dividends. He would not suffer from the perversion +of values which rates the talent and energy by which wealth is created +lower than the possession of property, which is at best their pensioner +and at worst the spend-thrift of what intelligence has produced. In a +society organized for the encouragement of creative activity those who +are esteemed most highly will be those who create, as in a world +organized for enjoyment they are those who own. + +Such considerations are too general and abstract to carry conviction. +Greater concreteness may be given them by comparing the present +position of mine-managers with that which they would occupy were effect +given to Mr. Justice Sankey's scheme for the nationalization of the +Coal Industry. A body of technicians who are weighing the probable +effects of such a reorganization will naturally consider them in +relation both to their own professional prospects and to the efficiency +of the service of which they are the working heads. They will properly +take into account questions of salaries, pensions, security of status +and promotion. At the same time they will wish to be satisfied as to +points which, though not less important, are less easily defined. +Under which system, private or public ownership, will they have most +personal discretion or authority over the conduct of matters within +their professional competence? Under which will they have the best +guarantees that their special knowledge will carry due weight, and +that, when handling matters of art, they will not be overridden or +obstructed by amateurs? + +{166} + +As far as the specific case of the Coal Industry is concerned the +question of security and salaries need hardly be discussed. The +greatest admirer of the present system would not argue that security of +status is among the advantages which it offers to its employees. It is +notorious that in some districts, at least, managers are liable to be +dismissed, however professionally competent they may be, if they +express in public views which are not approved by the directors of +their company. Indeed, the criticism which is normally made on the +public services, and made not wholly without reason, is that the +security which they offer is excessive. On the question of salaries +rather more than one-half of the colliery companies of Great Britain +themselves supplied figures to the Coal Industry Commission.[1] If +their returns may be trusted, it would appear that mine-managers are +paid, as a class, salaries the parsimony of which is the more +surprising in view of the emphasis laid, and quite properly laid, by +the mine-owners on the managers' responsibilities. The service of the +State does not normally offer, and ought not to offer, financial prizes +comparable with those of private industry. But it is improbable, had +the mines been its property during {167} the last ten years, that more +than one-half the managers would have been in receipt of salaries of +under £301 per year, and of less than £500 in 1919, by which time +prices had more than doubled, and the aggregate profits of the +mine-owners (of which the greater part was, however, taken by the State +in taxation) had amounted in five years to £160,000,000. It would be +misleading to suggest that the salaries paid to mine-managers are +typical of private industry, nor need it be denied that the probable +effect of turning an industry into a public service would be to reduce +the size of the largest prizes at present offered. What is to be +expected is that the lower and medium salaries would be raised, and the +largest somewhat diminished. It is hardly to be denied, at any rate, +that the majority of brain workers in industry have nothing to fear on +financial grounds from such a change as is proposed by Mr. Justice +Sankey. Under the normal organization of industry, profits, it cannot +be too often insisted, do not go to them but to shareholders. There +does not appear to be any reason to suppose that the salaries of +managers in the mines making more than 5/- profit a ton were any larger +than those making under 3/-. + +The financial aspect of the change is not, however, the only point +which a group of managers or technicians have to consider. They have +also to weigh its effect on their professional status. Will they have +as much freedom, initiative and authority in the service of the +community as under private ownership? How that question is answered +depends upon the form given to the administrative system through which +a public service is {168} conducted. It is possible to conceive an +arrangement under which the life of a mine-manager would be made a +burden to him by perpetual recalcitrance on the part of the men at the +pit for which he is responsible. It is possible to conceive one under +which he would be hampered to the point of paralysis by irritating +interference from a bureaucracy at headquarters. In the past some +managers of "co-operative workshops" suffered, it would seem, from the +former: many officers of Employment Exchanges are the victims, unless +common rumor is misleading, of the latter. It is quite legitimate, +indeed it is indispensable, that these dangers should be emphasized. +The problem of reorganizing industry is, as has been said above, a +problem of constitution making. It is likely to be handled +successfully only if the defects to which different types of +constitutional machinery are likely to be liable are pointed out in +advance. Once, however, these dangers are realized, to devise +precautions against them appears to be a comparatively simple matter. +If Mr. Justice Sankey's proposals be taken as a concrete example of the +position which would be occupied by the managers in a nationalized +industry, it will be seen that they do not involve either of the two +dangers which are pointed out above. The manager will, it is true, +work with a Local Mining Council or pit committee, which is to "meet +fortnightly, or oftener if need be, to advise the manager on all +questions concerning the direction and safety of the mine," and "if the +manager refuses to take the advice of the Local Mining Council on any +question concerning the safety and health of the mine, such question +shall be referred to {169} the District Mining Council." It is true +also that, once such a Local Mining Council is formally established, +the manager will find it necessary to win its confidence, to lead by +persuasion, not by mere driving, to establish, in short, the same +relationships of comradeship and good will as ought to exist between +the colleagues in any common undertaking. But in all this there is +nothing to undermine his authority, unless "authority" be understood to +mean an arbitrary power which no man is fit to exercise, and which few +men, in their sober moments, would claim. The manager will be +appointed by, and responsible to, not the men whose work he supervises, +but the District Mining Council, which controls all the pits in a +district, and on that council he will be represented. Nor will he be +at the mercy of a distant "clerkocracy," overwhelming him with +circulars and overriding his expert knowledge with impracticable +mandates devised in London. The very kernel of the schemes advanced +both by Justice Sankey and by the Miners' Federation is decentralized +administration within the framework of a national system. There is no +question of "managing the industry from Whitehall." The +characteristics of different coal-fields vary so widely that reliance +on local knowledge and experience are essential, and it is to local +knowledge and experience that it is proposed to intrust the +administration of the industry. The constitution which is recommended +is, in short, not "Unitary" but "Federal." There will be a division of +functions and power between central authorities and district +authorities. The former will lay down general rules as to those +matters which must necessarily {170} be dealt with on a national basis. +The latter will administer the industry within their own districts, +and, as long as they comply with those rules and provide their quota of +coal, will possess local autonomy and will follow the method of working +the pits which they think best suited to local conditions. + +Thus interpreted, public ownership does not appear to confront the +brain worker with the danger of unintelligent interference with his +special technique, of which he is, quite naturally, apprehensive. It +offers him, indeed, far larger opportunities of professional +development than are open to all but a favored few to-day, when the +considerations of productive efficiency, which it is his special +_métier_ to promote, are liable to be overridden by short-sighted +financial interests operating through the pressure of a Board of +Directors who desire to show an immediate profit to their shareholders, +and who, to obtain it, will "cream" the pit, or work it in a way other +than considerations of technical efficiency would dictate. And the +interest of the community in securing that the manager's professional +skill is liberated for the service of the public, is as great as his +own. For the economic developments of the last thirty years have made +the managerial and technical _personnel_ of industry the repositories +of public responsibilities of quite incalculable importance, which, +with the best will in the world, they can hardly at present discharge. +The most salient characteristic of modern industrial organization is +that production is carried on under the general direction of business +men, who do not themselves necessarily know anything of productive +processes. "Business" {171} and "industry" tend to an increasing +extent to form two compartments, which, though united within the same +economic system, employ different types of _personnel_, evoke different +qualities and recognize different standards of efficiency and +workmanship. The technical and managerial staff of industry is, of +course, as amenable as other men to economic incentives. But their +special work is production, not finance; and, provided they are not +smarting under a sense of economic injustice, they want, like most +workmen, to "see the job done properly." The business men who +ultimately control industry are concerned with the promotion and +capitalization of companies, with competitive selling and the +advertisement of wares, the control of markets, the securing of special +advantages, and the arrangement of pools, combines and monopolies. +They are preoccupied, in fact, with financial results, and are +interested in the actual making of goods only in so far as financial +results accrue from it. + + +The change in organization which has, to a considerable degree, +specialized the spheres of business and management is comparable in its +importance to that which separated business and labor a century and a +half ago. It is specially momentous for the consumer. As long as the +functions of manager, technician and capitalist were combined, as in +the classical era of the factory system, in the single person of "the +employer," it was not unreasonable to assume that profits and +productive efficiency ran similarly together. In such circumstances +the ingenuity with which economists proved {172} that, in obedience to +"the law of substitution," he would choose the most economical process, +machine, or type of organization, wore a certain plausibility. True, +the employer might, even so, adulterate his goods or exploit the labor +of a helpless class of workers. But as long as the person directing +industry was himself primarily a manager, he could hardly have the +training, ability or time, even if he had the inclination, to +concentrate special attention on financial gains unconnected with, or +opposed to, progress in the arts of production, and there was some +justification for the conventional picture which represented "the +manufacturer" as the guardian of the interests of the consumer. With +the drawing apart of the financial and technical departments of +industry--with the separation of "business" from "production"--the link +which bound profits to productive efficiency is tending to be snapped. +There are more ways than formerly of securing the former without +achieving the latter; and when it is pleaded that the interests of the +captain of industry stimulate the adoption of the most "economical" +methods and thus secure industrial progress, it is necessary to ask +"economical for whom"? Though the organization of industry which is +most efficient, in the sense of offering the consumer the best service +at the lowest real cost, may be that which is most profitable to the +firm, it is also true that profits are constantly made in ways which +have nothing to do with efficient production, and which sometimes, +indeed, impede it. + +The manner in which "business" may find that the methods which pay +itself best are those which a truly {173} scientific "management" would +condemn may be illustrated by three examples. In the first place, the +whole mass of profits which are obtained by the adroit capitalization +of a new business, or the reconstruction of one which already exists, +have hardly any connection with production at all. When, for instance, +a Lancashire cotton mill capitalized at £100,000 is bought by a London +syndicate which re-floats it with a capital of £500,000--not at all an +extravagant case--what exactly has happened? In many cases the +equipment of the mill for production remains, after the process, what +it was before it. It is, however, valued at a different figure, +because it is anticipated that the product of the mill will sell at a +price which will pay a reasonable profit not only upon the lower, but +upon the higher, capitalization. If the apparent state of the market +and prospects of the industry are such that the public can be induced +to believe this, the promoters of the reconstruction find it worth +while to recapitalize the mill on the new basis. They make their +profit not as manufacturers, but as financiers. They do not in any way +add to the productive efficiency of the firm, but they acquire shares +which will entitle them to an increased return. Normally, if the +market is favorable, they part with the greater number of them as soon +as they are acquired. But, whether they do so or not, what has +occurred is a process by which the business element in industry obtains +the right to a larger share of the product, without in any way +increasing the efficiency of the service which is offered to the +consumer. + +Other examples of the manner in which the control of {174} production +by "business" cuts across the line of economic progress are the wastes +of competitive industry and the profits of monopoly. It is well known +that the price paid by the consumer includes marketing costs, which to +a varying, but to a large, extent are expenses not of supplying the +goods, but of supplying them under conditions involving the expenses of +advertisement and competitive distribution. For the individual firm +such expenses, which enable it to absorb part of a rival's trade, may +be an economy: to the consumer of milk or coal--to take two flagrant +instances--they are pure loss. Nor, as is sometimes assumed, are such +wastes confined to distribution. Technical reasons are stated by +railway managers to make desirable a unification of railway +administration and by mining experts of mines. But, up to the war, +business considerations maintained the expensive system under which +each railway company was operated as a separate system, and still +prevent collieries, even collieries in the same district, from being +administered as parts of a single organization. Pits are drowned out +by water, because companies cannot agree to apportion between them the +costs of a common drainage system; materials are bought, and products +sold, separately, because collieries will not combine; small coal is +left in to the amount of millions of tons because the most economical +and technically efficient working of the seams is not necessarily that +which yields the largest profit to the business men who control +production. In this instance the wide differences in economic strength +which exist between different mines discourage the unification which is +economically desirable; naturally the {175} directors of a company +which owns "a good thing" do not desire to merge interests with a +company working coal that is poor in quality or expensive to mine. +When, as increasingly happens in other industries, competitive wastes, +or some of them, are eliminated by combination, there is a genuine +advance in technical efficiency, which must be set to the credit of +business motives. In that event, however, the divergence between +business interests and those of the consumers is merely pushed one +stage further forward; it arises, of course, over the question of +prices. If any one is disposed to think that this picture of the +economic waste which accompanies the domination of production by +business interests is overdrawn, he may be invited to consider the +criticisms upon the system passed by the "efficiency engineers," who +are increasingly being called upon to advise as to industrial +organization and equipment. "The higher officers of the corporation," +writes Mr. H. L. Gantt of a Public Utility Company established in +America during the war, "have all without exception been men of the +'business' type of mind, who have made their success through +financiering, buying, selling, etc.... As a matter of fact it is well +known that our industrial system has not measured up as we had +expected.... _The reason for its falling short is undoubtedly that the +men directing it had been trained in a business system operated for +profits, and did not understand one operated solely for production_. +This is no criticism of the men as individuals; they simply did not +know the job, and, what is worse, they did not know that they did not +know it." + +{176} + +In so far, then, as "Business" and "Management" are separated, the +latter being employed under the direction of the former, it cannot be +assumed that the direction of industry is in the hands of persons whose +primary concern is productive efficiency. That a considerable degree +of efficiency will result incidentally from the pursuit of business +profits is not, of course, denied. What seems to be true, however, is +that the main interest of those directing an industry which has reached +this stage of development is given to financial strategy and the +control of markets, because the gains which these activities offer are +normally so much larger than those accruing from the mere improvement +of the processes of production. It is evident, however, that it is +precisely that improvement which is the main interest of the consumer. +He may tolerate large profits as long as they are thought to be the +symbol of efficient production. But what he is concerned with is the +supply of goods, not the value of shares, and when profits appear to be +made, not by efficient production, but by skilful financiering or +shrewd commercial tactics, they no longer appear meritorious. If, in +disgust at what he has learned to call "profiteering," the consumer +seeks an alternative to a system under which product is controlled by +"Business," he can hardly find it except by making an ally of the +managerial and technical _personnel_ of industry. They organize the +service which he requires; they are relatively little implicated, +either by material interest or by psychological bias, in the financial +methods which he distrusts; they often find the control of their +professions by business men who are {177} primarily financiers +irritating in the obstruction which it offers to technical efficiency, +as well as sharp and close-fisted in the treatment of salaries. Both +on public and professional grounds they belong to a group which ought +to take the initiative in promoting a partnership between the producers +and the public. They can offer the community the scientific knowledge +and specialized ability which is the most important condition of +progress in the arts of production. It can offer them a more secure +and dignified status, larger opportunities for the exercise of their +special talents, and the consciousness that they are giving the best of +their work and their lives, not to enriching a handful of uninspiring, +if innocuous, shareholders, but to the service of the great body of +their fellow-countrymen. If the last advantage be dismissed as a +phrase--if medical officers of health, directors of education, +directors of the co-operative wholesale be assumed to be quite +uninfluenced by any consciousness of social service--the first two, at +any rate, remain. And they are considerable. + +It is this gradual disengagement of managerial technique from financial +interests which would appear the probable line along which "the +employer" of the future will develop. The substitution throughout +industry of fixed salaries for fluctuating profits would, in itself, +deprive his position of half the humiliating atmosphere of predatory +enterprise which embarrasses to-day any man of honor who finds himself, +when he has been paid for his services, in possession of a surplus for +which there is no assignable reason. Nor, once large incomes from +profits have been extinguished, need his salary be large, {178} as +incomes are reckoned to-day. It is said that among the barbarians, +where wealth is still measured by cattle, great chiefs are described as +hundred-cow men. The manager of a great enterprise who is paid +$400,000 a year, might similarly be described as a hundred-family man, +since he receives the income of a hundred families. It is true that +special talent is worth any price, and that a payment of $400,000 a +year to the head of a business with a turnover of millions is +economically a bagatelle. But economic considerations are not the only +considerations. There is also "the point of honor." And the truth is +that these hundred-family salaries are ungentlemanly. + +When really important issues are at stake every one realizes that no +decent man can stand out for his price. A general does not haggle with +his government for the precise pecuniary equivalent of his contribution +to victory. A sentry who gives the alarm to a sleeping battalion does +not spend next day collecting the capital value of the lives he has +saved; he is paid 1/- a day and is lucky if he gets it. The commander +of a ship does not cram himself and his belongings into the boats and +leave the crew to scramble out of the wreck as best they can; by the +tradition of the service he is the last man to leave. There is no +reason why the public should insult manufacturers and men of business +by treating them as though they were more thick-skinned than generals +and more extravagant than privates. To say that they are worth a good +deal more than even the exorbitant salaries which a few of them get is +often true. But it is beside the point. No one has any business to +{179} expect to be paid "what he is worth," for what he is worth is a +matter between his own soul and God. What he has a right to demand, +and what it concerns his fellow-men to see that he gets, is enough to +enable him to perform his work. When industry is organized on a basis +of function, that, and no more than that, is what he will be paid. To +do the managers of industry justice, this whining for more money is a +vice to which they (as distinct from their shareholders) are not +particularly prone. There is no reason why they should be. If a man +has important work, and enough leisure and income to enable him to do +it properly, he is in possession of as much happiness as is good for +any of the children of Adam. + + + +[1] The Coal Mines Department supplied the following figures to the +Coal Industry Commission (Vol. III, App. 66). They relate to 57 per +cent. of the collieries of the United Kingdom. + + Salary, including bonus and Number of Managers + value of house and coal 1913 1919 + + £100 or less ............................... 4 2 + £101 to £200 ............................... 134 3 + £201 to £300 ............................... 280 29 + £301 to £400 ............................... 161 251 + £401 to £500 ............................... 321 213 + £501 to £600 ............................... 57 146 + £601 and over .............................. 50 152 + + + + +{180} + +XI + +PORRO UNUM NECESSARIUM + +So the organization of society on the basis of function, instead of on +that of rights, implies three things. It means, first, that +proprietary rights shall be maintained when they are accompanied by the +performance of service and abolished when they are not. It means, +second, that the producers shall stand in a direct relation to the +community for whom production is carried on, so that their +responsibility to it may be obvious and unmistakable, not lost, as at +present, through their immediate subordination to shareholders whose +interest is not service but gain. It means, in the third place, that +the obligation for the maintenance of the service shall rest upon the +professional organization of those who perform it, and that, subject to +the supervision and criticism of the consumer, those organizations +shall exercise so much voice in the government of industry as may be +needed to secure that the obligation is discharged. It is obvious, +indeed, that no change of system or machinery can avert those causes of +social _malaise_ which consist in the egotism, greed, or +quarrelsomeness of human nature. What it can do is to create an +environment in which those are not the qualities which are encouraged. +It cannot secure that men live up to their principles. What it can do +is to establish their social order upon principles to which, if they +please, they can {181} live up and not live down. It cannot control +their actions. It can offer them an end on which to fix their minds. +And, as their minds are, so, in the long run and with exceptions, their +practical activity will be. + +The first condition of the right organization of industry is, then, the +intellectual conversion which, in their distrust of principles, +Englishmen are disposed to place last or to omit altogether. It is +that emphasis should be transferred from the opportunities which it +offers individuals to the social functions which it performs; that they +should be clear as to its end and should judge it by reference to that +end, not by incidental consequences which are foreign to it, however +brilliant or alluring those consequences may be. What gives its +meaning to any activity which is not purely automatic is its purpose. +It is because the purpose of industry, which is the conquest of nature +for the service of man, is neither adequately expressed in its +organization nor present to the minds of those engaged in it, because +it is not regarded as a function but as an opportunity for personal +gain or advancement or display, that the economic life of modern +societies is in a perpetual state of morbid irritation. If the +conditions which produce that unnatural tension are to be removed, it +can only be effected by the growth of a habit of mind which will +approach questions of economic organization from the standpoint of the +purpose which it exists to serve, and which will apply to it something +of the spirit expressed by Bacon when he said that the work of man +ought to be carried on "for the glory of God and the relief of men's +estate." + +{182} + +Viewed from that angle issues which are insoluble when treated on the +basis of rights may be found more susceptible of reasonable treatment. +For a purpose, is, in the first place a principle of limitation. It +determines the end for which, and therefore the limits within which, an +activity is to be carried on. It divided what is worth doing from what +is not, and settles the scale upon which what is worth doing ought to +be done. It is in the second place, a principle of unity, because it +supplies a common end to which efforts can be directed, and submits +interests, which would otherwise conflict, to the judgment of an +over-ruling object. It is, in the third place, a principle of +apportionment or distribution. It assigns to the different parties of +groups engaged in a common undertaking the place which they are to +occupy in carrying it out. Thus it establishes order, not upon chance +or power, but upon a principle, and bases remuneration not upon what +men can with good fortune snatch for themselves nor upon what, if +unlucky, they can be induced to accept, but upon what is appropriate to +their function, no more and no less, so that those who perform no +function receive no payment, and those who contribute to the common end +receive honourable payment for honourable service. + + Frate, la nostra volontà quieta + Virtù di carità, che fa volerne + Sol quel ch'avemo, e d'altro non ci asseta. + Si disiassimo esse più superne, + Foran discordi li nostri disiri + Dal voler di colui che qui ne cerne. + * * * * * + +{183} + + Anzi è formale ad esto beato esse + Tenersi dentro alla divina vogli, + Per ch'una fansi nostre vogli e stesse. + * * * * * + Chiaro mi fu allor com' ogni dove + In Cielo è paradiso, e sì la grazia + Del sommo ben d'un modo non vi piove. + +The famous lines in which Piccarda explains to Dante the order of +Paradise are a description of a complex and multiform society which is +united by overmastering devotion to a common end. By that end all +stations are assigned and all activities are valued. The parts derive +their quality from their place in the system, and are so permeated by +the unity which they express that they themselves are glad to be +forgotten, as the ribs of an arch carry the eye from the floor from +which they spring to the vault in which they meet and interlace. + +Such a combination of unity and diversity is possible only to a society +which subordinates its activities to the principle of purpose. For +what that principle offers is not merely a standard for determining the +relations of different classes and groups of producers, but a scale of +moral values. Above all, it assigns to economic activity itself its +proper place as the servant, not the master, of society. The burden of +our civilization is not merely, as many suppose, that the product of +industry is ill-distributed, or its conduct tyrannical, or its +operation interrupted by embittered disagreements. It is that industry +itself has come to hold a position of exclusive predominance among +human interests, which no single interest, and least of all the +provision of the {184} material means of existence, is fit to occupy. +Like a hypochondriac who is so absorbed in the processes of his own +digestion that he goes to his grave before he has begun to live, +industrialized communities neglect the very objects for which it is +worth while to acquire riches in their feverish preoccupation with the +means by which riches can be acquired. + +That obsession by economic issues is as local and transitory as it is +repulsive and disturbing. To future generations it will appear as +pitiable as the obsession of the seventeenth century by religious +quarrels appears to-day; indeed, it is less rational, since the object +with which it is concerned is less important. And it is a poison which +inflames every wound and turns each trivial scratch into a malignant +ulcer. Society will not solve the particular problems of industry +which afflict it, until that poison is expelled, and it has learned to +see industry itself in the right perspective. If it is to do that, it +must rearrange its scale of values. It must regard economic interests +as one element in life, not as the whole of life. It must persuade its +members to renounce the opportunity of gains which accrue without any +corresponding service, because the struggle for them keeps the whole +community in a fever. It must so organize industry that the +instrumental character of economic activity is emphasized by its +subordination to the social purpose for which it is carried on. + + + + +{185} + +INDEX + + + Abolition of private ownership, 147 + Absenteeism, 152 + Absolute rights, 50-51 + Absolutism in industry, 144 + Acquisitive societies, 29-32 + Administration, 115-116 + Allocation of power, 163-164 + American Constitution, 18-19, 52 + Annuities, 74 + Arbitration, compulsory, 101 + + Bacon, quoted, 58, 181 + Bentham, 16, 52, 55 + Brain workers, position of the, 161-171 + British Coal Industry, reorganization of, 166-171 + Building Guilds, 103 + Building Trade Report, 106-110 + Bureaucracy, 116, 149 + + Capitalism, and production, 173-176; downward thrust of, 154; + in America, 101; losing control, 141-142, 148 + Cecil, Lord Hugh, 23, 58 + Cecil, Robert, 59 + Cecil, William, 59 + Church and State, 10-13 + Coal Industry Commission, 71, 126, 137, 143; report of, 166-167 + Coal Mines Committees, 152 + Combinations, 125, 130 + Committee on Trusts, 153 + Competition, 27 + Compulsory arbitration, 101 + Confiscations, 103 + Conservatism, the New, 28 + Consumer, exploitation of the, 133-134 + Co-operative Movement and cost of coal, 125 + + Dante, quoted, 182-183 + Death Duties, 22 + Democratic control, 116 + Dickenson, Sir Arthur Lowes, 71 + Directorate control, 129 + Duckham, Sir Arthur, 119 + Duke of Wellington, quoted, 123 + + Economic confusion, cause of, 131-132 + Economic discontent, increase of, 5 + Economic egotism, 27, + Economic expansion, 9 + Efficiency, the condition of, 139-160; through _Esprit de Corps_, 149-150 + Employer, waning power of the, 140 + England, and natural right, 15-16; and France contrasted, 16-17; + Industrialism in, 44-47; Liberal Movement in, 18; + over-crowding of population in, 37; proprietary rights in, + 64 _et seq._ + English landlordism, 22-23 + Englishmen, characteristics of, 1-3; vanity of, 129 + English Revolution of 1688, 52 + Esch-Cummins Act, 118 + Expediency, rule of, 16 + + Feudalism, 18 + Fixed salaries, 177-178 + Forced labor, 102 + France, social and industrial conditions in, 16-17; + Feudalism in, 18; Revolution in, 15, 65, 69 + French Revolution, 15, 65, 69 + Function, definition of, 8; as a basis for remuneration, 41-42; + as a basis of social reorganization, 180; Function and Freedom, 7 + Functional Society, 29, 84-90 + Functionless property-owners, 79, 86; abolishment of, 87-88; + an expensive luxury, 87 + + Gainford, Lord, quoted, 26, 111 + Gantt, H. L., 175 + Government control in war time, 25-26 + Ground-rents, 89-90, 91 + + Hobson, Mr., 63 + "Hundred-Family Man," 178 + + Imperial Tobacco Company, 116 + Incomes, 41 + Income Tax, 22 + Income without service, 68 + Individualism, 48-49 + Individual rights, 9 + Individual rights _vs._ social functions, 27 + Industrial problems, 7 + Industrial reorganization, 151, 155 + Industrial revolution, 9 + Industrial societies, 9 + Industrial warfare, cause of, and remedy for, 40-42 + Industrialism, 18; a poison, 184; compared to Militarism, 44-46; + exaggerated estimate of its importance, 45-46; failure of present + system, 139-141; nemesis of, 33-51; spread of, 30; tendency of, + 31-32 + Industry, and a profession, 94, 97; as a profession, 91 _et seq._, + 125-126; deficiencies of, 147; definition of, 6; how private + control of may be terminated, 103-104; and the advantages of such + a change, 106; Building Trades' Plan for, 108, 111; motives in, + 155-159; nationalization of, 104, 114-118; present organization + of intolerable, 129; purpose of, 8, 46, 181; right organization + of, 6-7; the means not the end, 46-47 + Inheritance taxes, 90 + Insurance, 74 + + Joint control, 111-112 + Joint-stock companies, 66 + Joint-stock organizations, 97 + + Labor, absolute rights of, 28; and capital, 98-100, 108; compulsory, + 100; control of breaking down, 139 _et seq._; degradation of, 35; + forced, 102 + League of Nations, 101 + Liberal Movement, 18 + Locke, 14, 52, 55 + + Management divorced from ownership, 112-113 + Mann, Sir John, 126 + Militarism, 44-45 + Mill, quoted, 89 + Mine managers, position of, 162, 166-168 + Mining royalties, 23-24, 88 + + Nationalism, 48-49 + Nationalization, 114, 117; of the Coal Industry, 115, 165, 168-169 + Natural right in France, 15; in England, 15-16; doctrine of, 21 + + Officials, position under the present economic system, 162 + Old industrial order a failure, 139; its effect on the consumer, 144 + Organization, for public service instead of private gains, 127 + Over-centralization, 121 + Ownership, a new system of, 112-114 + + Pensioners, 34 + Poverty a symptom of social disorder, 5 + Private enterprise and public ownership, 118-120 + Private ownership, 120; abolition of, 147; of industrial capital, + 105-106 + Private rights and public welfare, 14-15 + Privileges, 24 + Producer, obligation of the, 127-128; responsibility of, 128 + Production, increased, 5; large scale and small scale, 87; + misdirection of, 37-39; why not increased, 136 + Productivity, 4, 46 + Professional Spirit, the, 149-150 + Profits, and production, 173-176; division of, 133 + Proletariat, 19, 65 + Property, absolute rights of, 52, 80; and creative work, 52 _et seq._; + classification of, 63, 64; complexity of, 75; functionless, 76-77, 81; + in land, 56-60; in rights and royalties, 62; minority ownership + of, 79; most ambiguous of categories, 53-54; passive ownership of, + 62; private, 70-72; protection of, 78-70; rights, 50-51; security in, + 72-73; socialist fallacy regarding, 86 + Proudhon, 54 + Publicity of costs and profits, 85, 123-124, 126, 132 + + Redmayne, Sir Richard, 149 + Reformation the, 10-13; effect on society, 12-14 + Reform Bill of 1832, 69 + Religion, 10; changes in, 11-12 + Report of the United States Industrial Commission, 1916, 128-129 + Riches, meaning of, 98 + Rights of Man, French Declaration of, the, 16, 52 + Rights, and Functions, 8-19; doctrine of, 21 _et seq._, 43-44; without + functions, 61 + Rights of the shareholder, 75 + Royalties, 23-24, 62 + Royalties, and property, 70; from coal mining properties, 88; a tax + upon the industry of others, 89 + + Sankey, Justice, 115, 117, 143, 165, 167, 168, 169 + Security of income, 73-75 + Service as a basis of remuneration, 25, 41-42, 85, 133 + Shareholders, 91-92 + Shells, cost of making, 124-125 + Smith, Adam, 15, 52, 95 + Social inequality, 36-37 + Social reorganizations, schemes for, 5 + Social war, 40 + Socialism, 53 + Society, duality of modern, 135 + Society, functional organization of, 52 + State management, 116, 117 + Steel Corporation, 116 + Supervision from within, 151 + Syndicalism, 130 + + Taxation, 22 + Trusts, Report on, 23 + + United States, transformation in, 65 + Utilitarians, the English, 17 + Utility, 16-17 + + "Vicious Circle," the, 43, 123-138 + Voltaire, quoted, 55 + + Wages and costs, 131 + Wages and profits, 78 + Wealth, acquisition of, 20 _et seq._; as foundation for public esteem, + 35-36; distribution of on basis of function, 77; fallacy of increased, + 42-45; how to increase output of, 147; inequality of, 37-38; + limitation of, 36-37; output of, 37-38; production and consumption + of--a contrast, 77-78; waste of, 37-39 + Whitley Councils, 110 + Women self-supporting, 74 + Worker and Spender, 77-78 + Workers, collective responsibility of, 154 + Workers' control, 128 + Workmen, as "hands," 152; present independence of, 145-146; + responsibility of destroyed, 153-154; servants of shareholders, + 136-137; treatment of, 152-153 + + + + + + + + + +End of the Project Gutenberg EBook of The Acquisitive Society, by R. 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H. Tawney +</TITLE> + +<STYLE TYPE="text/css"> +BODY { color: Black; + background: White; + margin-right: 10%; + margin-left: 10%; + font-family: "Times New Roman", serif; + text-align: justify } + +P {text-indent: 4% } + +P.noindent {text-indent: 0% } + +P.poem {text-indent: 0%; + margin-left: 10%; } + +P.letter {text-indent: 0%; + margin-left: 10% ; + margin-right: 10% } + +P.footnote {text-indent: 0% ; + font-size: 80%; + margin-left: 10% ; + margin-right: 10% } + +P.index {text-indent: -5% ; + margin-left: 5% ; + margin-top: 0% ; + margin-bottom: 0% ; + margin-right: 0% } + +P.finis { font-size: larger ; + text-align: center ; + text-indent: 0% ; + margin-left: 0% ; + margin-right: 0% } + +.pagenum { position: absolute; + left: 1%; + font-size: 80%; + text-align: left; + text-indent: 0; + font-style: normal; + font-weight: normal; + font-variant: normal; } + +</STYLE> + +</HEAD> + +<BODY> + + +<pre> + +The Project Gutenberg EBook of The Acquisitive Society, by R. H. Tawney + +This eBook is for the use of anyone anywhere at no cost and with +almost no restrictions whatsoever. You may copy it, give it away or +re-use it under the terms of the Project Gutenberg License included +with this eBook or online at www.gutenberg.org + + +Title: The Acquisitive Society + +Author: R. H. Tawney + +Release Date: September 16, 2010 [EBook #33741] + +Language: English + +Character set encoding: ISO-8859-1 + +*** START OF THIS PROJECT GUTENBERG EBOOK THE ACQUISITIVE SOCIETY *** + + + + +Produced by Al Haines + + + + + +</pre> + + +<BR><BR> + +<H1 ALIGN="center"> +THE ACQUISITIVE SOCIETY +</H1> + +<BR><BR> + +<H4 ALIGN="center"> +BY +</H4> + +<H3 ALIGN="center"> +R. H. TAWNEY +</H3> + +<BR> + +<H5 ALIGN="center"> +FELLOW OF BALLIOL COLLEGE, OXFORD; LATE MEMBER<BR> +OF THE COAL INDUSTRY COMMISSION<BR> +</H5> + +<BR><BR><BR> + +<H4 ALIGN="center"> +NEW YORK +<BR> +HARCOURT, BRACE AND COMPANY +</H4> + +<BR><BR><BR> + +<H5 ALIGN="center"> +COPYRIGHT, 1920, BY +<BR> +HARCOURT, BRACE AND HOWE, INC. +</H5> + +<BR><BR> + +<H5 ALIGN="center"> +PRINTED IN THE U. S. A. BY +<BR> +THE QUINN & BODEN COMPANY +<BR> +RAHWAY, N. J. +</H5> + +<BR><BR><BR> + +<H2 ALIGN="center"> +CONTENTS +</H2> + +<TABLE ALIGN="center" WIDTH="80%"> + +<TR> +<TD ALIGN="right" VALIGN="top">CHAPTER</TD> +<TD ALIGN="left" VALIGN="top"> </TD> +</TR> + +<TR> +<TD ALIGN="right" VALIGN="top">I </TD> +<TD ALIGN="left" VALIGN="top"> +<A HREF="#chap01">INTRODUCTORY</A></TD> +</TR> + +<TR> +<TD ALIGN="right" VALIGN="top">II </TD> +<TD ALIGN="left" VALIGN="top"> +<A HREF="#chap02">RIGHTS AND FUNCTIONS</A></TD> +</TR> + +<TR> +<TD ALIGN="right" VALIGN="top">III </TD> +<TD ALIGN="left" VALIGN="top"> +<A HREF="#chap03">THE ACQUISITIVE SOCIETY</A></TD> +</TR> + +<TR> +<TD ALIGN="right" VALIGN="top">IV </TD> +<TD ALIGN="left" VALIGN="top"> +<A HREF="#chap04">THE NEMESIS OF INDUSTRIALISM</A></TD> +</TR> + +<TR> +<TD ALIGN="right" VALIGN="top">V </TD> +<TD ALIGN="left" VALIGN="top"> +<A HREF="#chap05">PROPERTY AND CREATIVE WORK</A></TD> +</TR> + +<TR> +<TD ALIGN="right" VALIGN="top">VI </TD> +<TD ALIGN="left" VALIGN="top"> +<A HREF="#chap06">THE FUNCTIONAL SOCIETY</A></TD> +</TR> + +<TR> +<TD ALIGN="right" VALIGN="top">VII </TD> +<TD ALIGN="left" VALIGN="top"> +<A HREF="#chap07">INDUSTRY AS A PROFESSION</A></TD> +</TR> + +<TR> +<TD ALIGN="right" VALIGN="top">VIII </TD> +<TD ALIGN="left" VALIGN="top"> +<A HREF="#chap08">THE "VICIOUS CIRCLE"</A></TD> +</TR> + +<TR> +<TD ALIGN="right" VALIGN="top">IX </TD> +<TD ALIGN="left" VALIGN="top"> +<A HREF="#chap09">THE CONDITION OF EFFICIENCY</A></TD> +</TR> + +<TR> +<TD ALIGN="right" VALIGN="top">X </TD> +<TD ALIGN="left" VALIGN="top"> +<A HREF="#chap10">THE POSITION OF THE BRAIN WORKER</A></TD> +</TR> + +<TR> +<TD ALIGN="right" VALIGN="top">XI </TD> +<TD ALIGN="left" VALIGN="top"> +<A HREF="#chap11">PORRO UNUM NECESSARIUM</A></TD> +</TR> + +</TABLE> + +<BR><BR><BR> + +<P CLASS="noindent" STYLE="margin-left: 15%; margin-right: 15%"> +<I>The author desires to express his acknowledgments to the Editor of +the</I> Hibbert Journal <I>for permission to reprint an article which +appeared in it</I>. +</P> + +<BR><BR><BR> + +<A NAME="chap01"></A> + +<SPAN CLASS="pagenum">{<A NAME="P1"></A>1}</SPAN> + +<H2 ALIGN="center"> +THE ACQUISITIVE SOCIETY +</H2> + +<BR> + +<H3 ALIGN="center"> +I +</H3> + +<H3 ALIGN="center"> +INTRODUCTORY +</H3> + +<P> +It is a commonplace that the characteristic virtue of Englishmen is +their power of sustained practical activity, and their characteristic +vice a reluctance to test the quality of that activity by reference to +principles. They are incurious as to theory, take fundamentals for +granted, and are more interested in the state of the roads than in +their place on the map. And it might fairly be argued that in ordinary +times that combination of intellectual tameness with practical energy +is sufficiently serviceable to explain, if not to justify, the +equanimity with which its possessors bear the criticism of more +mentally adventurous nations. It is the mood of those who have made +their bargain with fate and are content to take what it offers without +re-opening the deal. It leaves the mind free to concentrate +undisturbed upon profitable activities, because it is not distracted by +a taste for unprofitable speculations. Most generations, it might be +said, walk in a path which they neither make, nor discover, but accept; +the main thing is that they should march. The blinkers worn by +Englishmen enable them to trot all the more steadily along the beaten +<SPAN CLASS="pagenum">{<A NAME="P2"></A>2}</SPAN> +road, without being disturbed by curiosity as to their destination. +</P> + +<P> +But if the medicine of the constitution ought not to be made its daily +food, neither can its daily food be made its medicine. There are times +which are not ordinary, and in such times it is not enough to follow +the road. It is necessary to know where it leads, and, if it leads +nowhere, to follow another. The search for another involves +reflection, which is uncongenial to the bustling people who describe +themselves as practical, because they take things as they are and leave +them as they are. But the practical thing for a traveler who is +uncertain of his path is not to proceed with the utmost rapidity in the +wrong direction: it is to consider how to find the right one. And the +practical thing for a nation which has stumbled upon one of the +turning-points of history is not to behave as though nothing very +important were involved, as if it did not matter whether it turned to +the right or to the left, went up hill or down dale, provided that it +continued doing with a little more energy what it has done hitherto; +but to consider whether what it has done hitherto is wise, and, if it +is not wise, to alter it. When the broken ends of its industry, its +politics, its social organization, have to be pieced together after a +catastrophe, it must make a decision; for it makes a decision even if +it refuses to decide. If it is to make a decision which will wear, it +must travel beyond the philosophy momentarily in favor with the +proprietors of its newspapers. Unless it is to move with the energetic +futility of a squirrel in a revolving cage, it must have a clear +apprehension both of the +<SPAN CLASS="pagenum">{<A NAME="P3"></A>3}</SPAN> +deficiency of what is, and of the +character of what ought to be. And to obtain this apprehension it must +appeal to some standard more stable than the momentary exigencies of +its commerce or industry or social life, and judge them by it. It +must, in short, have recourse to Principles. +</P> + +<BR> + +<P> +Such considerations are, perhaps, not altogether irrelevant at a time +when facts have forced upon Englishmen the reconsideration of their +social institutions which no appeal to theory could induce them to +undertake. An appeal to principles is the condition of any +considerable reconstruction of society, because social institutions are +the visible expression of the scale of moral values which rules the +minds of individuals, and it is impossible to alter institutions +without altering that moral valuation. Parliament, industrial +organizations, the whole complex machinery through which society +expresses itself, is a mill which grinds only what is put into it, and +when nothing is put into it grinds air. There are many, of course, who +desire no alteration, and who, when it is attempted, will oppose it. +They have found the existing economic order profitable in the past. +They desire only such changes as will insure that it is equally +profitable in the future. <I>Quand le Roi avait bu, la Pologne était +ivre</I>. They are genuinely unable to understand why their countrymen +cannot bask happily by the fire which warms themselves, and ask, like +the French farmer-general:—"When everything goes so happily, why +trouble to change it?" Such persons are to be pitied, for they lack +the social quality which is +<SPAN CLASS="pagenum">{<A NAME="P4"></A>4}</SPAN> +proper to man. But they do not need +argument; for Heaven has denied them one of the faculties required to +apprehend it. +</P> + +<P> +There are others, however, who are conscious of the desire for a new +social order, but who yet do not grasp the implications of their own +desire. Men may genuinely sympathize with the demand for a radical +change. They may be conscious of social evils and sincerely anxious to +remove them. They may set up a new department, and appoint new +officials, and invent a new name to express their resolution to effect +something more drastic than reform, and less disturbing than +revolution. But unless they will take the pains, not only to act, but +to reflect, they end by effecting nothing. For they deliver themselves +bound to those who think they are practical, because they take their +philosophy so much for granted as to be unconscious of its +implications, and directly they try to act, that philosophy re-asserts +itself, and serves as an overruling force which presses their action +more deeply into the old channels. "Unhappy man that I am; who shall +deliver me from the body of this death?" When they desire to place +their economic life on a better foundation, they repeat, like parrots, +the word "Productivity," because that is the word that rises first in +their minds; regardless of the fact that productivity is the foundation +on which it is based already, that increased productivity is the one +characteristic achievement of the age before the war, as religion was +of the Middle Ages or art of classical Athens, and that it is precisely +in the century which has seen the greatest increase in +<SPAN CLASS="pagenum">{<A NAME="P5"></A>5}</SPAN> +productivity +since the fall of the Roman Empire that economic discontent has been +most acute. When they are touched by social compunction, they can +think of nothing more original than the diminution of poverty, because +poverty, being the opposite of the riches which they value most, seems +to them the most terrible of human afflictions. They do not understand +that poverty is a symptom and a consequence of social disorder, while +the disorder itself is something at once more fundamental and more +incorrigible, and that the quality in their social life which causes it +to demoralize a few by excessive riches, is also the quality which +causes it to demoralize many by excessive poverty. +</P> + +<P> +"But increased production is important." Of course it is! That plenty +is good and scarcity evil—it needs no ghost from the graves of the +past five years to tell us that. But plenty depends upon co-operative +effort, and co-operation upon moral principles. And moral principles +are what the prophets of this dispensation despise. So the world +"continues in scarcity," because it is too grasping and too +short-sighted to seek that "which maketh men to be of one mind in a +house." The well-intentioned schemes for social reorganization put +forward by its commercial teachers are abortive, because they endeavor +to combine incompatibles, and, if they disturb everything, settle +nothing. They are like a man who, when he finds that his shoddy boots +wear badly, orders a pair two sizes larger instead of a pair of good +leather, or who makes up for putting a bad sixpence in the plate on +Sunday by putting in a bad shilling the next. And when their fit of +feverish energy +<SPAN CLASS="pagenum">{<A NAME="P6"></A>6}</SPAN> +has spent itself, and there is nothing to show for +it except disillusionment, they cry that reform is impracticable, and +blame human nature, when what they ought to blame is themselves. +</P> + +<P> +Yet all the time the principles upon which industry should be based are +simple, however difficult it may be to apply them; and if they are +overlooked it is not because they are difficult, but because they are +elementary. They are simple because industry is simple. An industry, +when all is said, is, in its essence, nothing more mysterious than a +body of men associated, in various degrees of competition and +co-operation, to win their living by providing the community with some +service which it requires. Organize it as you will, let it be a group +of craftsmen laboring with hammer and chisel, or peasants plowing their +own fields, or armies of mechanics of a hundred different trades +constructing ships which are miracles of complexity with machines which +are the climax of centuries of invention, its function is service, its +method is association. Because its function is service, an industry as +a whole has rights and duties towards the community, the abrogation of +which involves privilege. Because its method is association, the +different parties within it have rights and duties towards each other; +and the neglect or perversion of these involves oppression. +</P> + +<P> +The conditions of a right organization of industry are, therefore, +permanent, unchanging, and capable of being apprehended by the most +elementary intelligence, provided it will read the nature of its +countrymen in the large outlines of history, not in the bloodless +<SPAN CLASS="pagenum">{<A NAME="P7"></A>7}</SPAN> +abstractions of experts. The first is that it should be subordinated +to the community in such a way as to render the best service +technically possible, that those who render no service should not be +paid at all, because it is of the essence of a function that it should +find its meaning in the satisfaction, not of itself, but of the end +which it serves. The second is that its direction and government +should be in the hands of persons who are responsible to those who are +directed and governed, because it is the condition of economic freedom +that men should not be ruled by an authority which they cannot control. +The industrial problem, in fact, is a problem of right, not merely of +material misery, and because it is a problem of right it is most acute +among those sections of the working classes whose material misery is +least. It is a question, first of Function, and secondly of Freedom. +</P> + +<BR><BR><BR> + +<A NAME="chap02"></A> + +<SPAN CLASS="pagenum">{<A NAME="P8"></A>8}</SPAN> + +<H3 ALIGN="center"> +II +</H3> + +<H3 ALIGN="center"> +RIGHTS AND FUNCTIONS +</H3> + +<P> +A function may be defined as an activity which embodies and expresses +the idea of social purpose. The essence of it is that the agent does +not perform it merely for personal gain or to gratify himself, but +recognizes that he is responsible for its discharge to some higher +authority. The purpose of industry is obvious. It is to supply man +with things which are necessary, useful or beautiful, and thus to bring +life to body or spirit. In so far as it is governed by this end, it is +among the most important of human activities. In so far as it is +diverted from it, it may be harmless, amusing, or even exhilarating to +those who carry it on, but it possesses no more social significance +than the orderly business of ants and bees, the strutting of peacocks, +or the struggles of carnivorous animals over carrion. +</P> + +<P> +Men have normally appreciated this fact, however unwilling or unable +they may have been to act upon it; and therefore from time to time, in +so far as they have been able to control the forces of violence and +greed, they have adopted various expedients for emphasizing the social +quality of economic activity. It is not easy, however, to emphasize it +effectively, because to do so requires a constant effort of will, +against which egotistical instincts are in rebellion, and because, if +that will is to prevail, it must be embodied in some social +<SPAN CLASS="pagenum">{<A NAME="P9"></A>9}</SPAN> +and +political organization, which may itself become so arbitrary, +tyrannical and corrupt as to thwart the performance of function instead +of promoting it. When this process of degeneration has gone far, as in +most European countries it had by the middle of the eighteenth century, +the indispensable thing is to break the dead organization up and to +clear the ground. In the course of doing so, the individual is +emancipated and his rights are enlarged; but the idea of social purpose +is discredited by the discredit justly attaching to the obsolete order +in which it is embodied. +</P> + +<P> +It is not surprising, therefore, that in the new industrial societies +which arose on the ruins of the old régime the dominant note should +have been the insistence upon individual rights, irrespective of any +social purpose to which their exercise contributed. The economic +expansion which concentrated population on the coal-measures was, in +essence, an immense movement of colonization drifting from the south +and east to the north and west; and it was natural that in those +regions of England, as in the American settlements, the characteristic +philosophy should be that of the pioneer and the mining camp. The +change of social quality was profound. But in England, at least, it +was gradual, and the "industrial revolution," though catastrophic in +its effects, was only the visible climax of generations of subtle moral +change. The rise of modern economic relations, which may be dated in +England from the latter half of the seventeenth century, was coincident +with the growth of a political theory which replaced the conception of +purpose by that of mechanism. During a great part of history men had +<SPAN CLASS="pagenum">{<A NAME="P10"></A>10}</SPAN> +found the significance of their social order in its relation to +the universal purposes of religion. It stood as one rung in a ladder +which stretched from hell to Paradise, and the classes who composed it +were the hands, the feet, the head of a corporate body which was itself +a microcosm imperfectly reflecting a larger universe. When the +Reformation made the Church a department of the secular government, it +undermined the already enfeebled spiritual forces which had erected +that sublime, but too much elaborated, synthesis. But its influence +remained for nearly a century after the roots which fed it had been +severed. It was the atmosphere into which men were born, and from +which, however practical, or even Machiavellian, they could not easily +disengage their spirits. Nor was it inconvenient for the new +statecraft to see the weight of a traditional religious sanction added +to its own concern in the subordination of all classes and interests to +the common end, of which it conceived itself, and during the greater +part of the sixteenth century was commonly conceived, to be the +guardian. The lines of the social structure were no longer supposed to +reproduce in miniature the plan of a universal order. But common +habits, common traditions and beliefs, common pressure from above gave +them a unity of direction, which restrained the forces of individual +variation and lateral expansion; and the center towards which they +converged, formerly a Church possessing some of the characteristics of +a State, was now a State that had clothed itself with many of the +attributes of a Church. +</P> + +<P> +The difference between the England of Shakespeare, +<SPAN CLASS="pagenum">{<A NAME="P11"></A>11}</SPAN> +still visited +by the ghosts of the Middle Ages, and the England which merged in 1700 +from the fierce polemics of the last two generations, was a difference +of social and political theory even more than of constitutional and +political arrangements. Not only the facts, but the minds which +appraised them, were profoundly modified. The essence of the change +was the disappearance of the idea that social institutions and economic +activities were related to common ends, which gave them their +significance and which served as their criterion. In the eighteenth +century both the State and the Church had abdicated that part of the +sphere which had consisted in the maintenance of a common body of +social ethics; what was left of it was repression of a class, not the +discipline of a nation. Opinion ceased to regard social institutions +and economic activity as amenable, like personal conduct, to moral +criteria, because it was no longer influenced by the spectacle of +institutions which, arbitrary, capricious, and often corrupt in their +practical operation, had been the outward symbol and expression of the +subordination of life to purposes transcending private interests. That +part of government which had been concerned with social administration, +if it did not end, became at least obsolescent. For such democracy as +had existed in the Middle Ages was dead, and the democracy of the +Revolution was not yet born, so that government passed into the +lethargic hand of classes who wielded the power of the State in the +interests of an irresponsible aristocracy. And the Church was even +more remote from the daily life of mankind than the State. +Philanthropy abounded; but religion, +<SPAN CLASS="pagenum">{<A NAME="P12"></A>12}</SPAN> +once the greatest social +force, had become a thing as private and individual as the estate of +the squire or the working clothes of the laborer. There were special +dispensations and occasional interventions, like the acts of a monarch +who reprieved a criminal or signed an order for his execution. But +what was familiar, and human and lovable—what was Christian in +Christianity had largely disappeared. God had been thrust into the +frigid altitudes of infinite space. There was a limited monarchy in +Heaven, as well as upon earth. Providence was the spectator of the +curious machine which it had constructed and set in motion, but the +operation of which it was neither able nor willing to control. Like +the occasional intervention of the Crown in the proceedings of +Parliament, its wisdom was revealed in the infrequency of its +interference. +</P> + +<P> +The natural consequence of the abdication of authorities which had +stood, however imperfectly, for a common purpose in social +organization, was the gradual disappearance from social thought of the +idea of purpose itself. Its place in the eighteenth century was taken +by the idea of mechanism. The conception of men as united to each +other, and of all mankind as united to God, by mutual obligations +arising from their relation to a common end, which vaguely conceived +and imperfectly realized, had been the keystone holding together the +social fabric, ceased to be impressed upon men's minds, when Church and +State withdrew from the center of social life to its circumference. +What remained when the keystone of the arch was removed, was private +rights and private interests, the materials of a society rather +<SPAN CLASS="pagenum">{<A NAME="P13"></A>13}</SPAN> +than a society itself. These rights and interests were the natural +order which had been distorted by the ambitions of kings and priests, +and which emerged when the artificial super-structure disappeared, +because they were the creation, not of man, but of Nature herself. +They had been regarded in the past as relative to some public end, +whether religion or national welfare. Henceforward they were thought +to be absolute and indefeasible, and to stand by their own virtue. +They were the ultimate political and social reality; and since they +were the ultimate reality, they were not subordinate to other aspects +of society, but other aspects of society were subordinate to them. +</P> + +<P> +The State could not encroach upon these rights, for the State existed +for their maintenance. They determined the relation of classes, for +the most obvious and fundamental of all rights was property—property +absolute and unconditioned—and those who possessed it were regarded as +the natural governors of those who did not. Society arose from their +exercise, through the contracts of individual with individual. It +fulfilled its object in so far as, by maintaining contractual freedom, +it secured full scope for their unfettered exercise. It failed in so +far as, like the French monarchy, it overrode them by the use of an +arbitrary authority. Thus conceived, society assumed something of the +appearance of a great joint-stock company, in which political power and +the receipt of dividends were justly assigned to those who held the +most numerous shares. The currents of social activity did not converge +upon common ends, but were dispersed through a multitude of channels, +<SPAN CLASS="pagenum">{<A NAME="P14"></A>14}</SPAN> +created by the private interests of the individuals who composed +society. But in their very variety and spontaneity, in the very +absence of any attempt to relate them to a larger purpose than that of +the individual, lay the best security of its attainment. There is a +mysticism of reason as well as of emotion, and the eighteenth century +found, in the beneficence of natural instincts, a substitute for the +God whom it had expelled from contact with society, and did not +hesitate to identify them. +</P> + +<P CLASS="poem"> +"Thus God and nature planned the general frame<BR> +And bade self-love and social be the same."<BR> +</P> + +<BR> + +<P> +The result of such ideas in the world of practice was a society which +was ruled by law, not by the caprice of Governments, but which +recognized no moral limitation on the pursuit by individuals of their +economic self-interest. In the world of thought, it was a political +philosophy which made rights the foundation of the social order, and +which considered the discharge of obligations, when it considered it at +all, as emerging by an inevitable process from their free exercise. +The first famous exponent of this philosophy was Locke, in whom the +dominant conception is the indefeasibility of private rights, not the +pre-ordained harmony between private rights and public welfare. In the +great French writers who prepared the way for the Revolution, while +believing that they were the servants of an enlightened absolutism, +there is an almost equal emphasis upon the sanctity of rights and upon +the infallibility of the +<SPAN CLASS="pagenum">{<A NAME="P15"></A>15}</SPAN> +alchemy by which the pursuit of private +ends is transmuted into the attainment of public good. Though their +writings reveal the influence of the conception of society as a +self-adjusting mechanism, which afterwards became the most +characteristic note of the English individualism, what the French +Revolution burned into the mind of Europe was the former not the +latter. In England the idea of right had been negative and defensive, +a barrier to the encroachment of Governments. The French leapt to the +attack from trenches which the English had been content to defend, and +in France the idea became affirmative and militant, not a weapon of +defense, but a principle of social organization. The attempt to +refound society upon rights, and rights springing not from musty +charters, but from the very nature of man himself, was at once the +triumph and the limitation of the Revolution. It gave it the +enthusiasm and infectious power of religion. +</P> + +<P> +What happened in England might seem at first sight to have been +precisely the reverse. English practical men, whose thoughts were +pitched in a lower key, were a little shocked by the pomp and +brilliance of that tremendous creed. They had scanty sympathy with the +absolute affirmations of France. What captured their imagination was +not the right to liberty, which made no appeal to their commercial +instincts, but the expediency of liberty, which did; and when the +Revolution had revealed the explosive power of the idea of natural +right, they sought some less menacing formula. It had been offered +them first by Adam Smith and his precursors, who showed how the +mechanism of economic life +<SPAN CLASS="pagenum">{<A NAME="P16"></A>16}</SPAN> +converted "as with an invisible hand," +the exercise of individual rights into the instrument of public good. +Bentham, who despised metaphysical subtleties, and thought the +Declaration of the Rights of Man as absurd as any other dogmatic +religion, completed the new orientation by supplying the final +criterion of political institutions in the principle of Utility. +Henceforward emphasis was transferred from the right of the individual +to exercise his freedom as he pleased to the expediency of an +undisturbed exercise of freedom to society. +</P> + +<P> +The change is significant. It is the difference between the universal +and equal citizenship of France, with its five million peasant +proprietors, and the organized inequality of England established +solidly upon class traditions and class institutions; the descent from +hope to resignation, from the fire and passion of an age of illimitable +vistas to the monotonous beat of the factory engine, from Turgot and +Condorcet to the melancholy mathematical creed of Bentham and Ricardo +and James Mill. Mankind has, at least, this superiority over its +philosophers, that great movements spring from the heart and embody a +faith; not the nice adjustments of the hedonistic calculus. So in the +name of the rights of property France abolished in three years a great +mass of property rights which, under the old régime had robbed the +peasant of part of the produce of his labor, and the social +transformation survived a whole world of political changes. In England +the glad tidings of democracy were broken too discreetly to reach the +ears of the hind in the furrow or the shepherd on the hill; +<SPAN CLASS="pagenum">{<A NAME="P17"></A>17}</SPAN> +there +were political changes without a social transformation. The doctrine +of Utility, though trenchant in the sphere of politics, involved no +considerable interference with the fundamentals of the social fabric. +Its exponents were principally concerned with the removal of political +abuses and legal anomalies. They attacked sinecures and pensions and +the criminal code and the procedure of the law courts. But they +touched only the surface of social institutions. They thought it a +monstrous injustice that the citizen should pay one-tenth of his income +in taxation to an idle Government, but quite reasonable that he should +pay one-fifth of it in rent to an idle landlord. +</P> + +<P> +The difference, neverthelesss, was one of emphasis and expression, not +of principle. It mattered very little in practice whether private +property and unfettered economic freedom were stated, as in France, to +be natural rights, or whether, as in England, they were merely assumed +once for all to be expedient. In either case they were taken for +granted as the fundamentals upon which social organization was to be +based, and about which no further argument was admissible. Though +Bentham argued that rights were derived from utility, not from nature, +he did not push his analysis so far as to argue that any particular +right was relative to any particular function, and thus endorsed +indiscriminately rights which were not accompanied by service as well +as rights which were. While eschewing, in short, the phraseology of +natural rights, the English Utilitarians retained something not unlike +the substance of them. For they assumed that private property in +<SPAN CLASS="pagenum">{<A NAME="P18"></A>18}</SPAN> +land, and the private ownership of capital, were natural institutions, +and gave them, indeed, a new lease of life, by proving to their own +satisfaction that social well-being must result from their continued +exercise. Their negative was as important as their positive teaching. +It was a conductor which diverted the lightning. Behind their +political theory, behind the practical conduct, which as always, +continues to express theory long after it has been discredited in the +world of thought, lay the acceptance of absolute rights to property and +to economic freedom as the unquestioned center of social organization. +</P> + +<P> +The result of that attitude was momentous. The motive and inspiration +of the Liberal Movement of the eighteenth century had been the attack +on Privilege. But the creed which had exorcised the specter of +agrarian feudalism haunting village and <I>château</I> in France, was +impotent to disarm the new ogre of industrialism which was stretching +its limbs in the north of England. When, shorn of its splendors and +illusions, liberalism triumphed in England in 1832, it carried without +criticism into the new world of capitalist industry categories of +private property and freedom of contract which had been forged in the +simpler economic environment of the pre-industrial era. In England +these categories are being bent and twisted till they are no longer +recognizable, and will, in time, be made harmless. In America, where +necessity compelled the crystallization of principles in a +constitution, they have the rigidity of an iron jacket. The +magnificent formulæ in which a society of farmers +<SPAN CLASS="pagenum">{<A NAME="P19"></A>19}</SPAN> +and master +craftsmen enshrined its philosophy of freedom are in danger of becoming +fetters used by an Anglo-Saxon business aristocracy to bind insurgent +movements on the part of an immigrant and semi-servile proletariat. +</P> + +<BR><BR><BR> + +<A NAME="chap03"></A> + +<SPAN CLASS="pagenum">{<A NAME="P20"></A>20}</SPAN> + +<H3 ALIGN="center"> +III +</H3> + +<H3 ALIGN="center"> +THE ACQUISITIVE SOCIETY +</H3> + +<P> +This doctrine has been qualified in practice by particular limitations +to avert particular evils and to meet exceptional emergencies. But it +is limited in special cases precisely because its general validity is +regarded as beyond controversy, and, up to the eve of the present war, +it was the working faith of modern economic civilization. What it +implies is, that the foundation of society is found, not in functions, +but in rights; that rights are not deducible from the discharge of +functions, so that the acquisition of wealth and the enjoyment of +property are contingent upon the performances of services, but that the +individual enters the world equipped with rights to the free disposal +of his property and the pursuit of his economic self-interest, and that +these rights are anterior to, and independent of, any service which he +may render. True, the service of society will, in fact, it is assumed, +result from their exercise. But it is not the primary motive and +criterion of industry, but a secondary consequence, which emerges +incidentally through the exercise of rights, a consequence which is +attained, indeed, in practice, but which is attained without being +sought. It is not the end at which economic activity aims, or the +standard by which it is judged, but a by-product, as coal-tar is a +by-product of the +<SPAN CLASS="pagenum">{<A NAME="P21"></A>21}</SPAN> +manufacture of gas; whether that by-product +appears or not, it is not proposed that the rights themselves should be +abdicated. For they are regarded, not as a conditional trust, but as a +property, which may, indeed, give way to the special exigencies of +extraordinary emergencies, but which resumes its sway when the +emergency is over, and in normal times is above discussion. +</P> + +<P> +That conception is written large over the history of the nineteenth +century, both in England and in America. The doctrine which it +inherited was that property was held by an absolute right on an +individual basis, and to this fundamental it added another, which can +be traced in principle far back into history, but which grew to its +full stature only after the rise of capitalist industry, that societies +act both unfairly and unwisely when they limit opportunities of +economic enterprise. Hence every attempt to impose obligations as a +condition of the tenure of property or of the exercise of economic +activity has been met by uncompromising resistance. The story of the +struggle between humanitarian sentiment and the theory of property +transmitted from the eighteenth century is familiar. No one has +forgotten the opposition offered in the name of the rights of property +to factory legislation, to housing reform, to interference with the +adulteration of goods, even to the compulsory sanitation of private +houses. "May I not do what I like with my own?" was the answer to the +proposal to require a minimum standard of safety and sanitation from +the owners of mills and houses. Even to +<SPAN CLASS="pagenum">{<A NAME="P22"></A>22}</SPAN> +this day, while an +English urban landlord can cramp or distort the development of a whole +city by withholding land except at fancy prices, English municipalities +are without adequate powers of compulsory purchase, and must either pay +through the nose or see thousands of their members overcrowded. The +whole body of procedure by which they may acquire land, or indeed new +powers of any kind, has been carefully designed by lawyers to protect +owners of property against the possibility that their private rights +may be subordinated to the public interest, because their rights are +thought to be primary and absolute and public interests secondary and +contingent. +</P> + +<P> +No one needs to be reminded, again, of the influence of the same +doctrine in the sphere of taxation. Thus the income tax was excused as +a temporary measure, because the normal society was conceived to be one +in which the individual spent his whole income for himself and owed no +obligations to society on account of it. The death duties were +denounced as robbery, because they implied that the right to benefit by +inheritance was conditional upon a social sanction. The Budget of 1909 +created a storm, not because the taxation of land was heavy—in amount +the land-taxes were trifling—but because it was felt to involve the +doctrine that property is not an absolute right, but that it may +properly be accompanied by special obligations, a doctrine which, if +carried to its logical conclusion, would destroy its sanctity by making +ownership no longer absolute but conditional. +</P> + +<SPAN CLASS="pagenum">{<A NAME="P23"></A>23}</SPAN> + +<P> +Such an implication seems intolerable to an influential body of public +opinion, because it has been accustomed to regard the free disposal of +property and the unlimited exploitation of economic opportunities, as +rights which are absolute and unconditioned. On the whole, until +recently, this opinion had few antagonists who could not be ignored. +As a consequence the maintenance of property rights has not been +seriously threatened even in those cases in which it is evident that no +service is discharged, directly or indirectly, by their exercise. No +one supposes, that the owner of urban land, performs <I>qua</I> owner, any +function. He has a right of private taxation; that is all. But the +private ownership of urban land is as secure to-day as it was a century +ago; and Lord Hugh Cecil, in his interesting little book on +Conservatism, declares that whether private property is mischievous or +not, society cannot interfere with it, because to interfere with it is +theft, and theft is wicked. No one supposes that it is for the public +good that large areas of land should be used for parks and game. But +our country gentlemen are still settled heavily upon their villages and +still slay their thousands. No one can argue that a monopolist is +impelled by "an invisible hand" to serve the public interest. But over +a considerable field of industry competition, as the recent Report on +Trusts shows, has been replaced by combination, and combinations are +allowed the same unfettered freedom as individuals in the exploitation +of economic opportunities. No one really believes that the production +of coal depends upon the payment of +<SPAN CLASS="pagenum">{<A NAME="P24"></A>24}</SPAN> +mining royalties or that ships +will not go to and fro unless ship-owners can earn fifty per cent. upon +their capital. But coal mines, or rather the coal miner, still pay +royalties, and ship-owners still make fortunes and are made Peers. +</P> + +<P> +At the very moment when everybody is talking about the importance of +increasing the output of wealth, the last question, apparently, which +it occurs to any statesman to ask is why wealth should be squandered on +futile activities, and in expenditure which is either disproportionate +to service or made for no service at all. So inveterate, indeed, has +become the practice of payment in virtue of property rights, without +even the pretense of any service being rendered, that when, in a +national emergency, it is proposed to extract oil from the ground, the +Government actually proposes that every gallon shall pay a tax to +landowners who never even suspected its existence, and the ingenuous +proprietors are full of pained astonishment at any one questioning +whether the nation is under moral obligation to endow them further. +Such rights are, strictly speaking, privileges. For the definition of +a privilege is a right to which no corresponding function is attached. +</P> + +<P> +The enjoyment of property and the direction of industry are considered, +in short, to require no social justification, because they are regarded +as rights which stand by their own virtue, not functions to be judged +by the success with which they contribute to a social purpose. To-day +that doctrine, if intellectually discredited, is still the practical +foundation of social +<SPAN CLASS="pagenum">{<A NAME="P25"></A>25}</SPAN> +organization. How slowly it yields even to +the most insistent demonstration of its inadequacy is shown by the +attitude which the heads of the business world have adopted to the +restrictions imposed on economic activity during the war. The control +of railways, mines and shipping, the distribution of raw materials +through a public department instead of through competing merchants, the +regulation of prices, the attempts to check "profiteering"—the +detailed application of these measures may have been effective or +ineffective, wise or injudicious. It is evident, indeed, that some of +them have been foolish, like the restriction of imports when the world +has five years' destruction to repair, and that others, if sound in +conception, have been questionable in their execution. If they were +attacked on the ground that they obstruct the efficient performance of +function—if the leaders of industry came forward and said generally, +as some, to their honor, have:—"We accept your policy, but we will +improve its execution; we desire payment for service and service only +and will help the state to see that it pays for nothing else"—there +might be controversy as to the facts, but there could be none as to the +principle. +</P> + +<P> +In reality, however, the gravamen of the charges brought against these +restrictions appears generally to be precisely the opposite. They are +denounced by most of their critics not because they limit the +opportunity of service, but because they diminish the opportunity for +gain, not because they prevent the trader enriching the community, but +because they make it +<SPAN CLASS="pagenum">{<A NAME="P26"></A>26}</SPAN> +more difficult for him to enrich himself; +not, in short, because they have failed to convert economic activity +into a social function, but because they have come too near succeeding. +If the financial adviser to the Coal Controller may be trusted, the +shareholders in coal mines would appear to have done fairly well during +the war. But the proposal to limit their profits to 1/2 per ton is +described by Lord Gainford as "sheer robbery and confiscation." With +some honorable exceptions, what is demanded is that in the future as in +the past the directors of industry should be free to handle it as an +enterprise conducted for their own convenience or advancement, instead +of being compelled, as they have been partially compelled during the +war, to subordinate it to a social purpose. For to admit that the +criterion of commerce and industry is its success in discharging a +social purpose is at once to turn property and economic activity from +rights which are absolute into rights which are contingent and +derivative, because it is to affirm that they are relative to functions +and that they may justly be revoked when the functions are not +performed. It is, in short, to imply that property and economic +activity exist to promote the ends of society, whereas hitherto society +has been regarded in the world of business as existing to promote them. +To those who hold their position, not as functionaries, but by virtue +of their success in making industry contribute to their own wealth and +social influence, such a reversal of means and ends appears little less +than a revolution. For it means that they must justify before a social +tribunal +<SPAN CLASS="pagenum">{<A NAME="P27"></A>27}</SPAN> +rights which they have hitherto taken for granted as part +of an order which is above criticism. +</P> + +<P> +During the greater part of the nineteenth century the significance of +the opposition between the two principles of individual rights and +social functions was masked by the doctrine of the inevitable harmony +between private interests and public good. Competition, it was argued, +was an effective substitute for honesty. To-day that subsidiary +doctrine has fallen to pieces under criticism; few now would profess +adherence to the compound of economic optimism and moral bankruptcy +which led a nineteenth century economist to say: "Greed is held in +check by greed, and the desire for gain sets limits to itself." The +disposition to regard individual rights as the center and pivot of +society is still, however, the most powerful element in political +thought and the practical foundation of industrial organization. The +laborious refutation of the doctrine that private and public interests +are co-incident, and that man's self-love is God's Providence, which +was the excuse of the last century for its worship of economic egotism, +has achieved, in fact, surprisingly small results. Economic egotism is +still worshiped; and it is worshiped because that doctrine was not +really the center of the position. It was an outwork, not the citadel, +and now that the outwork has been captured, the citadel is still to win. +</P> + +<P> +What gives its special quality and character, its toughness and +cohesion, to the industrial system built up in the last century and a +half, is not its exploded theory of economic harmonies. It is the +doctrine that +<SPAN CLASS="pagenum">{<A NAME="P28"></A>28}</SPAN> +economic rights are anterior to, and independent of +economic functions, that they stand by their own virtue, and need +adduce no higher credentials. The practical result of it is that +economic rights remain, whether economic functions are performed or +not. They remain to-day in a more menacing form than in the age of +early industrialism. For those who control industry no longer compete +but combine, and the rivalry between property in capital and property +in land has long since ended. The basis of the New Conservatism +appears to be a determination so to organize society, both by political +and economic action, as to make it secure against every attempt to +extinguish payments which are made, not for service, but because the +owners possess a right to extract income without it. Hence the fusion +of the two traditional parties, the proposed "strengthening" of the +second chamber, the return to protection, the swift conversion of rival +industrialists to the advantages of monopoly, and the attempts to buy +off with concessions the more influential section of the working +classes. Revolutions, as a long and bitter experience reveals, are apt +to take their color from the régime which they overthrow. Is it any +wonder that the creed which affirms the absolute rights of property +should sometimes be met with a counter-affirmation of the absolute +rights of labor, less anti-social, indeed, and inhuman, but almost as +dogmatic, almost as intolerant and thoughtless as itself? +</P> + +<BR> + +<P> +A society which aimed at making the acquisition of wealth contingent +upon the discharge of social +<SPAN CLASS="pagenum">{<A NAME="P29"></A>29}</SPAN> +obligations, which sought to +proportion remuneration to service and denied it to those by whom no +service was performed, which inquired first not what men possess but +what they can make or create or achieve, might be called a Functional +Society, because in such a society the main subject of social emphasis +would be the performance of functions. But such a society does not +exist, even as a remote ideal, in the modern world, though something +like it has hung, an unrealized theory, before men's minds in the past. +Modern societies aim at protecting economic rights, while leaving +economic functions, except in moments of abnormal emergency, to fulfil +themselves. The motive which gives color and quality to their public +institutions, to their policy and political thought, is not the attempt +to secure the fulfilment of tasks undertaken for the public service, +but to increase the opportunities open to individuals of attaining the +objects which they conceive to be advantageous to themselves. If asked +the end or criterion of social organization, they would give an answer +reminiscent of the formula the greatest happiness of the greatest +number. But to say that the end of social institutions is happiness, +is to say that they have no common end at all. For happiness is +individual, and to make happiness the object of society is to resolve +society itself into the ambitions of numberless individuals, each +directed towards the attainment of some personal purpose. +</P> + +<P> +Such societies may be called Acquisitive Societies, because their whole +tendency and interest and preoccupation is to promote the acquisition +of wealth. The +<SPAN CLASS="pagenum">{<A NAME="P30"></A>30}</SPAN> +appeal of this conception must be powerful, for it +has laid the whole modern world under its spell. Since England first +revealed the possibilities of industrialism, it has gone from strength +to strength, and as industrial civilization invades countries hitherto +remote from it, as Russia and Japan and India and China are drawn into +its orbit, each decade sees a fresh extension of its influence. The +secret of its triumph is obvious. It is an invitation to men to use +the powers with which they have been endowed by nature or society, by +skill or energy or relentless egotism or mere good fortune, without +inquiring whether there is any principle by which their exercise should +be limited. It assumes the social organization which determines the +opportunities which different classes shall in fact possess, and +concentrates attention upon the right of those who possess or can +acquire power to make the fullest use of it for their own +self-advancement. By fixing men's minds, not upon the discharge of +social obligations, which restricts their energy, because it defines +the goal to which it should be directed, but upon the exercise of the +right to pursue their own self-interest, it offers unlimited scope for +the acquisition of riches, and therefore gives free play to one of the +most powerful of human instincts. To the strong it promises unfettered +freedom for the exercise of their strength; to the weak the hope that +they too one day may be strong. Before the eyes of both it suspends a +golden prize, which not all can attain, but for which each may strive, +the enchanting vision of infinite expansion. It assures men that there +are no ends other +<SPAN CLASS="pagenum">{<A NAME="P31"></A>31}</SPAN> +than their ends, no law other than their +desires, no limit other than that which they think advisable. Thus it +makes the individual the center of his own universe, and dissolves +moral principles into a choice of expediences. And it immensely +simplifies the problems of social life in complex communities. For it +relieves them of the necessity of discriminating between different +types of economic activity and different sources of wealth, between +enterprise and avarice, energy and unscrupulous greed, property which +is legitimate and property which is theft, the just enjoyment of the +fruits of labor and the idle parasitism of birth or fortune, because it +treats all economic activities as standing upon the same level, and +suggests that excess or defect, waste or superfluity, require no +conscious effort of the social will to avert them, but are corrected +almost automatically by the mechanical play of economic forces. +</P> + +<P> +Under the impulse of such ideas men do not become religious or wise or +artistic; for religion and wisdom and art imply the acceptance of +limitations. But they become powerful and rich. They inherit the +earth and change the face of nature, if they do not possess their own +souls; and they have that appearance of freedom which consists in the +absence of obstacles between opportunities for self-advancement and +those whom birth or wealth or talent or good fortune has placed in a +position to seize them. It is not difficult either for individuals or +for societies to achieve their object, if that object be sufficiently +limited and immediate, and if they are not distracted from its +<SPAN CLASS="pagenum">{<A NAME="P32"></A>32}</SPAN> +pursuit by other considerations. The temper which dedicates itself to +the cultivation of opportunities, and leaves obligations to take care +of themselves, is set upon an object which is at once simple and +practicable. The eighteenth century defined it. The twentieth century +has very largely attained it. Or, if it has not attained it, it has at +least grasped the possibilities of its attainment. The national output +of wealth per head of population is estimated to have been +approximately $200 in 1914. Unless mankind chooses to continue the +sacrifice of prosperity to the ambitions and terrors of nationalism, it +is possible that by the year 2000 it may be doubled. +</P> + +<BR><BR><BR> + +<A NAME="chap04"></A> + +<SPAN CLASS="pagenum">{<A NAME="P33"></A>33}</SPAN> + +<H3 ALIGN="center"> +IV +</H3> + +<H3 ALIGN="center"> +THE NEMESIS OF INDUSTRIALISM +</H3> + +<P> +Such happiness is not remote from achievement. In the course of +achieving it, however, the world has been confronted by a group of +unexpected consequences, which are the cause of its <I>malaise</I>, as the +obstruction of economic opportunity was the cause of social <I>malaise</I> +in the eighteenth century. And these consequences are not, as is often +suggested, accidental mal-adjustments, but flow naturally from its +dominant principle: so that there is a sense in which the cause of its +perplexity is not its failure, but the quality of its success, and its +light itself a kind of darkness. The will to economic power, if it is +sufficiently single-minded, brings riches. But if it is single-minded +it destroys the moral restraints which ought to condition the pursuit +of riches, and therefore also makes the pursuit of riches meaningless. +For what gives meaning to economic activity, as to any other activity +is, as we have said, the purpose to which it is directed. But the +faith upon which our economic civilization reposes, the faith that +riches are not a means but an end, implies that all economic activity +is equally estimable, whether it is subordinated to a social purpose or +not. Hence it divorces gain from service, and justifies rewards for +which no function is performed, or which are out of all proportion to +it. Wealth in modern societies is distributed according to +<SPAN CLASS="pagenum">{<A NAME="P34"></A>34}</SPAN> +opportunity; and while opportunity depends partly upon talent and +energy, it depends still more upon birth, social position, access to +education and inherited wealth; in a word, upon property. For talent +and energy can create opportunity. But property need only wait for it. +It is the sleeping partner who draws the dividends which the firm +produces, the residuary legatee who always claims his share in the +estate. +</P> + +<P> +Because rewards are divorced from services, so that what is prized most +is not riches obtained in return for labor but riches the economic +origin of which, being regarded as sordid, is concealed, two results +follow. The first is the creation of a class of pensioners upon +industry, who levy toll upon its product, but contribute nothing to its +increase, and who are not merely tolerated, but applauded and admired +and protected with assiduous care, as though the secret of prosperity +resided in them. They are admired because in the absence of any +principle of discrimination between incomes which are payment for +functions and incomes which are not, all incomes, merely because they +represent wealth, stand on the same level of appreciation, and are +estimated solely by their magnitude, so that in all societies which +have accepted industrialism there is an upper layer which claims the +enjoyment of social life, while it repudiates its responsibilities. +The <I>rentier</I> and his ways, how familiar they were in England before +the war! A public school and then club life in Oxford and Cambridge, +and then another club in town; London in June, when London is pleasant, +the moors in August, and pheasants in October, Cannes in +<SPAN CLASS="pagenum">{<A NAME="P35"></A>35}</SPAN> +December +and hunting in February and March; and a whole world of rising +bourgeoisie eager to imitate them, sedulous to make their expensive +watches keep time with this preposterous calendar! +</P> + +<P> +The second consequence is the degradation of those who labor, but who +do not by their labor command large rewards; that is of the great +majority of mankind. And this degradation follows inevitably from the +refusal of men to give the purpose of industry the first place in their +thought about it. When they do that, when their minds are set upon the +fact that the meaning of industry is the service of man, all who labor +appear to them honorable, because all who labor serve, and the +distinction which separates those who serve from those who merely spend +is so crucial and fundamental as to obliterate all minor distinctions +based on differences of income. But when the criterion of function is +forgotten, the only criterion which remains is that of wealth, and an +Acquisitive Society reverences the possession of wealth, as a +Functional Society would honor, even in the person of the humblest and +most laborious craftsman, the arts of creation. +</P> + +<P> +So wealth becomes the foundation of public esteem, and the mass of men +who labor, but who do not acquire wealth, are thought to be vulgar and +meaningless and insignificant compared with the few who acquire wealth +by good fortune, or by the skilful use of economic opportunities. They +come to be regarded, not as the ends for which alone it is worth while +to produce wealth at all, but as the instruments of its +<SPAN CLASS="pagenum">{<A NAME="P36"></A>36}</SPAN> +acquisition by a world that declines to be soiled by contact with what +is thought to be the dull and sordid business of labor. They are not +happy, for the reward of all but the very mean is not merely money, but +the esteem of their fellow-men, and they know they are not esteemed, as +soldiers, for example, are esteemed, though it is because they give +their lives to making civilization that there is a civilization which +it is worth while for soldiers to defend. They are not esteemed, +because the admiration of society is directed towards those who get, +not towards those who give; and though workmen give much they get +little. And the <I>rentiers</I> whom they support are not happy; for in +discarding the idea of function, which sets a limit to the acquisition +of riches, they have also discarded the principle which alone give +riches their meaning. Hence unless they can persuade themselves that +to be rich is in itself meritorious, they may bask in social +admiration, but they are unable to esteem themselves. For they have +abolished the principle which makes activity significant, and therefore +estimable. They are, indeed, more truly pitiable than some of those +who envy them. For like the spirits in the Inferno, they are punished +by the attainment of their desires. +</P> + +<P> +A society ruled by these notions is necessarily the victim of an +irrational inequality. To escape such inequality it is necessary to +recognize that there is some principle which ought to limit the gains +of particular classes and particular individuals, because gains drawn +from certain sources or exceeding certain amounts are illegitimate. +But such a limitation implies a +<SPAN CLASS="pagenum">{<A NAME="P37"></A>37}</SPAN> +standard of discrimination, which +is inconsistent with the assumption that each man has a right to what +he can get, irrespective of any service rendered for it. Thus +privilege, which was to have been exorcised by the gospel of 1789, +returns in a new guise, the creature no longer of unequal legal rights +thwarting the natural exercise of equal powers of hand and brain, but +of unequal powers springing from the exercise of equal rights in a +world where property and inherited wealth and the apparatus of class +institutions have made opportunities unequal. Inequality, again, leads +to the mis-direction of production. For, since the demand of one +income of £50,000 is as powerful a magnet as the demand of 500 incomes +of £100, it diverts energy from the creation of wealth to the +multiplication of luxuries, so that, for example, while one-tenth of +the people of England are overcrowded, a considerable part of them are +engaged, not in supplying that deficiency, but in making rich men's +hotels, luxurious yachts, and motorcars like that used by the Secretary +of State for War, "with an interior inlaid with silver in quartered +mahogany, and upholstered in fawn suede and morocco," which was +recently bought by a suburban capitalist, by way of encouraging useful +industries and rebuking public extravagance with an example of private +economy, for the trifling sum of $14,000. +</P> + +<P> +Thus part of the goods which are annually produced, and which are +called wealth, is, strictly speaking, waste, because it consists of +articles which, though reckoned as part of the income of the nation, +either should not have been produced until other articles had already +<SPAN CLASS="pagenum">{<A NAME="P38"></A>38}</SPAN> +been produced in sufficient abundance, or should not have been +produced at all. And some part of the population is employed in making +goods which no man can make with happiness, or indeed without loss of +self-respect, because he knows that they had much better not be made; +and that his life is wasted in making them. Everybody recognizes that +the army contractor who, in time of war, set several hundred navvies to +dig an artificial lake in his grounds, was not adding to, but +subtracting from, the wealth of the nation. But in time of peace many +hundred thousand workmen, if they are not digging ponds, are doing work +which is equally foolish and wasteful; though, in peace, as in war, +there is important work, which is waiting to be done, and which is +neglected. It is neglected because, while the effective demand of the +mass of men is only too small, there is a small class which wears +several men's clothes, eats several men's dinners, occupies several +families' houses, and lives several men's lives. As long as a minority +has so large an income that part of it, if spent at all, must be spent +on trivialities, so long will part of the human energy and mechanical +equipment of the nation be diverted from serious work, which enriches +it, to making trivialities, which impoverishes it, since they can only +be made at the cost of not making other things. And if the peers and +millionaires who are now preaching the duty of production to miners and +dock laborers desire that more wealth, not more waste, should be +produced, the simplest way in which they can achieve their aim is to +transfer to the public their whole incomes over (say) $5,000 a year, in +order that it may +<SPAN CLASS="pagenum">{<A NAME="P39"></A>39}</SPAN> +be spent in setting to work, not gardeners, +chauffeurs, domestic servants and shopkeepers in the West End of +London, but builders, mechanics and teachers. +</P> + +<P> +So to those who clamor, as many now do, "Produce! Produce!" one simple +question may be addressed:—"Produce what?" Food, clothing, +house-room, art, knowledge? By all means! But if the nation is +scantily furnished with these things had it not better stop producing a +good many others which fill shop windows in Regent Street? If it +desires to re-equip its industries with machinery and its railways with +wagons, had it not better refrain from holding exhibitions designed to +encourage rich men to re-equip themselves with motor-cars? What can be +more childish than to urge the necessity that productive power should +be increased, if part of the productive power which exists already is +misapplied? Is not <I>less</I> production of futilities as important as, +indeed a condition of, <I>more</I> production of things of moment? Would +not "Spend less on private luxuries" be as wise a cry as "produce +more"? Yet this result of inequality, again, is a phenomenon which +cannot be prevented, or checked, or even recognized by a society which +excludes the idea of purpose from its social arrangements and +industrial activity. For to recognize it is to admit that there is a +principle superior to the mechanical play of economic forces, which +ought to determine the relative importance of different occupations, +and thus to abandon the view that all riches, however composed, are an +end, and that all economic activity is equally justifiable. +</P> + +<SPAN CLASS="pagenum">{<A NAME="P40"></A>40}</SPAN> + +<P> +The rejection of the idea of purpose involves another consequence which +every one laments, but which no one can prevent, except by abandoning +the belief that the free exercise of rights is the main interest of +society and the discharge of obligations a secondary and incidental +consequence which may be left to take care of itself. It is that +social life is turned into a scene of fierce antagonisms and that a +considerable part of industry is carried on in the intervals of a +disguised social war. The idea that industrial peace can be secured +merely by the exercise of tact and forbearance is based on the idea +that there is a fundamental identity of interest between the different +groups engaged in it, which is occasionally interrupted by regrettable +misunderstandings. Both the one idea and the other are an illusion. +The disputes which matter are not caused by a misunderstanding of +identity of interests, but by a better understanding of diversity of +interests. Though a formal declaration of war is an episode, the +conditions which issue in a declaration of war are permanent; and what +makes them permanent is the conception of industry which also makes +inequality and functionless incomes permanent. It is the denial that +industry has any end or purpose other than the satisfaction of those +engaged in it. +</P> + +<P> +That motive produces industrial warfare, not as a regrettable incident, +but as an inevitable result. It produces industrial war, because its +teaching is that each individual or group has a right to what they can +get, and denies that there is any principle, other than the mechanism +of the market, which determines what +<SPAN CLASS="pagenum">{<A NAME="P41"></A>41}</SPAN> +they ought to get. For, +since the income available for distribution is limited, and since, +therefore, when certain limits have been passed, what one group gains +another group must lose, it is evident that if the relative incomes of +different groups are not to be determined by their functions, there is +no method other than mutual self-assertion which is left to determine +them. Self-interest, indeed, may cause them to refrain from using +their full strength to enforce their claims, and, in so far as this +happens, peace is secured in industry, as men have attempted to secure +it in international affairs, by a balance of power. But the +maintenance of such a peace is contingent upon the estimate of the +parties to it that they have more to lose than to gain by an overt +struggle, and is not the result of their acceptance of any standard of +remuneration as an equitable settlement of their claims. Hence it is +precarious, insincere and short. It is without finality, because there +can be no finality in the mere addition of increments of income, any +more than in the gratification of any other desire for material goods. +When demands are conceded the old struggle recommences upon a new +level, and will always recommence as long as men seek to end it merely +by increasing remuneration, not by finding a principle upon which all +remuneration, whether large or small, should be based. +</P> + +<P> +Such a principle is offered by the idea of function, because its +application would eliminate the surpluses which are the subject of +contention, and would make it evident that remuneration is based upon +service, +<SPAN CLASS="pagenum">{<A NAME="P42"></A>42}</SPAN> +not upon chance or privilege or the power to use +opportunities to drive a hard bargain. But the idea of function is +incompatible with the doctrine that every person and organization have +an unlimited right to exploit their economic opportunities as fully as +they please, which is the working faith of modern industry; and, since +it is not accepted, men resign themselves to the settlement of the +issue by force, or propose that the State should supersede the force of +private associations by the use of its force, as though the absence of +a principle could be compensated by a new kind of machinery. Yet all +the time the true cause of industrial warfare is as simple as the true +cause of international warfare. It is that if men recognize no law +superior to their desires, then they must fight when their desires +collide. For though groups or nations which are at issue with each +other may be willing to submit to a principle which is superior to them +both, there is no reason why they should submit to each other. +</P> + +<P> +Hence the idea, which is popular with rich men, that industrial +disputes would disappear if only the output of wealth were doubled, and +every one were twice as well off, not only is refuted by all practical +experience, but is in its very nature founded upon an illusion. For +the question is one not of amounts but of proportions; and men will +fight to be paid $120 a week, instead of $80, as readily as they will +fight to be paid $20 instead of $16, as long as there is no reason why +they should be paid $80 instead of $120, and as long as other men who +do not work are paid anything +<SPAN CLASS="pagenum">{<A NAME="P43"></A>43}</SPAN> +at all. If miners demanded higher +wages when every superfluous charge upon coal-getting had been +eliminated, there would be a principle with which to meet their claim, +the principle that one group of workers ought not to encroach upon the +livelihood of others. But as long as mineral owners extract royalties, +and exceptionally productive mines pay thirty per cent. to absentee +shareholders, there is no valid answer to a demand for higher wages. +For if the community pays anything at all to those who do not work, it +can afford to pay more to those who do. The naïve complaint, that +workmen are never satisfied, is, therefore, strictly true. It is true, +not only of workmen, but of all classes in a society which conducts its +affairs on the principle that wealth, instead of being proportioned to +function, belongs to those who can get it. They are never satisfied, +nor can they be satisfied. For as long as they make that principle the +guide of their individual lives and of their social order, nothing +short of infinity could bring them satisfaction. +</P> + +<BR> + +<P> +So here, again, the prevalent insistence upon rights, and prevalent +neglect of functions, brings men into a vicious circle which they +cannot escape, without escaping from the false philosophy which +dominates them. But it does something more. It makes that philosophy +itself seem plausible and exhilarating, and a rule not only for +industry, in which it had its birth, but for politics and culture and +religion and the whole compass of social life. The possibility that +one aspect of human life may be so exaggerated as to overshadow, +<SPAN CLASS="pagenum">{<A NAME="P44"></A>44}</SPAN> +and in time to atrophy, every other, has been made familiar to +Englishmen by the example of "Prussian militarism." Militarism is the +characteristic, not of an army, but of a society. Its essence is not +any particular quality or scale of military preparation, but a state of +mind, which, in its concentration on one particular element in social +life, ends finally by exalting it until it becomes the arbiter of all +the rest. The purpose for which military forces exist is forgotten. +They are thought to stand by their own right and to need no +justification. Instead of being regarded as an instrument which is +necessary in an imperfect world, they are elevated into an object of +superstitious veneration, as though the world would be a poor insipid +place without them, so that political institutions and social +arrangements and intellect and morality and religion are crushed into a +mold made to fit one activity, which in a sane society is a subordinate +activity, like the police, or the maintenance of prisons, or the +cleansing of sewers, but which in a militarist state is a kind of +mystical epitome of society itself. +</P> + +<P> +Militarism, as Englishmen see plainly enough, is fetich worship. It is +the prostration of men's souls before, and the laceration of their +bodies to appease, an idol. What they do not see is that their +reverence for economic activity and industry and what is called +business is also fetich worship, and that in their devotion to that +idol they torture themselves as needlessly and indulge in the same +meaningless antics as the Prussians did in their worship of militarism. +For what the military tradition and spirit have done for Prussia, +<SPAN CLASS="pagenum">{<A NAME="P45"></A>45}</SPAN> +with the result of creating militarism, the commercial tradition and +spirit have done for England, with the result of creating +industrialism. Industrialism is no more a necessary characteristic of +an economically developed society than militarism is a necessary +characteristic of a nation which maintains military forces. It is no +more the result of applying science to industry than militarism is the +result of the application of science to war, and the idea that it is +something inevitable in a community which uses coal and iron and +machinery, so far from being the truth, is itself a product of the +perversion of mind which industrialism produces. Men may use what +mechanical instruments they please and be none the worse for their use. +What kills their souls is when they allow their instruments to use +<I>them</I>. The essence of industrialism, in short, is not any particular +method of industry, but a particular estimate of the importance of +industry, which results in it being thought the only thing that is +important at all, so that it is elevated from the subordinate place +which it should occupy among human interests and activities into being +the standard by which all other interests and activities are judged. +</P> + +<P> +When a Cabinet Minister declares that the greatness of this country +depends upon the volume of its exports, so that France, with exports +comparatively little, and Elizabethan England, which exported next to +nothing, are presumably to be pitied as altogether inferior +civilizations, that is Industrialism. It is the confusion of one minor +department of life with the +<SPAN CLASS="pagenum">{<A NAME="P46"></A>46}</SPAN> +whole of life. When manufacturers cry +and cut themselves with knives, because it is proposed that boys and +girls of fourteen shall attend school for eight hours a week, and the +President of the Board of Education is so gravely impressed by their +apprehensions, that he at once allows the hours to be reduced to seven, +that is Industrialism. It is fetich worship. When the Government +obtains money for a war, which costs $28,000,000 a day, by closing the +Museums, which cost $80,000 a year, that is Industrialism. It is a +contempt for all interests which do not contribute obviously to +economic activity. When the Press clamors that the one thing needed to +make this island an Arcadia is productivity, and more productivity, and +yet more productivity, that is Industrialism. It is the confusion of +means with ends. +</P> + +<P> +Men will always confuse means with ends if they are without any clear +conception that it is the ends, not the means, which matter—if they +allow their minds to slip from the fact that it is the social purpose +of industry which gives it meaning and makes it worth while to carry it +on at all. And when they do that, they will turn their whole world +upside down, because they do not see the poles upon which it ought to +move. So when, like England, they are thoroughly industrialized, they +behave like Germany, which was thoroughly militarized. They talk as +though man existed for industry, instead of industry existing for man, +as the Prussians talked of man existing for war. They resent any +activity which is not colored by the predominant interest, because it +seems a rival to it. So they +<SPAN CLASS="pagenum">{<A NAME="P47"></A>47}</SPAN> +destroy religion and art and +morality, which cannot exist unless they are disinterested; and having +destroyed these, which are the end, for the sake of industry, which is +a means, they make their industry itself what they make their cities, a +desert of unnatural dreariness, which only forgetfulness can make +endurable, and which only excitement can enable them to forget. +</P> + +<P> +Torn by suspicions and recriminations, avid of power, and oblivious of +duties, desiring peace, but unable to "seek peace and ensue it," +because unwilling to surrender the creed which is the cause of war, to +what can one compare such a society but to the international world, +which also has been called a society and which also is social in +nothing but name? And the comparison is more than a play upon words. +It is an analogy which has its roots in the facts of history. It is +not a chance that the last two centuries, which saw the new growth of a +new system of industry, saw also the growth of the system of +international politics which came to a climax in the period from 1870 +to 1914. Both the one and the other are the expression of the same +spirit and move in obedience to similar laws. The essence of the +former was the repudiation of any authority superior to the individual +reason. It left men free to follow their own interests or ambitions or +appetites, untrammeled by subordination to any common center of +allegiance. The essence of the latter was the repudiation of any +authority superior to the sovereign state, which again was conceived as +a compact self-contained unit—a unit +<SPAN CLASS="pagenum">{<A NAME="P48"></A>48}</SPAN> +which would lose its very +essence if it lost its independence of other states. Just as the one +emancipated economic activity from a mesh of antiquated traditions, so +the other emancipated nations from arbitrary subordination to alien +races or Governments, and turned them into nationalities with a right +to work out their own destiny. +</P> + +<P> +Nationalism is, in fact, the counterpart among nations of what +individualism is within them. It has similar origins and tendencies, +similar triumphs and defects. For nationalism, like individualism, +lays its emphasis on the rights of separate units, not on their +subordination to common obligations, though its units are races or +nations, not individual men. Like individualism it appeals to the +self-assertive instincts, to which it promises opportunities of +unlimited expansion. Like individualism it is a force of immense +explosive power, the just claims of which must be conceded before it is +possible to invoke any alternative principle to control its operations. +For one cannot impose a supernational authority upon irritated or +discontented or oppressed nationalities any more than one can +subordinate economic motives to the control of society, until society +has recognized that there is a sphere which they may legitimately +occupy. And, like individualism, if pushed to its logical conclusion, +it is self-destructive. For as nationalism, in its brilliant youth, +begins as a claim that nations, because they are spiritual beings, +shall determine themselves, and passes too often into a claim that they +shall dominate others, so individualism begins by asserting the right +of men to +<SPAN CLASS="pagenum">{<A NAME="P49"></A>49}</SPAN> +make of their own lives what they can, and ends by +condoning the subjection of the majority of men to the few whom good +fortune or special opportunity or privilege have enabled most +successfully to use their rights. They rose together. It is probable +that, if ever they decline, they will decline together. For life +cannot be cut in compartments. In the long run the world reaps in war +what it sows in peace. And to expect that international rivalry can be +exorcised as long as the industrial order within each nation is such as +to give success to those whose existence is a struggle for +self-aggrandizement is a dream which has not even the merit of being +beautiful. +</P> + +<P> +So the perversion of nationalism is imperialism, as the perversion of +individualism is industrialism. And the perversion comes, not through +any flaw or vice in human nature, but by the force of the idea, because +the principle is defective and reveals its defects as it reveals its +power. For it asserts that the rights of nations and individuals are +absolute, which is false, instead of asserting that they are absolute +in their own sphere, but that their sphere itself is contingent upon +the part which they play in the community of nations and individuals, +which is true. Thus it constrains them to a career of indefinite +expansion, in which they devour continents and oceans, law, morality +and religion, and last of all their own souls, in an attempt to attain +infinity by the addition to themselves of all that is finite. In the +meantime their rivals, and their subjects, and they themselves are +conscious of the danger of opposing forces, and seek to +<SPAN CLASS="pagenum">{<A NAME="P50"></A>50}</SPAN> +purchase +security and to avoid a collision by organizing a balance of power. +But the balance, whether in international politics or in industry, is +unstable, because it reposes not on the common recognition of a +principle by which the claims of nations and individuals are limited, +but on an attempt to find an equipoise which may avoid a conflict +without adjuring the assertion of unlimited claims. No such equipoise +can be found, because, in a world where the possibilities of increasing +military or industrial power are illimitable, no such equipoise can +exist. +</P> + +<P> +Thus, as long as men move on this plane, there is no solution. They +can obtain peace only by surrendering the claim to the unfettered +exercise of their rights, which is the cause of war. What we have been +witnessing, in short, during the past five years, both in international +affairs and in industry, is the breakdown of the organization of +society on the basis of rights divorced from obligations. Sooner or +later the collapse was inevitable, because the basis was too narrow. +For a right is simply a power which is secured by legal sanctions, "a +capacity," as the lawyers define it, "residing in one man, of +controlling, with the assistance of the State, the action of others," +and a right should not be absolute for the same reason that a power +should not be absolute. No doubt it is better that individuals should +have absolute rights than that the State or the Government should have +them; and it was the reaction against the abuses of absolute power by +the State which led in the eighteenth century to the declaration of the +absolute rights of individuals. +<SPAN CLASS="pagenum">{<A NAME="P51"></A>51}</SPAN> +The most obvious defense against +the assertion of one extreme was the assertion of the other. Because +Governments and the relics of feudalism had encroached upon the +property of individuals it was affirmed that the right of property was +absolute; because they had strangled enterprise, it was affirmed that +every man had a natural right to conduct his business as he pleased. +But, in reality, both the one assertion and the other are false, and, +if applied to practice, must lead to disaster. The State has no +absolute rights; they are limited by its commission. The individual +has no absolute rights; they are relative to the function which he +performs in the community of which he is a member, because, unless they +are so limited, the consequences must be something in the nature of +private war. All rights, in short, are conditional and derivative, +because all power should be conditional and derivative. They are +derived from the end or purpose of the society in which they exist. +They are conditional on being used to contribute to the attainment of +that end, not to thwart it. And this means in practice that, if +society is to be healthy, men must regard themselves not as the owners +of rights, but as trustees for the discharge of functions and the +instruments of a social purpose. +</P> + +<BR><BR><BR> + +<A NAME="chap05"></A> + +<SPAN CLASS="pagenum">{<A NAME="P52"></A>52}</SPAN> + +<H3 ALIGN="center"> +V +</H3> + +<H3 ALIGN="center"> +PROPERTY AND CREATIVE WORK +</H3> + +<P> +The application of the principle that society should be organized upon +the basis of functions, is not recondite, but simple and direct. It +offers in the first place, a standard for discriminating between those +types of private property which are legitimate and those which are not. +During the last century and a half, political thought has oscillated +between two conceptions of property, both of which, in their different +ways, are extravagant. On the one hand, the practical foundation of +social organization has been the doctrine that the particular forms of +private property which exist at any moment are a thing sacred and +inviolable, that anything may properly become the object of property +rights, and that, when it does, the title to it is absolute and +unconditioned. The modern industrial system took shape in an age when +this theory of property was triumphant. The American Constitution and +the French Declaration of the Rights of Man both treated property as +one of the fundamental rights which Governments exist to protect. The +English Revolution of 1688, undogmatic and reticent though it was, had +in effect done the same. The great individualists from Locke to +Turgot, Adam Smith and Bentham all repeated, in different language, a +similar conception. Though what gave the Revolution its +<SPAN CLASS="pagenum">{<A NAME="P53"></A>53}</SPAN> +diabolical character in the eyes of the English upper classes was its +treatment of property, the dogma of the sanctity of private property +was maintained as tenaciously by French Jacobins as by English Tories; +and the theory that property is an absolute, which is held by many +modern Conservatives, is identical, if only they knew it, with that not +only of the men of 1789, but of the Convention itself. +</P> + +<P> +On the other hand, the attack has been almost as undiscriminating as +the defense. "Private property" has been the central position against +which the social movement of the last hundred years has directed its +forces. The criticism of it has ranged from an imaginative communism +in the most elementary and personal of necessaries, to prosaic and +partially realized proposals to transfer certain kinds of property from +private to public ownership, or to limit their exploitation by +restrictions imposed by the State. But, however varying in emphasis +and in method, the general note of what may conveniently be called the +Socialist criticism of property is what the word Socialism itself +implies. Its essence is the statement that the economic evils of +society are primarily due to the unregulated operation, under modern +conditions of industrial organization, of the institution of private +property. +</P> + +<P> +The divergence of opinion is natural, since in most discussions of +property the opposing theorists have usually been discussing different +things. Property is the most ambiguous of categories. It covers a +multitude of rights which have nothing in common except that they are +exercised by persons and enforced by the State. +<SPAN CLASS="pagenum">{<A NAME="P54"></A>54}</SPAN> +Apart from these +formal characteristics, they vary indefinitely in economic character, +in social effect, and in moral justification. They may be conditional +like the grant of patent rights, or absolute like the ownership of +ground rents, terminable like copyright, or permanent like a freehold, +as comprehensive as sovereignty or as restricted as an easement, as +intimate and personal as the ownership of clothes and books, or as +remote and intangible as shares in a gold mine or rubber plantation. +It is idle, therefore, to present a case for or against private +property without specifying the particular forms of property to which +reference is made, and the journalist who says that "private property +is the foundation of civilization" agrees with Proudhon, who said it +was theft, in this respect at least that, without further definition, +the words of both are meaningless. Arguments which support or demolish +certain kinds of property may have no application to others; +considerations which are conclusive in one stage of economic +organization may be almost irrelevant in the next. The course of +wisdom is neither to attack private property in general nor to defend +it in general; for things are not similar in quality, merely because +they are identical in name. It is to discriminate between the various +concrete embodiments of what, in itself, is, after all, little more +than an abstraction. +</P> + +<P> +The origin and development of different kinds of proprietary rights is +not material to this discussion. Whatever may have been the historical +process by which they have been established and recognized, the +<SPAN CLASS="pagenum">{<A NAME="P55"></A>55}</SPAN> +<I>rationale</I> of private property traditional in England is that which +sees in it the security that each man will reap where he has sown. "If +I despair of enjoying the fruits of labor," said Bentham, repeating +what were in all essentials the arguments of Locke, "I shall only live +from day to day; I shall not undertake labors which will only benefit +my enemies." Property, it is argued, is a moral right, and not merely +a legal right, because it insures that the producer will not be +deprived by violence of the result of his efforts. The period from +which that doctrine was inherited differed from our own in three +obvious, but significant, respects. Property in land and in the simple +capital used in most industries was widely distributed. Before the +rise of capitalist agriculture and capitalist industry, the ownership, +or at any rate the secure and effective occupation, of land and tools +by those who used them, was a condition precedent to effective work in +the field or in the workshop. The forces which threatened property +were the fiscal policy of Governments and in some countries, for +example France, the decaying relics of feudalism. The interference +both of the one and of the other involved the sacrifice of those who +carried on useful labor to those who did not. To resist them was to +protect not only property but industry, which was indissolubly +connected with it. Too often, indeed, resistance was ineffective. +Accustomed to the misery of the rural proprietor in France, Voltaire +remarked with astonishment that in England the peasant may be rich, and +"does not fear to increase the number of his beasts or to cover his +roof with tiles." And +<SPAN CLASS="pagenum">{<A NAME="P56"></A>56}</SPAN> +the English Parliamentarians and the French +philosophers who made the inviolability of property rights the center +of their political theory, when they defended those who owned, were +incidentally, if sometimes unintentionally, defending those who +labored. They were protecting the yeoman or the master craftsman or +the merchant from seeing the fruits of his toil squandered by the +hangers-on at St. James or the courtly parasites of Versailles. +</P> + +<P> +In such circumstances the doctrine which found the justification of +private property in the fact that it enabled the industrious man to +reap where he had sown, was not a paradox, but, as far as the mass of +the population was concerned, almost a truism. Property was defended +as the most sacred of rights. But it was defended as a right which was +not only widely exercised, but which was indispensable to the +performance of the active function of providing food and clothing. For +it consisted predominantly of one of two types, land or tools which +were used by the owner for the purpose of production, and personal +possessions which were the necessities or amenities of civilized +existence. The former had its <I>rationale</I> in the fact that the land of +the peasant or the tools of the craftsman were the condition of his +rendering the economic services which society required; the latter +because furniture and clothes are indispensable to a life of decency +and comfort. The proprietary rights—and, of course, they were +numerous—which had their source, not in work, but in predatory force, +were protected from criticism by the wide distribution of some kind +<SPAN CLASS="pagenum">{<A NAME="P57"></A>57}</SPAN> +of property among the mass of the population, and in England, at +least, the cruder of them were gradually whittled down. When property +in land and what simple capital existed were generally diffused among +all classes of society, when, in most parts of England, the typical +workman was not a laborer but a peasant or small master, who could +point to the strips which he had plowed or the cloth which he had +woven, when the greater part of the wealth passing at death consisted +of land, household furniture and a stock in trade which was hardly +distinguishable from it, the moral justification of the title to +property was self-evident. It was obviously, what theorists said that +it was, and plain men knew it to be, the labor spent in producing, +acquiring and administering it. +</P> + +<P> +Such property was not a burden upon society, but a condition of its +health and efficiency, and indeed, of its continued existence. To +protect it was to maintain the organization through which public +necessities were supplied. If, as in Tudor England, the peasant was +evicted from his holding to make room for sheep, or crushed, as in +eighteenth century France, by arbitrary taxation and seigneurial dues, +land went out of cultivation and the whole community was short of food. +If the tools of the carpenter or smith were seized, plows were not +repaired or horses shod. Hence, before the rise of a commercial +civilization, it was the mark of statesmanship, alike in the England of +the Tudors and in the France of Henry IV, to cherish the small +property-owner even to the point of offending the great. Popular +sentiment idealized the +<SPAN CLASS="pagenum">{<A NAME="P58"></A>58}</SPAN> +yeoman—"the Joseph of the country who +keeps the poor from starving"—not merely because he owned property, +but because he worked on it, denounced that "bringing of the livings of +many into the hands of one," which capitalist societies regard with +equanimity as an inevitable, and, apparently, a laudable result of +economic development, cursed the usurer who took advantage of his +neighbor's necessities to live without labor, was shocked by the +callous indifference to public welfare shown by those who "not having +before their eyes either God or the profit and advantage of the realm, +have enclosed with hedges and dykes towns and hamlets," and was +sufficiently powerful to compel Governments to intervene to prevent the +laying of field to field, and the engrossing of looms—to set limits, +in short, to the scale to which property might grow. +</P> + +<P> +When Bacon, who commended Henry VII for protecting the tenant right of +the small farmer, and pleaded in the House of Commons for more drastic +land legislation, wrote "Wealth is like muck. It is not good but if it +be spread," he was expressing in an epigram what was the commonplace of +every writer on politics from Fortescue at the end of the fifteenth +century to Harrington in the middle of the seventeenth. The modern +conservative, who is inclined to take <I>au pied de la lettre</I> the +vigorous argument in which Lord Hugh Cecil denounces the doctrine that +the maintenance of proprietary rights ought to be contingent upon the +use to which they are put, may be reminded that Lord Hugh's own theory +is of a kind to make his ancestors turn in their graves. Of the two +members of the +<SPAN CLASS="pagenum">{<A NAME="P59"></A>59}</SPAN> +family who achieved distinction before the +nineteenth century, the elder advised the Crown to prevent landlords +evicting tenants, and actually proposed to fix a pecuniary maximum to +the property which different classes might possess, while the younger +attacked enclosing in Parliament, and carried legislation compelling +landlords to build cottages, to let them with small holdings, and to +plow up pasture. +</P> + +<P> +William and Robert Cecil were sagacious and responsible men, and their +view that the protection of property should be accompanied by the +enforcement of obligations upon its owners was shared by most of their +contemporaries. The idea that the institution of private property +involves the right of the owner to use it, or refrain from using it, in +such a way as he may please, and that its principal significance is to +supply him with an income, irrespective of any duties which he may +discharge, would not have been understood by most public men of that +age, and, if understood, would have been repudiated with indignation by +the more reputable among them. They found the meaning of property in +the public purposes to which it contributed, whether they were the +production of food, as among the peasantry, or the management of public +affairs, as among the gentry, and hesitated neither to maintain those +kinds of property which met these obligations nor to repress those uses +of it which appeared likely to conflict with them. Property was to be +an aid to creative work, not an alternative to it. The patentee was +secured protection for a new invention, in order to secure him the +fruits of his own brain, but the monopolist who grew +<SPAN CLASS="pagenum">{<A NAME="P60"></A>60}</SPAN> +fat on the +industry of others was to be put down. The law of the village bound +the peasant to use his land, not as he himself might find most +profitable, but to grow the corn the village needed. Long after +political changes had made direct interference impracticable, even the +higher ranks of English landowners continued to discharge, however +capriciously and tyrannically, duties which were vaguely felt to be the +contribution which they made to the public service in virtue of their +estates. When as in France, the obligations of ownership were +repudiated almost as completely as they have been by the owner of +to-day, nemesis came in an onslaught upon the position of a <I>noblesse</I> +which had retained its rights and abdicated its functions. Property +reposed, in short, not merely upon convenience, or the appetite for +gain, but on a moral principle. It was protected not only for the sake +of those who owned, but for the sake of those who worked and of those +for whom their work provided. It was protected, because, without +security for property, wealth could not be produced or the business of +society carried on. +</P> + +<BR> + +<P> +Whatever the future may contain, the past has shown no more excellent +social order than that in which the mass of the people were the masters +of the holdings which they plowed and of the tools with which they +worked, and could boast, with the English freeholder, that "it is a +quietness to a man's mind to live upon his own and to know his heir +certain." With this conception of property and its practical +expression in social institutions those who urge that society should be +<SPAN CLASS="pagenum">{<A NAME="P61"></A>61}</SPAN> +organized on the basis of function have no quarrel. It is in +agreement with their own doctrine, since it justifies property by +reference to the services which it enables its owner to perform. All +that they need ask is that it should be carried to its logical +conclusion. +</P> + +<P> +For the argument has evidently more than one edge. If it justifies +certain types of property, it condemns others; and in the conditions of +modern industrial civilization, what it justifies is less than what it +condemns. The truth is, indeed, that this theory of property and the +institutions in which it is embodied have survived into an age in which +the whole structure of society is radically different from that in +which it was formulated, and which made it a valid argument, if not for +all, at least for the most common and characteristic kinds of property. +It is not merely that the ownership of any substantial share in the +national wealth is concentrated to-day in the hands of a few hundred +thousand families, and that at the end of an age which began with an +affirmation of the rights of property, proprietary rights are, in fact, +far from being widely distributed. Nor is it merely that what makes +property insecure to-day is not the arbitrary taxation of +unconstitutional monarchies or the privileges of an idle <I>noblesse</I>, +but the insatiable expansion and aggregation of property itself, which +menaces with absorption all property less than the greatest, the small +master, the little shopkeeper, the country bank, and has turned the +mass of mankind into a proletariat working under the agents and for the +profit of those who own. +</P> + +<P> +The characteristic fact, which differentiates most +<SPAN CLASS="pagenum">{<A NAME="P62"></A>62}</SPAN> +modern property +from that of the pre-industrial age, and which turns against it the +very reasoning by which formerly it was supported, is that in modern +economic conditions ownership is not active, but passive, that to most +of those who own property to-day it is not a means of work but an +instrument for the acquisition of gain or the exercise of power, and +that there is no guarantee that gain bears any relation to service, or +power to responsibility. For property which can be regarded as a +condition of the performance of function, like the tools of the +craftsman, or the holding of the peasant, or the personal possessions +which contribute to a life of health and efficiency, forms an +insignificant proportion, as far as its value is concerned, of the +property rights existing at present. In modern industrial societies +the great mass of property consists, as the annual review of wealth +passing at death reveals, neither of personal acquisitions such as +household furniture, nor of the owner's stock-in-trade, but of rights +of various kinds, such as royalties, ground-rents, and, above all, of +course shares in industrial undertakings which yield an income +irrespective of any personal service rendered by their owners. +Ownership and use are normally divorced. The greater part of modern +property has been attenuated to a pecuniary lien or bond on the product +of industry which carries with it a right to payment, but which is +normally valued precisely because it relieves the owner from any +obligation to perform a positive or constructive function. +</P> + +<P> +Such property may be called passive property, or property for +acquisition, for exploitation, or for power, +<SPAN CLASS="pagenum">{<A NAME="P63"></A>63}</SPAN> +to distinguish it +from the property which is actively used by its owner for the conduct +of his profession or the upkeep of his household. To the lawyer the +first is, of course, as fully property as the second. It is +questionable, however, whether economists shall call it "Property" at +all, and not rather, as Mr. Hobson has suggested, "Improperty," since +it is not identical with the rights which secure the owner the produce +of his toil, but is opposite of them. A classification of proprietary +rights based upon this difference would be instructive. If they were +arranged according to the closeness with which they approximate to one +or other of these two extremes, it would be found that they were spread +along a line stretching from property which is obviously the payment +for, and condition of, personal services, to property which is merely a +right to payment from the services rendered by others, in fact a +private tax. The rough order which would emerge, if all details and +qualification were omitted, might be something as follows:— +</P> + +<P> +1. Property in payments made for personal services. +</P> + +<P> +2. Property in personal possessions necessary to health and comfort. +</P> + +<P> +3. Property in land and tools used by their owners. +</P> + +<P> +4. Property in copyright and patent rights owned by authors and +inventors. +</P> + +<P> +5. Property in pure interest, including much agricultural rent. +</P> + +<P> +6. Property in profits of luck and good fortune: "quasi-rents." +</P> + +<P> +7. Property in monopoly profits. +</P> + +<SPAN CLASS="pagenum">{<A NAME="P64"></A>64}</SPAN> + +<P> +8. Property in urban ground rents. +</P> + +<P> +9. Property in royalties. +</P> + +<P> +The first four kinds of property obviously accompany, and in some sense +condition, the performance of work. The last four obviously do not. +Pure interest has some affinities with both. It represents a necessary +economic cost, the equivalent of which must be born, whatever the legal +arrangements under which property is held, and is thus unlike the +property represented by profits (other than the equivalent of salaries +and payment for necessary risk), urban ground-rents and royalties. It +relieves the recipient from personal services, and thus resembles them. +</P> + +<P> +The crucial question for any society is, under which each of these two +broad groups of categories the greater part (measured in value) of the +proprietary rights which it maintains are at any given moment to be +found. If they fall in the first group creative work will be +encouraged and idleness will be depressed; if they fall in the second, +the result will be the reverse. The facts vary widely from age to age +and from country to country. Nor have they ever been fully revealed; +for the lords of the jungle do not hunt by daylight. It is probable, +at least, that in the England of 1550 to 1750, a larger proportion of +the existing property consisted of land and tools used by their owners +than either in contemporary France, where feudal dues absorbed a +considerable proportion of the peasants' income, or than in the England +of 1800 to 1850, where the new capitalist manufacturers made hundreds +per cent. while manual workers were goaded by starvation into +ineffectual +<SPAN CLASS="pagenum">{<A NAME="P65"></A>65}</SPAN> +revolt. It is probable that in the nineteenth +century, thanks to the Revolution, France and England changed places, +and that in this respect not only Ireland but the British Dominions +resemble the former rather than the latter. The transformation can be +studied best of all in the United States, in parts of which the +population of peasant proprietors and small masters of the early +nineteenth century were replaced in three generations by a propertyless +proletariat and a capitalist plutocracy. The abolition of the economic +privileges of agrarian feudalism, which, under the name of equality, +was the driving force of the French Revolution, and which has taken +place, in one form or another, in all countries touched by its +influence, has been largely counter-balanced since 1800 by the growth +of the inequalities springing from Industrialism. +</P> + +<P> +In England the general effect of recent economic development has been +to swell proprietary rights which entitle the owners to payment without +work, and to diminish those which can properly be described as +functional. The expansion of the former, and the process by which the +simpler forms of property have been merged in them, are movements the +significance of which it is hardly possible to over-estimate. There +is, of course, a considerable body of property which is still of the +older type. But though working landlords, and capitalists who manage +their own businesses, are still in the aggregate a numerous body, the +organization for which they stand is not that which is most +representative of the modern economic world. The general tendency for +the ownership and administration of +<SPAN CLASS="pagenum">{<A NAME="P66"></A>66}</SPAN> +property to be separated, the +general refinement of property into a claim on goods produced by an +unknown worker, is as unmistakable as the growth of capitalist industry +and urban civilization themselves. Villages are turned into towns and +property in land changes from the holding worked by a farmer or the +estate administered by a landlord into "rents," which are advertised +and bought and sold like any other investment. Mines are opened and +the rights of the landowner are converted into a tribute for every ton +of coal which is brought to the surface. As joint-stock companies take +the place of the individual enterprise which was typical of the earlier +years of the factory system, organization passes from the employer who +both owns and manages his business, into the hands of salaried +officials, and again the mass of property-owners is swollen by the +multiplication of <I>rentiers</I> who put their wealth at the disposal of +industry, but who have no other connection with it. The change is +taking place in our day most conspicuously, perhaps, through the +displacement in retail trade of the small shopkeeper by the multiple +store, and the substitution in manufacturing industry of combines and +amalgamations for separate businesses conducted by competing employers. +And, of course, it is not only by economic development that such claims +are created. "Out of the eater came forth meat, and out of the strong +came forth sweetness." It is probable that war, which in barbarous +ages used to be blamed as destructive of property, has recently created +more titles to property than almost all other causes put together. +</P> + +<P> +Infinitely diverse as are these proprietary rights, they +<SPAN CLASS="pagenum">{<A NAME="P67"></A>67}</SPAN> +have the +common characteristic of being so entirely separated from the actual +objects over which they are exercised, so rarified and generalized, as +to be analogous almost to a form of currency rather than to the +property which is so closely united to its owner as to seem a part of +him. Their isolation from the rough environment of economic life, +where the material objects of which they are the symbol are shaped and +handled, is their charm. It is also their danger. The hold which a +class has upon the future depends on the function which it performs. +What nature demands is work: few working aristocracies, however +tyrannical, have fallen; few functionless aristocracies have survived. +In society, as in the world of organic life, atrophy is but one stage +removed from death. In proportion as the landowner becomes a mere +<I>rentier</I> and industry is conducted, not by the rude energy of the +competing employers who dominated its infancy, but by the salaried +servants of shareholders, the argument for private property which +reposes on the impossibility of finding any organization to supersede +them loses its application, for they are already superseded. +</P> + +<P> +Whatever may be the justification of these types of property, it cannot +be that which was given for the property of the peasant or the +craftsman. It cannot be that they are necessary in order to secure to +each man the fruits of his own labor. For if a legal right which gives +$200,000 a year to a mineral owner in the North of England and to a +ground landlord in London "secures the fruits of labor" at all, the +fruits are the proprietor's and the labor that of some one else. +Property +<SPAN CLASS="pagenum">{<A NAME="P68"></A>68}</SPAN> +has no more insidious enemies than those well-meaning +anarchists who, by defending all forms of it as equally valid, involve +the institution in the discredit attaching to its extravagances. In +reality, whatever conclusion may be drawn from the fact, the greater +part of modern property, whether, like mineral rights and urban +ground-rents, it is merely a form of private taxation which the law +allows certain persons to levy on the industry of others, or whether, +like property in capital, it consists of rights to payment for +instruments which the capitalist cannot himself use but puts at the +disposal of those who can, has as its essential feature that it confers +upon its owners income unaccompanied by personal service. In this +respect the ownership of land and the ownership of capital are normally +similar, though from other points of view their differences are +important. To the economist rent and interest are distinguished by the +fact that the latter, though it is often accompanied by surplus +elements which are merged with it in dividends, is the price of an +instrument of production which would not be forthcoming for industry if +the price were not paid, while the former is a differential surplus +which does not affect the supply. To the business community and the +solicitor land and capital are equally investments, between which, +since they possess the common characteristic of yielding income without +labor, it is inequitable to discriminate; and though their significance +as economic categories may be different, their effect as social +institutions is the same. It is to separate property from creative +ability, and to divide society into two classes, of which one has its +<SPAN CLASS="pagenum">{<A NAME="P69"></A>69}</SPAN> +primary interest in passive ownership, while the other is mainly +dependent upon active work. +</P> + +<P> +Hence the real analogy to many kinds of modern property is not the +simple property of the small land-owner or the craftsman, still less +the household goods and dear domestic amenities, which is what the word +suggests to the guileless minds of clerks and shopkeepers, and which +stampede them into displaying the ferocity of terrified sheep when the +cry is raised that "Property" is threatened. It is the feudal dues +which robbed the French peasant of part of his produce till the +Revolution abolished them. How do royalties differ from <I>quintaines</I> +and <I>lods et ventes</I>? They are similar in their origin and similar in +being a tax levied on each increment of wealth which labor produces. +How do urban ground-rents differ from the payments which were made to +English sinecurists before the Reform Bill of 1832? They are equally +tribute paid by those who work to those who do not. If the monopoly +profits of the owner of <I>banalités</I>, whose tenant must grind corn at +his mill and make wine at his press, were an intolerable oppression, +what is the sanctity attaching to the monopoly profits of the +capitalists, who, as the Report of the Government Committee on trusts +tells us, "in soap, tobacco, wallpaper, salt, cement and in the textile +trades ... are in a position to control output and prices" or, in other +words, can compel the consumer to buy from them, at the figure they +fix, on pain of not buying at all? +</P> + +<P> +All these rights—royalties, ground-rents, monopoly profits—are +"Property." The criticism most fatal to them is not that of +Socialists. It is contained in the +<SPAN CLASS="pagenum">{<A NAME="P70"></A>70}</SPAN> +arguments by which property is +usually defended. For if the meaning of the institution is to +encourage industry by securing that the worker shall receive the +produce of his toil, then precisely in proportion as it is important to +preserve the property which a man has in the results of his own +efforts, is it important to abolish that which he has in the results of +the efforts of some one else. The considerations which justify +ownership as a function are those which condemn it as a tax. Property +is not theft, but a good deal of theft becomes property. The owner of +royalties who, when asked why he should be paid £50,000 a year from +minerals which he has neither discovered nor developed nor worked but +only owned, replies "But it's Property!" may feel all the awe which his +language suggests. But in reality he is behaving like the snake which +sinks into its background by pretending that it is the dead branch of a +tree, or the lunatic who tried to catch rabbits by sitting behind a +hedge and making a noise like a turnip. He is practising +protective—and sometimes aggressive—mimicry. His sentiments about +property are those of the simple toiler who fears that what he has sown +another may reap. His claim is to be allowed to continue to reap what +another has sown. +</P> + +<P> +It is sometimes suggested that the less attractive characteristics of +our industrial civilization, its combination of luxury and squalor, its +class divisions and class warfare, are accidental maladjustments which +are not rooted in the center of its being, but are excrescences which +economic progress itself may in time be expected to correct. That +agreeable optimism will not survive an +<SPAN CLASS="pagenum">{<A NAME="P71"></A>71}</SPAN> +examination of the +operation of the institution of private property in land and capital in +industrialized communities. In countries where land is widely +distributed, in France or in Ireland, its effect may be to produce a +general diffusion of wealth among a rural middle class who at once work +and own. In countries where the development of industrial organization +has separated the ownership of property and the performance of work, +the normal effect of private property is to transfer to functionless +owners the surplus arising from the more fertile sites, the better +machinery, the more elaborate organization. No clearer +exemplifications of this "law of rent" has been given than the figures +supplied to the Coal Industry Commission by Sir Arthur Lowes Dickenson, +which showed that in a given quarter the costs per ton of producing +coal varied from $3.12 to $12 per ton, and the profits from nil to +$4.12. The distribution in dividends to shareholders of the surplus +accruing from the working of richer and more accessible seams, from +special opportunities and access to markets, from superior machinery, +management and organization, involves the establishment of Privilege as +a national institution, as much as the most arbitrary exactions of a +feudal <I>seigneur</I>. It is the foundation of an inequality which is not +accidental or temporary, but necessary and permanent. And on this +inequality is erected the whole apparatus of class institutions, which +make not only the income, but the housing, education, health and +manners, indeed the very physical appearance of different classes of +Englishmen almost as different from each other as though the minority +were +<SPAN CLASS="pagenum">{<A NAME="P72"></A>72}</SPAN> +alien settlers established amid the rude civilization of a +race of impoverished aborigines. +</P> + +<BR> + +<P> +So the justification of private property traditional in England, which +saw in it the security that each man would enjoy the fruits of his own +labor, though largely applicable to the age in which it was formulated, +has undergone the fate of most political theories. It has been refuted +not by the doctrines of rival philosophers, but by the prosaic course +of economic development. As far as the mass of mankind are concerned, +the need which private property other than personal possessions does +still often satisfy, though imperfectly and precariously, is the need +for security. To the small investors, who are the majority of +property-owners, though owning only an insignificant fraction of the +property in existence, its meaning is simple. It is not wealth or +power, or even leisure from work. It is safety. They work hard. They +save a little money for old age, or for sickness, or for their +children. They invest it, and the interest stands between them and all +that they dread most. Their savings are of convenience to industry, +the income from them is convenient to themselves. "Why," they ask, +"should we not reap in old age the advantage of energy and thrift in +youth?" And this hunger for security is so imperious that those who +suffer most from the abuses of property, as well as those who, if they +could profit by them, would be least inclined to do so, will tolerate +and even defend them, for fear lest the knife which trims dead matter +should cut into the quick. They have seen too many men drown to be +<SPAN CLASS="pagenum">{<A NAME="P73"></A>73}</SPAN> +critical of dry land, though it be an inhospitable rock. They are +haunted by the nightmare of the future, and, if a burglar broke it, +would welcome a burglar. +</P> + +<P> +This need for security is fundamental, and almost the gravest +indictment of our civilization is that the mass of mankind are without +it. Property is one way of organizing it. It is quite comprehensible +therefore, that the instrument should be confused with the end, and +that any proposal to modify it should create dismay. In the past, +human beings, roads, bridges and ferries, civil, judicial and clerical +offices, and commissions in the army have all been private property. +Whenever it was proposed to abolish the rights exercised over them, it +was protested that their removal would involve the destruction of an +institution in which thrifty men had invested their savings, and on +which they depended for protection amid the chances of life and for +comfort in old age. In fact, however, property is not the only method +of assuring the future, nor, when it is the way selected, is security +dependent upon the maintenance of all the rights which are at present +normally involved in ownership. In so far as its psychological +foundation is the necessity for securing an income which is stable and +certain, which is forthcoming when its recipient cannot work, and which +can be used to provide for those who cannot provide for themselves, +what is really demanded is not the command over the fluctuating +proceeds of some particular undertaking, which accompanies the +ownership of capital, but the security which is offered by an annuity. +Property is the instrument, security is the object, and when some +alternative way is forthcoming +<SPAN CLASS="pagenum">{<A NAME="P74"></A>74}</SPAN> +of providing the latter, it does +not appear in practice that any loss of confidence, or freedom or +independence is caused by the absence of the former. +</P> + +<P> +Hence not only the manual workers, who since the rise of capitalism, +have rarely in England been able to accumulate property sufficient to +act as a guarantee of income when their period of active earning is +past, but also the middle and professional classes, increasingly seek +security to-day, not in investment, but in insurance against sickness +and death, in the purchase of annuities, or in what is in effect the +same thing, the accumulation of part of their salary towards a pension +which is paid when their salary ceases. The professional man may buy +shares in the hope of making a profit on the transaction. But when +what he desires to buy is security, the form which his investment takes +is usually one kind or another of insurance. The teacher, or nurse, or +government servant looks forward to a pension. Women, who fifty years +ago would have been regarded as dependent almost as completely as if +femininity were an incurable disease with which they had been born, and +whose fathers, unless rich men, would have been tormented with anxiety +for fear lest they should not save sufficient to provide for them, now +receive an education, support themselves in professions, and save in +the same way. It is still only in comparatively few cases that this +type of provision is made; almost all wage-earners outside government +employment, and many in it, as well as large numbers of professional +men, have nothing to fall back upon in sickness or old age. But that +does not alter the fact +<SPAN CLASS="pagenum">{<A NAME="P75"></A>75}</SPAN> +that, when it is made, it meets the need +for security, which, apart, of course, from personal possessions and +household furniture, is the principal meaning of property to by far the +largest element in the population, and that it meets it more completely +and certainly than property itself. +</P> + +<P> +Nor, indeed, even when property is the instrument used to provide for +the future, is such provision dependent upon the maintenance in its +entirety of the whole body of rights which accompany ownership to-day. +Property is not simple but complex. That of a man who has invested his +savings as an ordinary shareholder comprises at least three rights, the +right to interest, the right to profits, the right to control. In so +far as what is desired is the guarantee for the maintenance of a stable +income, not the acquisition of additional wealth without labor—in so +far as his motive is not gain but security—the need is met by interest +on capital. It has no necessary connection either with the right to +residuary profits or the right to control the management of the +undertaking from which the profits are derived, both of which are +vested to-day in the shareholder. If all that were desired were to use +property as an instrument for purchasing security, the obvious +course—from the point of view of the investor desiring to insure his +future the safest course—would be to assimilate his position as far as +possible to that of a debenture holder or mortgagee, who obtains the +stable income which is his motive for investment, but who neither +incurs the risks nor receives the profits of the speculator. To insist +that the elaborate apparatus of proprietary rights which +<SPAN CLASS="pagenum">{<A NAME="P76"></A>76}</SPAN> +distributes dividends of thirty per cent to the shareholders in Coats, +and several thousands a year to the owner of mineral royalties and +ground-rents, and then allows them to transmit the bulk of gains which +they have not earned to descendants who in their turn will thus be +relieved from the necessity of earning, must be maintained for the sake +of the widow and the orphan, the vast majority of whom have neither and +would gladly part with them all for a safe annuity if they had, is, to +say the least of it, extravagantly <I>mal-à-propos</I>. It is like pitching +a man into the water because he expresses a wish for a bath, or +presenting a tiger cub to a householder who is plagued with mice, on +the ground that tigers and cats both belong to the genus <I>felis</I>. The +tiger hunts for itself not for its masters, and when game is scarce +will hunt them. The classes who own little or no property may +reverence it because it is security. But the classes who own much +prize it for quite different reasons, and laugh in their sleeve at the +innocence which supposes that anything as vulgar as the savings of the +<I>petite bourgeoisie</I> have, except at elections, any interest for them. +They prize it because it is the order which quarters them on the +community and which provides for the maintenance of a leisure class at +the public expense. +</P> + +<P> +"Possession," said the Egoist, "without obligation to the object +possessed, approaches felicity." Functionless property appears natural +to those who believe that society should be organized for the +acquisition of private wealth, and attacks upon it perverse or +malicious, because the question which they ask of any institution is, +"What does it yield?" And such property yields much +<SPAN CLASS="pagenum">{<A NAME="P77"></A>77}</SPAN> +to those who +own it. Those, however, who hold that social unity and effective work +are possible only if society is organized and wealth distributed on the +basis of function, will ask of an institution, not, "What dividends +does it pay?" but "What service does it perform?" To them the fact +that much property yields income irrespective of any service which is +performed or obligation which is recognized by its owners will appear +not a quality but a vice. They will see in the social confusion which +it produces, payments disproportionate to service here, and payments +without any service at all there, and dissatisfaction everywhere, a +convincing confirmation of their argument that to build on a foundation +of rights and of rights alone is to build on a quicksand. +</P> + +<P> +From the portentous exaggeration into an absolute of what once was, and +still might be, a sane and social institution most other social evils +follow the power of those who do not work over those who do, the +alternate subservience and rebelliousness of those who work towards +those who do not, the starving of science and thought and creative +effort for fear that expenditure upon them should impinge on the +comfort of the sluggard and the <I>fainéant</I>, and the arrangement of +society in most of its subsidiary activities to suit the convenience +not of those who work usefully but of those who spend gaily, so that +the most hideous, desolate and parsimonious places in the country are +those in which the greatest wealth is produced, the Clyde valley, or +the cotton towns of Lancashire, or the mining villages of Scotland and +Wales, and the gayest and most luxurious +<SPAN CLASS="pagenum">{<A NAME="P78"></A>78}</SPAN> +those in which it is +consumed. From the point of view of social health and economic +efficiency, society should obtain its material equipment at the +cheapest price possible, and after providing for depreciation and +expansion should distribute the whole product to its working members +and their dependents. What happens at present, however, is that its +workers are hired at the cheapest price which the market (as modified +by organization) allows, and that the surplus, somewhat diminished by +taxation, is distributed to the owners of property. Profits may vary +in a given year from a loss to 100 per cent. But wages are fixed at a +level which will enable the marginal firm to continue producing one +year with another; and the surplus, even when due partly to efficient +management, goes neither to managers nor manual workers, but to +shareholders. The meaning of the process becomes startlingly apparent +when, as in Lancashire to-day, large blocks of capital change hands at +a period of abnormal activity. The existing shareholders receive the +equivalent of the capitalized expectation of future profits. The +workers, as workers, do not participate in the immense increment in +value; and when, in the future, they demand an advance in wages, they +will be met by the answer that profits, which before the transaction +would have been reckoned large, yield shareholders after it only a low +rate of interest on their investment. +</P> + +<P> +The truth is that whereas in earlier ages the protection of property +was normally the protection of work, the relationship between them has +come in the course of the economic development of the last two +centuries to +<SPAN CLASS="pagenum">{<A NAME="P79"></A>79}</SPAN> +be very nearly reversed. The two elements which +compose civilization are active effort and passive property, the labor +of human things and the tools which human beings use. Of these two +elements those who supply the first maintain and improve it, those who +own the second normally dictate its character, its development and its +administration. Hence, though politically free, the mass of mankind +live in effect under rules imposed to protect the interests of the +small section among them whose primary concern is ownership. From this +subordination of creative activity to passive property, the worker who +depends upon his brains, the organizer, inventor, teacher or doctor +suffers almost as much embarrassment as the craftsman. The real +economic cleavage is not, as is often said, between employers and +employed, but between all who do constructive work, from scientist to +laborer, on the one hand, and all whose main interest is the +preservation of existing proprietary rights upon the other, +irrespective of whether they contribute to constructive work or not. +</P> + +<P> +If, therefore, under the modern conditions which have concentrated any +substantial share of property in the hands of a small minority of the +population, the world is to be governed for the advantages of those who +own, it is only incidentally and by accident that the results will be +agreeable to those who work. In practice there is a constant collision +between them. Turned into another channel, half the wealth distributed +in dividends to functionless shareholders, could secure every child a +good education up to 18, could re-endow English Universities, and +(since more efficient production is +<SPAN CLASS="pagenum">{<A NAME="P80"></A>80}</SPAN> +important) could equip English +industries for more efficient production. Half the ingenuity now +applied to the protection of property could have made most industrial +diseases as rare as smallpox, and most English cities into places of +health and even of beauty. What stands in the way is the doctrine that +the rights of property are absolute, irrespective of any social +function which its owners may perform. So the laws which are most +stringently enforced are still the laws which protect property, though +the protection of property is no longer likely to be equivalent to the +protection of work, and the interests which govern industry and +predominate in public affairs are proprietary interests. A mill-owner +may poison or mangle a generation of operatives; but his brother +magistrates will let him off with a caution or a nominal fine to poison +and mangle the next. For he is an owner of property. A landowner may +draw rents from slums in which young children die at the rate of 200 +per 1000; but he will be none the less welcome in polite society. For +property has no obligations and therefore can do no wrong. Urban land +may be held from the market on the outskirts of cities in which human +beings are living three to a room, and rural land may be used for sport +when villagers are leaving it to overcrowd them still more. No public +authority intervenes, for both are property. To those who believe that +institutions which repudiate all moral significance must sooner or +later collapse, a society which confuses the protection of property +with the preservation of its functionless perversions will appear as +precarious as that which has left the memorials of its +<SPAN CLASS="pagenum">{<A NAME="P81"></A>81}</SPAN> +tasteless +frivolity and more tasteless ostentation in the gardens of Versailles. +</P> + +<P> +Do men love peace? They will see the greatest enemy of social unity in +rights which involve no obligation to co-operate for the service of +society. Do they value equality? Property rights which dispense their +owners from the common human necessity of labor make inequality an +institution permeating every corner of society, from the distribution +of material wealth to the training of intellect itself. Do they desire +greater industrial efficiency? There is no more fatal obstacle to +efficiency than the revelation that idleness has the same privileges as +industry, and that for every additional blow with the pick or hammer an +additional profit will be distributed among shareholders who wield +neither. +</P> + +<P> +Indeed, functionless property is the greatest enemy of legitimate +property itself. It is the parasite which kills the organism that +produced it. Bad money drives out good, and, as the history of the +last two hundred years shows, when property for acquisition or power +and property for service or for use jostle each other freely in the +market, without restrictions such as some legal systems have imposed on +alienation and inheritance, the latter tends normally to be absorbed by +the former, because it has less resisting power. Thus functionless +property grows, and as it grows it undermines the creative energy which +produced property and which in earlier ages it protected. It cannot +unite men, for what unites them is the bond of service to a common +purpose, and that bond it repudiates, since its very +<SPAN CLASS="pagenum">{<A NAME="P82"></A>82}</SPAN> +essence is +the maintenance of rights irrespective of service. It cannot create; +it can only spend, so that the number of scientists, inventors, artists +or men of letters who have sprung in the course of the last century +from hereditary riches can be numbered on one hand. It values neither +culture nor beauty, but only the power which belongs to wealth and the +ostentation which is the symbol of it. +</P> + +<P> +So those who dread these qualities, energy and thought and the creative +spirit—and they are many—will not discriminate, as we have tried to +discriminate, between different types and kinds of property, in order +that they may preserve those which are legitimate and abolish those +which are not. They will endeavor to preserve all private property, +even in its most degenerate forms. And those who value those things +will try to promote them by relieving property of its perversions, and +thus enabling it to return to its true nature. They will not desire to +establish any visionary communism, for they will realize that the free +disposal of a sufficiency of personal possessions is the condition of a +healthy and self-respecting life, and will seek to distribute more +widely the property rights which make them to-day the privilege of a +minority. But they will refuse to submit to the naïve philosophy which +would treat all proprietary rights as equal in sanctity merely because +they are identical in name. They will distinguish sharply between +property which is used by its owner for the conduct of his profession +or the upkeep of his household, and property which is merely a claim on +wealth produced by another's labor. They will insist that +<SPAN CLASS="pagenum">{<A NAME="P83"></A>83}</SPAN> +property is moral and healthy only when it is used as a condition not +of idleness but of activity, and when it involves the discharge of +definite personal obligations. They will endeavor, in short, to base +it upon the principle of function. +</P> + +<BR><BR><BR> + +<A NAME="chap06"></A> + +<SPAN CLASS="pagenum">{<A NAME="P84"></A>84}</SPAN> + +<H3 ALIGN="center"> +VI +</H3> + +<H3 ALIGN="center"> +THE FUNCTIONAL SOCIETY +</H3> + +<P> +The application to property and industry of the principle of function +is compatible with several different types of social organization, and +is as unlikely as more important revelations to be the secret of those +who cry "Lo here!" and "Lo there!" The essential thing is that men +should fix their minds upon the idea of purpose, and give that idea +pre-eminence over all subsidiary issues. If, as is patent, the purpose +of industry is to provide the material foundation of a good social +life, then any measure which makes that provision more effective, so +long as it does not conflict with some still more important purpose, is +wise, and any institution which thwarts or encumbers it is foolish. It +is foolish, for example, to cripple education, as it is crippled in +England for the sake of industry; for one of the uses of industry is to +provide the wealth which may make possible better education. It is +foolish to maintain property rights for which no service is performed, +for payment without service is waste; and if it is true, as +statisticians affirm, that, even were income equally divided, income +per head would be small, then it is all the more foolish, for sailors +in a boat have no room for first-class passengers, and it is all the +more important that none of the small national income should be +misapplied. It is foolish to leave the direction of industry +<SPAN CLASS="pagenum">{<A NAME="P85"></A>85}</SPAN> +in +the hands of servants of private property-owners who themselves know +nothing about it but its balance sheets, because this is to divert it +from the performance of service to the acquisition of gain, and to +subordinate those who do creative work to those who do not. +</P> + +<P> +The course of wisdom in the affairs of industry is, after all, what it +is in any other department of organized life. It is to consider the +end for which economic activity is carried on and then to adapt +economic organization to it. It is to pay for service and for service +only, and when capital is hired to make sure that it is hired at the +cheapest possible price. It is to place the responsibility for +organizing industry on the shoulders of those who work and use, not of +those who own, because production is the business of the producer and +the proper person to see that he discharges his business is the +consumer for whom, and not for the owner of property, it ought to be +carried on. Above all it is to insist that all industries shall be +conducted in complete publicity as to costs and profits, because +publicity ought to be the antiseptic both of economic and political +abuses, and no man can have confidence in his neighbor unless both work +in the light. +</P> + +<P> +As far as property is concerned, such a policy would possess two edges. +On the one hand, it would aim at abolishing those forms of property in +which ownership is divorced from obligations. On the other hand, it +would seek to encourage those forms of economic organization under +which the worker, whether owner or not, is free to carry on his work +without sharing its control or its profits with the mere <I>rentier</I>. +Thus, if in certain +<SPAN CLASS="pagenum">{<A NAME="P86"></A>86}</SPAN> +spheres it involved an extension of public +ownership, it would in others foster an extension of private property. +For it is not private ownership, but private ownership divorced from +work, which is corrupting to the principle of industry; and the idea of +some socialists that private property in land or capital is necessarily +mischievous is a piece of scholastic pedantry as absurd as that of +those conservatives who would invest all property with some kind of +mysterious sanctity. It all depends what sort of property it is and +for what purpose it is used. Provided that the State retains its +eminent domain, and controls alienation, as it does under the Homestead +laws of the Dominions, with sufficient stringency to prevent the +creation of a class of functionless property-owners, there is no +inconsistency between encouraging simultaneously a multiplication of +peasant farmers and small masters who own their own farms or shops, and +the abolition of private ownership in those industries, unfortunately +to-day the most conspicuous, in which the private owner is an absentee +shareholder. +</P> + +<P> +Indeed, the second reform would help the first. In so far as the +community tolerates functionless property it makes difficult, if not +impossible, the restoration of the small master in agriculture or in +industry, who cannot easily hold his own in a world dominated by great +estates or capitalist finance. In so far as it abolishes those kinds +of property which are merely parasitic, it facilitates the restoration +of the small property-owner in those kinds of industry for which small +ownership is adapted. A socialistic policy towards the former is not +<SPAN CLASS="pagenum">{<A NAME="P87"></A>87}</SPAN> +antagonistic to the "distributive state," but, in modern economic +conditions, a necessary preliminary to it, and if by "Property" is +meant the personal possessions which the word suggests to nine-tenths +of the population, the object of socialists is not to undermine +property but to protect and increase it. The boundary between large +scale and small scale production will always be uncertain and +fluctuating, depending, as it does, on technical conditions which +cannot be foreseen: a cheapening of electrical power, for example, +might result in the decentralization of manufactures, as steam resulted +in their concentration. The fundamental issue, however, is not between +different scales of ownership, but between ownership of different +kinds, not between the large farmer or master and the small, but +between property which is used for work and property which yields +income without it. The Irish landlord was abolished, not because he +owned a large scale, but because he was an owner and nothing more; if, +and when English land-ownership has been equally attenuated, as in +towns it already has been, it will deserve to meet the same fate. Once +the issue of the character of ownership has been settled, the question +of the size of the economic unit can be left to settle itself. +</P> + +<P> +The first step, then, towards the organization of economic life for the +performance of function is to abolish those types of private property +in return for which no function is performed. The man who lives by +owning without working is necessarily supported by the industry of some +one else, and is, therefore, too expensive a luxury to be encouraged. +Though he deserves to be +<SPAN CLASS="pagenum">{<A NAME="P88"></A>88}</SPAN> +treated with the leniency which ought to +be, and usually is not, shown to those who have been brought up from +infancy to any other disreputable trade, indulgence to individuals must +not condone the institution of which both they and their neighbors are +the victims. Judged by this standard, certain kinds of property are +obviously anti-social. The rights in virtue of which the owner of the +surface is entitled to levy a tax, called a royalty, on every ton of +coal which the miner brings to the surface, to levy another tax, called +a way-leave, on every ton of coal transported under the surface of his +land though its amenity and value may be quite unaffected, to distort, +if he pleases, the development of a whole district by refusing access +to the minerals except upon his own terms, and to cause some 3,500 to +4,000 million tons to be wasted in barriers between different +properties, while he in the meantime contributes to a chorus of +lamentation over the wickedness of the miners in not producing more +tons of coal for the public and incidentally more private taxes for +himself—all this adds an agreeable touch of humor to the drab quality +of our industrial civilization for which mineral owners deserve perhaps +some recognition, though not the $400,000 odd a year which is paid to +each of the four leading players, or the $24,000,000 a year which is +distributed among the crowd. +</P> + +<P> +The alchemy by which a gentleman who has never seen a coal mine +distills the contents of that place of gloom into elegant chambers in +London and a place in the country is not the monopoly of royalty +owners. A similar feat of prestidigitation is performed by the +<SPAN CLASS="pagenum">{<A NAME="P89"></A>89}</SPAN> +owner of urban ground-rents. In rural districts some landlords, +perhaps many landlords, are partners in the hazardous and difficult +business of agriculture, and, though they may often exercise a power +which is socially excessive, the position which they hold and the +income which they receive are, in part at last, a return for the +functions which they perform. The ownership of urban land has been +refined till of that crude ore only the pure gold is left. It is the +perfect sinecure, for the only function it involves is that of +collecting its profits, and in an age when the struggle of Liberalism +against sinecures was still sufficiently recent to stir some chords of +memory, the last and greatest of liberal thinkers drew the obvious +deduction. "The reasons which form the justification ... of property +in land," wrote Mill in 1848, "are valid only in so far as the +proprietor of land is its improver.... In no sound theory of private +property was it ever contemplated that the proprietor of land should be +merely a sinecurist quartered on it." Urban ground-rents and royalties +are, in fact, as the Prime Minister in his unregenerate days suggested, +a tax which some persons are permitted by the law to levy upon the +industry of others. They differ from public taxation only in that +their amount increases in proportion not to the nation's need of +revenue but to its need of the coal and space on which they are levied, +that their growth inures to private gain not to public benefit, and +that if the proceeds are wasted on frivolous expenditure no one has any +right to complain, because the arrangement by which Lord Smith spends +wealth produced by Mr. Brown on objects which do no good to either is +part +<SPAN CLASS="pagenum">{<A NAME="P90"></A>90}</SPAN> +of the system which, under the name of private property, Mr. +Brown as well as Lord Smith have learned to regard as essential to the +higher welfare of mankind. +</P> + +<P> +But if we accept the principle of function we shall ask what is the +<I>purpose</I> of this arrangement, and for what end the inhabitants of, for +example, London pay $64,000,000 a year to their ground landlords. And +if we find that it is for no purpose and no end, but that these things +are like the horseshoes and nails which the City of London presents to +the Crown on account of land in the Parish of St. Clement Danes, then +we shall not deal harshly with a quaint historical survival, but +neither shall we allow it to distract us from the business of the +present, as though there had been history but there were not history +any longer. We shall close these channels through which wealth leaks +away by resuming the ownership of minerals and of urban land, as some +communities in the British Dominions and on the Continent of Europe +have resumed it already. We shall secure that such large accumulations +as remain change hands at least once in every generation, by increasing +our taxes on inheritance till what passes to the heir is little more +than personal possessions, not the right to a tribute from industry +which, though qualified by death-duties, is what the son of a rich man +inherits to-day. We shall treat mineral owners and land-owners, in +short, as Plato would have treated the poets, whom in their ability to +make something out of nothing and to bewitch mankind with words they a +little resemble, and crown them with flowers and usher them politely +out of the State. +</P> + +<BR><BR><BR> + +<A NAME="chap07"></A> + +<SPAN CLASS="pagenum">{<A NAME="P91"></A>91}</SPAN> + +<H3 ALIGN="center"> +VII +</H3> + +<H3 ALIGN="center"> +INDUSTRY AS A PROFESSION +</H3> + +<P> +Rights without functions are like the shades in Homer which drank blood +but scattered trembling at the voice of a man. To extinguish royalties +and urban ground-rents is merely to explode a superstition. It needs +as little—and as much—resolution as to put one's hand through any +other ghost. In all industries except the diminishing number in which +the capitalist is himself the manager, property in capital is almost +equally passive. Almost, but not quite. For, though the majority of +its owners do not themselves exercise any positive function, they +appoint those who do. It is true, of course, that the question of how +capital is to be owned is distinct from the question of how it is to be +administered, and that the former can be settled without prejudice to +the latter. To infer, because shareholders own capital which is +indispensable to industry, that therefore industry is dependent upon +the maintenance of capital in the hands of shareholders, to write, with +some economists, as though, if private property in capital were further +attenuated or abolished altogether, the constructive energy of the +managers who may own capital or may not, but rarely, in the more +important industries, own more than a small fraction of it, must +necessarily be impaired, is to be guilty of a robust <I>non-sequitur</I> and +to ignore the most obvious facts of +<SPAN CLASS="pagenum">{<A NAME="P92"></A>92}</SPAN> +contemporary industry. The +less the mere capitalist talks about the necessity for the consumer of +an efficient organization of industry, the better; for, whatever the +future of industry may be, an efficient organization is likely to have +no room for <I>him</I>. But though shareholders do not govern, they reign, +at least to the extent of saying once a year "<I>le roy le veult</I>." If +their rights are pared down or extinguished, the necessity for some +organ to exercise them will still remain. And the question of the +ownership of capital has this much in common with the question of +industrial organization, that the problem of the constitution under +which industry is to be conducted is common to both. +</P> + +<P> +That constitution must be sought by considering how industry can be +organized to express most perfectly the principle of purpose. The +application to industry of the principle of purpose is simple, however +difficult it may be to give effect to it. It is to turn it into a +Profession. A Profession may be defined most simply as a trade which +is organized, incompletely, no doubt, but genuinely, for the +performance of function. It is not simply a collection of individuals +who get a living for themselves by the same kind of work. Nor is it +merely a group which is organized exclusively for the economic +protection of its members, though that is normally among its purposes. +It is a body of men who carry on their work in accordance with rules +designed to enforce certain standards both for the better protection of +its members and for the better service of the public. The standards +which it maintains may be high or low: all professions have some rules +which protect the interests +<SPAN CLASS="pagenum">{<A NAME="P93"></A>93}</SPAN> +of the community and others which are +an imposition on it. Its essence is that it assumes certain +responsibilities for the competence of its members or the quality of +its wares, and that it deliberately prohibits certain kinds of conduct +on the ground that, though they may be profitable to the individual, +they are calculated to bring into disrepute the organization to which +he belongs. While some of its rules are trade union regulations +designed primarily to prevent the economic standards of the profession +being lowered by unscrupulous competition, others have as their main +object to secure that no member of the profession shall have any but a +purely professional interest in his work, by excluding the incentive of +speculative profit. +</P> + +<P> +The conception implied in the words "unprofessional conduct" is, +therefore, the exact opposite of the theory and practice which assume +that the service of the public is best secured by the unrestricted +pursuit on the part of rival traders of their pecuniary self-interest, +within such limits as the law allows. It is significant that at the +time when the professional classes had deified free competition as the +arbiter of commerce and industry, they did not dream of applying it to +the occupations in which they themselves were primarily interested, but +maintained, and indeed, elaborated machinery through which a +professional conscience might find expression. The rules themselves +may sometimes appear to the layman arbitrary and ill-conceived. But +their object is clear. It is to impose on the profession itself the +obligation of maintaining the quality of the service, and to prevent +its common purpose being frustrated through +<SPAN CLASS="pagenum">{<A NAME="P94"></A>94}</SPAN> +the undue influence of +the motive of pecuniary gain upon the necessities or cupidity of the +individual. +</P> + +<P> +The difference between industry as it exists to-day and a profession +is, then, simple and unmistakable. The essence of the former is that +its only criterion is the financial return which it offers to its +shareholders. The essence of the latter, is that, though men enter it +for the sake of livelihood, the measure of their success is the service +which they perform, not the gains which they amass. They may, as in +the case of a successful doctor, grow rich; but the meaning of their +profession, both for themselves and for the public, is not that they +make money but that they make health, or safety, or knowledge, or good +government or good law. They depend on it for their income, but they +do not consider that any conduct which increases their income is on +that account good. And while a boot-manufacturer who retires with half +a million is counted to have achieved success, whether the boots which +he made were of leather or brown paper, a civil servant who did the +same would be impeached. +</P> + +<P> +So, if they are doctors, they recognize that there are certain kinds of +conduct which cannot be practised, however large the fee offered for +them, because they are unprofessional; if scholars and teachers, that +it is wrong to make money by deliberately deceiving the public, as is +done by makers of patent medicines, however much the public may clamor +to be deceived; if judges or public servants, that they must not +increase their incomes by selling justice for money; if soldiers, that +the service comes first, and their private inclinations, +<SPAN CLASS="pagenum">{<A NAME="P95"></A>95}</SPAN> +even the +reasonable preference of life to death, second. Every country has its +traitors, every army its deserters, and every profession its blacklegs. +To idealize the professional spirit would be very absurd; it has its +sordid side, and, if it is to be fostered in industry, safeguards will +be needed to check its excesses. But there is all the difference +between maintaining a standard which is occasionally abandoned, and +affirming as the central truth of existence that there is no standard +to maintain. The meaning of a profession is that it makes the traitors +the exception, not as they are in industry, the rule. It makes them +the exception by upholding as the criterion of success the end for +which the profession, whatever it may be, is carried on, and +subordinating the inclination, appetites and ambitions of individuals +to the rules of an organization which has as its object to promote the +performance of function. +</P> + +<BR> + +<P> +There is no sharp line between the professions and the industries. A +hundred years ago the trade of teaching, which to-day is on the whole +an honorable public service, was rather a vulgar speculation upon +public credulity; if Mr. Squeers was a caricature, the Oxford of Gibbon +and Adam Smith was a solid port-fed reality; no local authority could +have performed one-tenth of the duties which are carried out by a +modern municipal corporation every day, because there was no body of +public servants to perform them, and such as there were took bribes. +It is conceivable, at least, that some branches of medicine might have +developed on the lines of industrial capitalism, with hospitals as +factories, +<SPAN CLASS="pagenum">{<A NAME="P96"></A>96}</SPAN> +doctors hired at competitive wages as their "hands," +large dividends paid to shareholders by catering for the rich, and the +poor, who do not offer a profitable market, supplied with an inferior +service or with no service at all. +</P> + +<P> +The idea that there is some mysterious difference between making +munitions of war and firing them, between building schools and teaching +in them when built, between providing food and providing health, which +makes it at once inevitable and laudable that the former should be +carried on with a single eye to pecuniary gain, while the latter are +conducted by professional men who expect to be paid for service but who +neither watch for windfalls nor raise their fees merely because there +are more sick to be cured, more children to be taught, or more enemies +to be resisted, is an illusion only less astonishing than that the +leaders of industry should welcome the insult as an honor and wear +their humiliation as a kind of halo. The work of making boots or +building a house is in itself no more degrading than that of curing the +sick or teaching the ignorant. It is as necessary and therefore as +honorable. It should be at least equally bound by rules which have as +their object to maintain the standards of professional service. It +should be at least equally free from the vulgar subordination of moral +standards to financial interests. +</P> + +<P> +If industry is to be organized as a profession, two changes are +requisite, one negative and one positive. The first, is that it should +cease to be conducted by the agents of property-owners for the +advantage of property-owners, +<SPAN CLASS="pagenum">{<A NAME="P97"></A>97}</SPAN> +and should be carried on, instead, +for the service of the public. The second, is that, subject to +rigorous public supervision, the responsibility for the maintenance of +the service should rest upon the shoulders of those, from organizer and +scientist to laborer, by whom, in effect, the work is conducted. +</P> + +<P> +The first change is necessary because the conduct of industry for the +public advantage is impossible as long as the ultimate authority over +its management is vested in those whose only connection with it, and +interest in it, is the pursuit of gain. As industry is at present +organized, its profits and its control belong by law to that element in +it which has least to do with its success. Under the joint-stock +organization which has become normal in all the more important +industries except agriculture, it is managed by the salaried agents of +those by whom the property is owned. It is successful if it returns +large sums to shareholders, and unsuccessful if it does not. If an +opportunity presents itself to increase dividends by practices which +deteriorate the service or degrade the workers, the officials who +administer industry act strictly within their duty if they seize it, +for they are the servants of their employers, and their obligation to +their employers is to provide dividends not to provide service. But +the owners of the property are, <I>qua</I> property-owners functionless, not +in the sense, of course, that the tools of which they are proprietors +are not useful, but in the sense that since work and ownership are +increasingly separated, the efficient use of the tools is not dependent +on the maintenance of the proprietary rights exercised over them. +<SPAN CLASS="pagenum">{<A NAME="P98"></A>98}</SPAN> +Of course there are many managing directors who both own capital and +administer the business. But it is none the less the case that most +shareholders in most large industries are normally shareholders and +nothing more. +</P> + +<P> +Nor is their economic interest identical, as is sometimes assumed, with +that of the general public. A society is rich when material goods, +including capital, are cheap, and human beings dear: indeed the word +"riches" has no other meaning. The interest of those who own the +property used in industry, though not, of course, of the managers who +administer industry and who themselves are servants, and often very +ill-paid servants at that, is that their capital should be dear and +human beings cheap. Hence, if the industry is such as to yield a +considerable return, or if one unit in the industry, owing to some +special advantage, produces more cheaply than its neighbors, while +selling at the same price, or if a revival of trade raises prices, or +if supplies are controlled by one of the combines which are now the +rule in many of the more important industries, the resulting surplus +normally passes neither to the managers, nor to the other employees, +nor to the public, but to the shareholders. Such an arrangement is +preposterous in the literal sense of being the reverse of that which +would be established by considerations of equity and common sense, and +gives rise (among other things) to what is called "the struggle between +labor and capital." The phrase is apposite, since it is as absurd as +the relations of which it is intended to be a description. To deplore +"ill-feeling" or to advocate +<SPAN CLASS="pagenum">{<A NAME="P99"></A>99}</SPAN> +"harmony" between "labor and capital" +is as rational as to lament the bitterness between carpenters and +hammers or to promote a mission for restoring amity between mankind and +its boots. The only significance of these <I>clichés</I> is that their +repetition tends to muffle their inanity, even to the point of +persuading sensible men that capital "employs" labor, much as our pagan +ancestors imagined that the other pieces of wood and iron, which they +deified in their day, sent their crops and won their battles. When men +have gone so far as to talk as though their idols have come to life, it +is time that some one broke them. Labor consists of persons, capital +of things. The only use of things is to be applied to the service of +persons. The business of persons is to see that they are there to use, +and that no more than need be is paid for using them. +</P> + +<P> +Thus the application to industry of the principle of function involves +an alteration of proprietary rights, because those rights do not +contribute, as they now are, to the end which industry exists to serve. +What gives unity to any activity, what alone can reconcile the +conflicting claims of the different groups engaged in it, is the +purpose for which it is carried on. If men have no common goal it is +no wonder that they should fall out by the way, nor are they likely to +be reconciled by a redistribution of their provisions. If they are not +content both to be servants, one or other must be master, and it is +idle to suppose that mastership can be held in a state of suspense +between the two. There can be a division of functions between +different grades of workers, or between worker and consumer, and each +can +<SPAN CLASS="pagenum">{<A NAME="P100"></A>100}</SPAN> +have in his own sphere the authority needed to enable him to +fill it. But there cannot be a division of functions between the +worker and the owner who is owner and nothing else, for what function +does such an owner perform? The provision of capital? Then pay him +the sum needed to secure the use of his capital, but neither pay him +more nor admit him to a position of authority over production for which +merely as an owner he is not qualified. For this reason, while an +equilibrium between worker and manager is possible, because both are +workers, that which it is sought to establish between worker and owner +is not. It is like the proposal of the Germans to negotiate with +Belgium from Brussels. Their proposals may be excellent: but it is not +evident why they are where they are, or how, since they do not +contribute to production, they come to be putting forward proposals at +all. As long as they are in territory where they have no business to +be, their excellence as individuals will be overlooked in annoyance at +the system which puts them where they are. +</P> + +<P> +It is fortunate indeed, if nothing worse than this happens. For one +way of solving the problem of the conflict of rights in industry is not +to base rights on functions, as we propose, but to base them on force. +It is to re-establish in some veiled and decorous form the institution +of slavery, by making labor compulsory. In nearly all countries a +concerted refusal to work has been made at one time or another a +criminal offense. There are to-day parts of the world in which +European capitalists, unchecked by any public opinion or authority +<SPAN CLASS="pagenum">{<A NAME="P101"></A>101}</SPAN> +independent of themselves, are free to impose almost what terms +they please upon workmen of ignorant and helpless races. In those +districts of America where capitalism still retains its primitive +lawlessness, the same result appears to be produced upon immigrant +workmen by the threat of violence. +</P> + +<P> +In such circumstances the conflict of rights which finds expression in +industrial warfare does not arise, because the rights of one party have +been extinguished. The simplicity of the remedy is so attractive that +it is not surprising that the Governments of industrial nations should +coquet from time to time with the policy of compulsory arbitration. +After all, it is pleaded, it is only analogous to the action of a +supernational authority which should use its common force to prevent +the outbreak of war. In reality, compulsory arbitration is the +opposite of any policy which such an authority could pursue either with +justice or with hope of success. For it takes for granted the +stability of existing relationships and intervenes to adjust incidental +disputes upon the assumption that their equity is recognized and their +permanence desired. In industry, however, the equity of existing +relationships is precisely the point at issue. A League of Nations +which adjusted between a subject race and its oppressors, between Slavs +and Magyars, or the inhabitants of what was once Prussian Poland and +the Prussian Government, on the assumption that the subordination of +Slavs to Magyars and Poles to Prussians was part of an unchangeable +order, would rightly be resisted by all those who think liberty more +precious than peace. A State which, in the +<SPAN CLASS="pagenum">{<A NAME="P102"></A>102}</SPAN> +name of peace, should +make the concerted cessation of work a legal offense would be guilty of +a similar betrayal of freedom. It would be solving the conflict of +rights between those who own and those who work by abolishing the +rights of those who work. +</P> + +<BR> + +<P> +So here again, unless we are prepared to re-establish some form of +forced labor, we reach an impasse. But it is an impasse only in so +long as we regard the proprietary rights of those who own the capital +used in industry as absolute and an end in themselves. If, instead of +assuming that all property, merely because it is property, is equally +sacred, we ask what is the <I>purpose</I> for which capital is used, what is +its <I>function</I>, we shall realize that it is not an end but a means to +an end, and that its function is to serve and assist (as the economists +tell us) the labor of human beings, not the function of human beings to +serve those who happen to own it. And from this truth two consequences +follow. The first is that since capital is a thing, which ought to be +used to help industry as a man may use a bicycle to get more quickly to +his work, it ought, when it is employed, to be employed on the cheapest +terms possible. The second is that those who own it should no more +control production than a man who lets a house controls the meals which +shall be cooked in the kitchen, or the man who lets a boat the speed at +which the rowers shall pull. In other words, capital should always be +got at cost price, which means, unless the State finds it wise, as it +very well may, to own the capital used in certain industries, it should +be paid the lowest interest +<SPAN CLASS="pagenum">{<A NAME="P103"></A>103}</SPAN> +for which it can be obtained, but +should carry no right either to residuary dividends or to the control +of industry. +</P> + +<P> +There are, in theory, five ways by which the control of industry by the +agents of private property-owners can be terminated. They may be +expropriated without compensation. They may voluntarily surrender it. +They may be frozen out by action on the part of the working +<I>personnel</I>, which itself undertakes such functions, if any, as they +have performed, and makes them superfluous by conducting production +without their assistance. Their proprietary interest may be limited or +attenuated to such a degree that they become mere <I>rentiers</I>, who are +guaranteed a fixed payment analogous to that of the debenture-holder, +but who receive no profits and bear no responsibility for the +organization of industry. They may be bought out. The first +alternative is exemplified by the historical confiscations of the past, +such as, for instance, by the seizure of ecclesiastical property by the +ruling classes of England, Scotland and most other Protestant states. +The second has rarely, if ever, been tried—the nearest approach to it, +perhaps, was the famous abdication of August 4th, 1789. The third is +the method apparently contemplated by the building guilds which are now +in process of formation in Great Britain. The fourth method of +treating the capitalist is followed by the co-operative movement. It +is also that proposed by the committee of employers and trade-unionists +in the building industry over which Mr. Foster presided, and which +proposed that employers should be paid a fixed salary, and a fixed rate +of +<SPAN CLASS="pagenum">{<A NAME="P104"></A>104}</SPAN> +interest on their capital, but that all surplus profits should +be pooled and administered by a central body representing employers and +workers. The fifth has repeatedly been practised by municipalities, +and somewhat less often by national governments. +</P> + +<P> +Which of these alternative methods of removing industry from the +control of the property-owner is adopted is a matter of expediency to +be decided in each particular case. "Nationalization," therefore, +which is sometimes advanced as the only method of extinguishing +proprietary rights, is merely one species of a considerable genus. It +can be used, of course, to produce the desired result. But there are +some industries, at any rate, in which nationalization is not necessary +in order to bring it about, and since it is at best a cumbrous process, +when other methods are possible, other methods should be used. +Nationalization is a means to an end, not an end in itself. Properly +conceived its object is not to establish state management of industry, +but to remove the dead hand of private ownership, when the private +owner has ceased to perform any positive function. It is unfortunate, +therefore, that the abolition of obstructive property rights, which is +indispensable, should have been identified with a single formula, which +may be applied with advantage in the special circumstances of some +industries, but need not necessarily be applied in all. Ownership is +not a right, but a bundle of rights, and it is possible to strip them +off piecemeal as well as to strike them off simultaneously. The +ownership of capital involves, as we have said, three main claims; the +right to interest as the price of capital, the right to +<SPAN CLASS="pagenum">{<A NAME="P105"></A>105}</SPAN> +profits, +and the right to control, in virtue of which managers and workmen are +the servants of shareholders. These rights in their fullest degree are +not the invariable accompaniment of ownership, nor need they +necessarily co-exist. The ingenuity of financiers long ago devised +methods of grading stock in such a way that the ownership of some +carries full control, while that of others does not, that some bear all +the risk and are entitled to all the profits, while others are limited +in respect to both. All are property, but not all carry proprietary +rights of the same degree. +</P> + +<P> +As long as the private ownership of industrial capital remains, the +object of reformers should be to attenuate its influence by insisting +that it shall be paid not more than a rate of interest fixed in +advance, and that it should carry with it no right of control. In such +circumstances the position of the ordinary shareholder would +approximate to that of the owner of debentures; the property in the +industry would be converted into a mortgage on its profits, while the +control of its administration and all profits in excess of the minimum +would remain to be vested elsewhere. So, of course, would the risks. +But risks are of two kinds, those of the individual business and those +of the industry. The former are much heavier than the latter, for +though a coal mine is a speculative investment, coal mining is not, and +as long as each business is managed as a separate unit, the payments +made to shareholders must cover both. If the ownership of capital in +each industry were unified, which does not mean centralized, those +risks which are incidental to individual competition would be +<SPAN CLASS="pagenum">{<A NAME="P106"></A>106}</SPAN> +eliminated, and the credit of each unit would be that of the whole. +</P> + +<P> +Such a change in the character of ownership would have three +advantages. It would abolish the government of industry by property. +It would end the payment of profits to functionless shareholders by +turning them into creditors paid a fixed rate of interest. It would +lay the only possible foundations for industrial peace by making it +possible to convert industry into a profession carried on by all grades +of workers for the service of the public, not for the gain of those who +own capital. The organization which it would produce will be +described, of course, as impracticable. It is interesting, therefore, +to find it is that which experience has led practical men to suggest as +a remedy for the disorders of one of the most important of national +industries, that of building. The question before the Committee of +employers and workmen, which issued last August a Report upon the +Building Trade, was "Scientific Management and the Reduction of +Costs."[<A NAME="chap07fn1text"></A><A HREF="#chap07fn1">1</A>] These are not phrases which suggest an economic revolution; +but it is something little short of a revolution that the signatories +of the report propose. For, as soon as they came to grips with the +problem, they found that it was impossible to handle it effectively +without reconstituting the general fabric of industrial relationships +which is its setting. Why is the service supplied by the industry +ineffective? Partly because the workers do not give their full +energies to the performance of their part in production. +<SPAN CLASS="pagenum">{<A NAME="P107"></A>107}</SPAN> +Why do +they not give their best energies? Because of "the fear of +unemployment, the disinclination of the operatives to make unlimited +profit for private employers, the lack of interest evinced by +operatives owing to their non-participation in control, inefficiency +both managerial and operative." How are these psychological obstacles +to efficiency to be counteracted? By increased supervision and +speeding up, by the allurements of a premium bonus system, or the other +devices by which men who are too ingenious to have imagination or moral +insight would bully or cajole poor human nature into doing what—if +only the systems they invent would let it!—it desires to do, simple +duties and honest work? Not at all. By turning the building of houses +into what teaching now is, and Mr. Squeers thought it could never be, +an honorable profession. +</P> + +<P> +"We believe," they write, "that the great task of our Industrial +Council is to develop an entirely new system of industrial control by +the members of the industry itself—the actual producers, whether by +hand or brain, and to bring them into co-operation with the State as +the central representative of the community whom they are organized to +serve." Instead of unlimited profits, so "indispensable as an +incentive to efficiency," the employer is to be paid a salary for his +services as manager, and a rate of interest on his capital which is to +be both fixed and (unless he fails to earn it through his own +inefficiency) guaranteed; anything in excess of it, any "profits" in +fact, which in other industries are distributed as dividends to +shareholders, he is to +<SPAN CLASS="pagenum">{<A NAME="P108"></A>108}</SPAN> +surrender to a central fund to be +administered by employers and workmen for the benefit of the industry +as a whole. Instead of the financial standing of each firm being +treated as an inscrutable mystery to the public, with the result that +it is sometimes a mystery to itself, there is to be a system of public +costing and audit, on the basis of which the industry will assume a +collective liability for those firms which are shown to be competently +managed. Instead of the workers being dismissed in slack times to +struggle along as best they can, they are to be maintained from a fund +raised by a levy on employers and administered by the trade unions. +There is to be publicity as to costs and profits, open dealing and +honest work and mutual helpfulness, instead of the competition which +the nineteenth century regarded as an efficient substitute for them. +"Capital" is not to "employ labor." Labor, which includes managerial +labor, is to employ capital; and to employ it at the cheapest rate at +which, in the circumstances of the trade, it can be got. If it employs +it so successfully that there is a surplus when it has been fairly paid +for its own services, then that surplus is not to be divided among +shareholders, for, when they have been paid interest, they have been +paid their due; it is to be used to equip the industry to provide still +more effective service in the future. +</P> + +<P> +So here we have the majority of a body of practical men, who care +nothing for socialist theories, proposing to establish "organized +Public Service in the Building Industry," recommending, in short, that +their industry shall be turned into a profession. And they do it, it +<SPAN CLASS="pagenum">{<A NAME="P109"></A>109}</SPAN> +will be observed, by just that functional organization, just that +conversion of full proprietary rights into a mortgage secured (as far +as efficient firms are concerned) on the industry as a whole, just that +transference of the control of production from the owner of capital to +those whose business is production, which we saw is necessary if +industry is to be organized for the performance of service, not for the +pecuniary advantage of those who hold proprietary rights. Their Report +is of the first importance as offering a policy for attenuating private +property in capital in the important group of industries in which +private ownership, in one form or another, is likely for some +considerable time to continue, and a valuable service would be rendered +by any one who would work out in detail the application of its +principle to other trades. +</P> + +<P> +Not, of course, that this is the only way, or in highly capitalized +industries the most feasible way, in which the change can be brought +about. Had the movement against the control of production by property +taken place before the rise of limited companies, in which ownership is +separated from management, the transition to the organization of +industry as a profession might also have taken place, as the employers +and workmen in the building trade propose that it should, by limiting +the rights of private ownership without abolishing it. But that is not +what has actually happened, and therefore the proposals of the building +trade are not of universal application. It is possible to retain +private ownership in building and in industries like building, +<SPAN CLASS="pagenum">{<A NAME="P110"></A>110}</SPAN> +while changing its character, precisely because in building the +employer is normally not merely an owner, but something else as well. +He is a manager; that is, he is a workman. And because he is a +workman, whose interests, and still more whose professional spirit as a +workman may often outweigh his interests and merely financial spirit as +an owner, he can form part of the productive organization of the +industry, after his rights as an owner have been trimmed and limited. +</P> + +<P> +But that dual position is abnormal, and in the highly organized +industries is becoming more abnormal every year. In coal, in cotton, +in ship-building, in many branches of engineering the owner of capital +is not, as he is in building, an organizer or manager. His connection +with the industry and interest in it is purely financial. He is an +owner and nothing more. And because his interest is merely financial, +so that his concern is dividends and production only as a means to +dividends, he cannot be worked into an organization of industry which +vests administration in a body representing all grades of producers, or +producers and consumers together, for he has no purpose in common with +them; so that while joint councils between workers and managers may +succeed, joint councils between workers and owners or agents of owners, +like most of the so-called Whitley Councils, will not, because the +necessity for the mere owner is itself one of the points in dispute. +The master builder, who owns the capital used, can be included, not +<I>qua</I> capitalist, but <I>qua</I> builder, if he surrenders some of the +rights of ownership, as the Building Industry Committee proposed that +he should. But +<SPAN CLASS="pagenum">{<A NAME="P111"></A>111}</SPAN> +if the shareholder in a colliery or a shipyard +abdicates the control and unlimited profits to which, <I>qua</I> capitalist, +he is at present entitled, he abdicates everything that makes him what +he is, and has no other standing in the industry. He cannot share, +like the master builder, in its management, because he has no +qualifications which would enable him to do so. His object is profit; +and if industry is to become, as employers and workers in the building +trade propose, an "organized public service," then its subordination to +the shareholder whose object is profit, is, as they clearly see, +precisely what must be eliminated. The master builders propose to give +it up. They can do so because they have their place in the industry in +virtue of their function as workmen. But if the shareholder gave it +up, he would have no place at all. +</P> + +<P> +Hence in coal mining, where ownership and management are sharply +separated, the owners will not admit the bare possibility of any system +in which the control of the administration of the mines is shared +between the management and the miners. "I am authorized to state on +behalf of the Mining Association," Lord Gainford, the chief witness on +behalf of the mine-owners, informed the Coal Commission, "that if the +owners are not to be left complete executive control they will decline +to accept the responsibility for carrying on the industry."[<A NAME="chap07fn2text"></A><A HREF="#chap07fn2">2</A>] So the +mine-owners blow away in a sentence the whole body of plausible +make-believe which rests on the idea that, while private ownership +remains +<SPAN CLASS="pagenum">{<A NAME="P112"></A>112}</SPAN> +unaltered, industrial harmony can be produced by the +magic formula of joint control. And they are right. The +representatives of workmen and shareholders, in mining and in other +industries, can meet and negotiate and discuss. But joint +administration of the shareholders' property by a body representing +shareholders and workmen is impossible, because there is no purpose in +common between them. For the only purpose which could unite all +persons engaged in industry, and overrule their particular and +divergent interests, is the provision of service. And the object of +shareholders, the whole significance and <I>métier</I> of industry to them, +is not the provision of service but the provision of dividends. +</P> + +<BR> + +<P> +In industries where management is divorced from ownership, as in most +of the highly organized trades it is to-day, there is no obvious +halfway house, therefore, between the retention of the present system +and the complete extrusion of the capitalist from the control of +production. The change in the character of ownership, which is +necessary in order that coal or textiles and ship-building may be +organized as professions for the service of the public, cannot easily +spring from within. The stroke needed to liberate them from the +control of the property-owner must come from without. In theory it +might be struck by action on the part of organized workers, who would +abolish residuary profits and the right of control by the mere +procedure of refusing to work as long as they were maintained, on the +historical analogy offered by peasants who have destroyed +<SPAN CLASS="pagenum">{<A NAME="P113"></A>113}</SPAN> +predatory property in the past by declining to pay its dues and admit +its government, in which case Parliament would intervene only to +register the community's assent to the <I>fait accompli</I>. In practice, +however, the conditions of modern industry being what they are, that +course, apart from its other disadvantages, is so unlikely to be +attempted, or, if attempted, to succeed, that it can be neglected. The +alternative to it is that the change in the character of property +should be affected by legislation in virtue of which the rights of +ownership in an industry are bought out simultaneously. +</P> + +<P> +In either case, though the procedure is different, the result of the +change, once it is accomplished, is the same. Private property in +capital, in the sense of the right to profits and control, is +abolished. What remains of it is, at most, a mortgage in favor of the +previous proprietors, a dead leaf which is preserved, though the sap of +industry no longer feeds it, as long as it is not thought worth while +to strike it off. And since the capital needed to maintain and equip a +modern industry could not be provided by any one group of workers, even +were it desirable on other grounds that they should step completely +into the position of the present owners, the complex of rights which +constitutes ownership remains to be shared between them and whatever +organ may act on behalf of the general community. The former, for +example, may be the heir of the present owners as far as the control of +the routine and administration of industry is concerned: the latter may +succeed to their right to dispose of residuary profits. The elements +composing property, have, in fact, to be +<SPAN CLASS="pagenum">{<A NAME="P114"></A>114}</SPAN> +disentangled: and the +fact that to-day, under the common name of ownership, several different +powers are vested in identical hands, must not be allowed to obscure +the probability that, once private property in capital has been +abolished, it may be expedient to re-allocate those powers in detail as +well as to transfer them <I>en bloc</I>. +</P> + +<P> +The essence of a profession is, as we have suggested, that its members +organize themselves for the performance of function. It is essential +therefore, if industry is to be professionalized, that the abolition of +functionless property should not be interpreted to imply a continuance +under public ownership of the absence of responsibility on the part of +the <I>personnel</I> of industry, which is the normal accompaniment of +private ownership working through the wage-system. It is the more +important to emphasize that point, because such an implication has +sometimes been conveyed in the past by some of those who have presented +the case for some such change in the character of ownership as has been +urged above. The name consecrated by custom to the transformation of +property by public and external action is nationalization. But +nationalization is a word which is neither very felicitous nor free +from ambiguity. Properly used, it means merely ownership by a body +representing the nation. But it has come in practice to be used as +equivalent to a particular method of administration, under which +officials employed by the State step into the position of the present +directors of industry, and exercise all the power which they exercised. +So those who desire to maintain the system under which industry is +carried on, not as a profession +<SPAN CLASS="pagenum">{<A NAME="P115"></A>115}</SPAN> +serving the public, but for the +advantage of shareholders, attack nationalization on the ground that +state management is necessarily inefficient, and tremble with +apprehension whenever they post a letter in a letter-box; and those who +desire to change it reply that state services are efficient and praise +God whenever they use a telephone; as though either private or public +administration had certain peculiar and unalterable characteristics, +instead of depending for its quality, like an army or railway company +or school, and all other undertakings, public and private alike, not on +whether those who conduct it are private officials or state officials, +but on whether they are properly trained for their work and can command +the good will and confidence of their subordinates. +</P> + +<P> +The arguments on both sides are ingenious, but in reality nearly all of +them are beside the point. The merits of nationalization do not stand +or fall with the efficiency or inefficiency of existing state +departments as administrators of industry. For nationalization, which +means public ownership, is compatible with several different types of +management. The constitution of the industry may be "unitary," as is +(for example) that of the post-office. Or it may be "federal," as was +that designed by Mr. Justice Sankey for the Coal Industry. +Administration may be centralized or decentralized. The authorities to +whom it is intrusted may be composed of representatives of the +consumers, or of representatives of professional associations, or of +state officials, or of all three in several different proportions. +Executive work may be placed in the hands of civil +<SPAN CLASS="pagenum">{<A NAME="P116"></A>116}</SPAN> +servants, +trained, recruited and promoted as in the existing state departments, +or a new service may be created with a procedure and standards of its +own. It may be subject to Treasury control, or it may be financially +autonomous. The problem is, in fact, of a familiar, though difficult, +order. It is one of constitution-making. +</P> + +<P> +It is commonly assumed by controversialists that the organization and +management of a nationalized industry must, for some undefined reason, +be similar to that of the post-office. One might as reasonably suggest +that the pattern exemplar of private enterprise must be the Steel +Corporation or the Imperial Tobacco Company. The administrative +systems obtaining in a society which has nationalized its foundation +industries will, in fact, be as various as in one that resigns them to +private ownership; and to discuss their relative advantages without +defining what particular type of each is the subject of reference is +to-day as unhelpful as to approach a modern political problem in terms +of the Aristotelian classification of constitutions. The highly +abstract dialectics as to "enterprise," "initiative," "bureaucracy," +"red tape," "democratic control," "state management," which fill the +press of countries occupied with industrial problems, really belong to +the dark ages of economic thought. The first task of the student, +whatever his personal conclusions, is, it may be suggested, to +contribute what he can to the restoration of sanity by insisting that +instead of the argument being conducted with the counters of a highly +inflated and rapidly depreciating verbal currency, the exact situation, +<SPAN CLASS="pagenum">{<A NAME="P117"></A>117}</SPAN> +in so far as is possible, shall be stated as it is; uncertainties +(of which there are many) shall be treated as uncertain, and the +precise meaning of alternative proposals shall be strictly defined. +Not the least of the merits of Mr. Justice Sankey's report was that, by +stating in great detail the type of organization which he recommended +for the Coal Industry, he imparted a new precision and reality into the +whole discussion. Whether his conclusions are accepted or not, it is +from the basis of clearly defined proposals such as his that the future +discussion of these problems must proceed. It may not find a solution. +It will at least do something to create the temper in which alone a +reasonable solution can be sought. +</P> + +<P> +Nationalization, then, is not an end, but a means to an end, and when +the question of ownership has been settled the question of +administration remains for solution. As a means it is likely to be +indispensable in those industries in which the rights of private +proprietors cannot easily be modified without the action of the State, +just as the purchase of land by county councils is a necessary step to +the establishment of small holders, when landowners will not +voluntarily part with their property for the purpose. But the object +in purchasing land is to establish small holders, not to set up farms +administered by state officials; and the object of nationalizing mining +or railways or the manufacture of steel should not be to establish any +particular form of state management, but to release those who do +constructive work from the control of those whose sole interest is +pecuniary gain, in order that they may be free to +<SPAN CLASS="pagenum">{<A NAME="P118"></A>118}</SPAN> +apply their +energies to the true purpose of industry, which is the provision of +service, not the provision of dividends. When the transference of +property has taken place, it will probably be found that the necessary +provision for the government of industry will involve not merely the +freedom of the producers to produce, but the creation of machinery +through which the consumer, for whom he produces, can express his +wishes and criticize the way in which they are met, as at present he +normally cannot. But that is the second stage in the process of +reorganizing industry for the performance of function, not the first. +The first is to free it from subordination to the pecuniary interests +of the owner of property, because they are the magnetic pole which sets +all the compasses wrong, and which causes industry, however swiftly it +may progress, to progress in the wrong direction. +</P> + +<P> +Nor does this change in the character of property involve a breach with +the existing order so sharp as to be impracticable. The phraseology of +political controversy continues to reproduce the conventional +antitheses of the early nineteenth century; "private enterprise" and +"public ownership" are still contrasted with each other as light with +darkness or darkness with light. But, in reality, behind the formal +shell of the traditional legal system the elements of a new body of +relationship have already been prepared, and find piece-meal +application through policies devised, not by socialists, but by men who +repeat the formulæ of individualism, at the very moment when they are +undermining it. The Esch-Cummins Act in America, the +<SPAN CLASS="pagenum">{<A NAME="P119"></A>119}</SPAN> +Act +establishing a Ministry of Transport in England, Sir Arthur Duckham's +scheme for the organization of the coal mines, the proposals with +regard to the coal industry of the British Government itself, appear to +have the common characteristic of retaining private ownership in name, +while attenuating it in fact, by placing its operators under the +supervision, accompanied sometimes by a financial guarantee, of a +public authority. Schemes of this general character appear, indeed, to +be the first instinctive reaction produced by the discovery that +private enterprise is no longer functioning effectively; it is probable +that they possess certain merits of a technical order analogous to +those associated with the amalgamation of competing firms into a single +combination. It is questionable, however, whether the compromise which +they represent is permanently tenable. What, after all, it may be +asked, are the advantages of private ownership when it has been pared +down to the point which policies of this order propose? May not the +"owner" whose rights they are designed to protect not unreasonably +reply to their authors, "Thank you for nothing"? Individual enterprise +has its merits: so also, perhaps, has public ownership. But, by the +time these schemes have done with it, not much remains of "the simple +and obvious system of natural liberty," while their inventors are +precluded from appealing to the motives which are emphasized by +advocates of nationalization. It is one thing to be an entrepreneur +with a world of adventure and unlimited profits—if they can be +achieved—before one. It is quite another to be a director of a +railway company or coal +<SPAN CLASS="pagenum">{<A NAME="P120"></A>120}</SPAN> +corporation with a minimum rate of profit +guaranteed by the State, and a maximum rate of profit which cannot be +exceeded. Hybrids are apt to be sterile. It may be questioned +whether, in drawing the teeth of private capitalism, this type of +compromise does not draw out most of its virtues as well. +</P> + +<P> +So, when a certain stage of economic development has been reached, +private ownership, by the admission of its defenders, can no longer be +tolerated in the only form in which it is free to display the +characteristic, and quite genuine, advantages for the sake of which it +used to be defended. And, as step by step it is whittled down by tacit +concessions to the practical necessity of protecting the consumer, or +eliminating waste, or meeting the claims of the workers, public +ownership becomes, not only on social grounds, but for reasons of +economic efficiency, the alternative to a type of private ownership +which appears to carry with it few rights of ownership and to be +singularly devoid of privacy. Inevitably and unfortunately the change +must be gradual. But it should be continuous. When, as in the last +few years, the State has acquired the ownership of great masses of +industrial capital, it should retain it, instead of surrendering it to +private capitalists, who protest at once that it will be managed so +inefficiently that it will not pay and managed so efficiently that it +will undersell them. When estates are being broken up and sold, as +they are at present, public bodies should enter the market and acquire +them. Most important of all, the ridiculous barrier, inherited from an +age in which municipal corporations were corrupt oligarchies, which +<SPAN CLASS="pagenum">{<A NAME="P121"></A>121}</SPAN> +at present prevents England's Local Authorities from acquiring +property in land and industrial capital, except for purposes specified +by Act of Parliament, should be abolished, and they should be free to +undertake such services as the citizens may desire. The objection to +public ownership, in so far as it is intelligent, is in reality largely +an objection to over-centralization. But the remedy for +over-centralization, is not the maintenance of functionless property in +private hands, but the decentralized ownership of public property, and +when Birmingham and Manchester and Leeds are the little republics which +they should be, there is no reason to anticipate that they will tremble +at a whisper from Whitehall. +</P> + +<P> +These things should be done steadily and continuously quite apart from +the special cases like that of the mines and railways, where the +private ownership of capital is stated by the experts to have been +responsible for intolerable waste, or the manufacture of ornaments +[Transcriber's note: armaments?] and alcoholic liquor, which are +politically and socially too dangerous to be left in private hands. +They should be done not in order to establish a single form of +bureaucratic management, but in order to release the industry from the +domination of proprietary interests, which, whatever the form of +management, are not merely troublesome in detail but vicious in +principle, because they divert it from the performance of function to +the acquisition of gain. If at the same time private ownership is +shaken, as recently it has been, by action on the part of particular +groups of workers, so much the better. There are more ways of killing +a cat than +<SPAN CLASS="pagenum">{<A NAME="P122"></A>122}</SPAN> +drowning it in cream, and it is all the more likely to +choose the cream if they are explained to it. But the two methods are +complementary, not alternative, and the attempt to found rival schools +on an imaginary incompatibility between them is a bad case of the +<I>odium sociologicum</I> which afflicts reformers. +</P> + +<BR><BR> + +<P CLASS="footnote"> +<A NAME="chap07fn1"></A> +[<A HREF="#chap07fn1text">1</A>] Reprinted in <I>The Industrial Council for the Building Industry</I>. +</P> + +<P CLASS="footnote"> +<A NAME="chap07fn2"></A> +[<A HREF="#chap07fn2text">2</A>] <I>Coal Industry Commission, Minutes of Evidence</I>, Vol. I, p. 2506. +</P> + +<BR><BR><BR> + +<A NAME="chap08"></A> + +<SPAN CLASS="pagenum">{<A NAME="P123"></A>123}</SPAN> + +<H3 ALIGN="center"> +VIII +</H3> + +<H3 ALIGN="center"> +THE "VICIOUS CIRCLE" +</H3> + +<P> +What form of management should replace the administration of industry +by the agents of shareholders? What is most likely to hold it to its +main purpose, and to be least at the mercy of predatory interests and +functionless supernumeraries, and of the alternations of sullen +dissatisfaction and spasmodic revolt which at present distract it? +Whatever the system upon which industry is administered, one thing is +certain. Its economic processes and results must be public, because +only if they are public can it be known whether the service of industry +is vigilant, effective and honorable, whether its purpose is being +realized and its function carried out. The defense of secrecy in +business resembles the defense of adulteration on the ground that it is +a legitimate weapon of competition; indeed it has even less +justification than that famous doctrine, for the condition of effective +competition is publicity, and one motive for secrecy is to prevent it. +</P> + +<P> +Those who conduct industry at the present time and who are most +emphatic that, as the Duke of Wellington said of the unreformed House +of Commons, they "have never read or heard of any measure up to the +present moment which can in any degree satisfy the mind" that the +method of conducting it can in any way be improved, are also those +apparently who, with some +<SPAN CLASS="pagenum">{<A NAME="P124"></A>124}</SPAN> +honorable exceptions, are most +reluctant that the full facts about it should be known. And it is +crucial that they should be known. It is crucial not only because, in +the present ignorance of the real economic situation, all industrial +disagreements tend inevitably to be battles in the dark, in which +"ignorant armies clash by night," but because, unless there is complete +publicity as to profits and costs, it is impossible to form any +judgment either of the reasonableness of the prices which are charged +or of the claims to remuneration of the different parties engaged in +production. For balance sheets, with their opportunities for +concealing profits, give no clear light upon the first, and no light at +all upon the second. And so, when the facts come out, the public is +aghast at revelations which show that industry is conducted with +bewildering financial extravagance. If the full facts had been +published, as they should have been, quarter by quarter, these +revelations would probably not have been made at all, because publicity +itself would have been an antiseptic and there would have been nothing +sensational to reveal. +</P> + +<P> +The events of the last few years are a lesson which should need no +repetition. The Government, surprised at the price charged for making +shells at a time when its soldiers were ordered by Headquarters not to +fire more than a few rounds per day, whatever the need for retaliation, +because there were not more than a few to fire, establishes a costing +department to analyze the estimates submitted by manufacturers and to +compare them, item by item, with the costs in its own factories. It +finds that, through the mere pooling of knowledge, +<SPAN CLASS="pagenum">{<A NAME="P125"></A>125}</SPAN> +"some of the +reductions made in the price of shells and similar munitions," as the +Chartered Accountant employed by the Department tells us, "have been as +high as 50% of the original price." The household consumer grumbles at +the price of coal. For once in a way, amid a storm of indignation from +influential persons engaged in the industry, the facts are published. +And what do they show? That, after 2/6 has been added to the already +high price of coal because the poorer mines are alleged not to be +paying their way, 21% of the output examined by the Commission was +produced at a profit of 1/- to 3/- per ton, 32% at a profit of 3/- to +5/-, 13% at a profit of 5/- to 7/-, and 14% at a profit of 7/- per ton +and over, while the profits of distributors in London alone amount in +the aggregate to over $3,200,000, and the co-operative movement, which +aims not at profit, but at service, distributes household coal at a +cost of from 2/- to 4/- less per ton than is charged by the coal +trade![<A NAME="chap08fn1text"></A><A HREF="#chap08fn1">1</A>] +</P> + +<P> +"But these are exceptions." They may be. It is possible that in the +industries, in which, as the recent Committee on Trusts has told us, +"powerful Combinations or Consolidations of one kind or another are in +a position effectively to control output and prices," not only costs +are cut to the bare minimum but profits are inconsiderable. But then +why insist on this humiliating tradition of secrecy with regard to +them, when every one who uses their products, and every one who renders +honest service to production, stands to gain by publicity? If industry +is to become a profession, whatever its +<SPAN CLASS="pagenum">{<A NAME="P126"></A>126}</SPAN> +management, the first of +its professional rules should be, as Sir John Mann told the Coal +Commission, that "all cards should be placed on the table." If it were +the duty of a Public Department to publish quarterly exact returns as +to costs of production and profits in all the firms throughout an +industry, the gain in mere productive efficiency, which should appeal +to our enthusiasts for output, would be considerable; for the +organization whose costs were least would become the standard with +which all other types of organization would be compared. The gain in +<I>morale</I>, which is also, absurd though it may seem, a condition of +efficiency, would be incalculable. For industry would be conducted in +the light of day. Its costs, necessary or unnecessary, the +distribution of the return to it, reasonable or capricious, would be a +matter of common knowledge. It would be held to its purpose by the +mere impossibility of persuading those who make its products or those +who consume them to acquiesce, as they acquiesce now, in expenditure +which is meaningless because it has contributed nothing to the service +which the industry exists to perform. +</P> + +<P> +The organization of industry as a profession does not involve only the +abolition of functionless property, and the maintenance of publicity as +the indispensable condition of a standard of professional honor. It +implies also that those who perform its work should undertake that its +work is performed effectively. It means that they should not merely be +held to the service of the public by fear of personal inconvenience or +penalties, but that they should treat the discharge of professional +<SPAN CLASS="pagenum">{<A NAME="P127"></A>127}</SPAN> +responsibilities as an obligation attaching not only to a small +<I>élite</I> of intellectuals, managers or "bosses," who perform the +technical work of "business management," but as implied by the mere +entry into the industry and as resting on the corporate consent and +initiative of the rank and file of workers. It is precisely, indeed, +in the degree to which that obligation is interpreted as attaching to +all workers, and not merely to a select class, that the difference +between the existing industrial order, collectivism and the +organization of industry as a profession resides. The first involves +the utilization of human beings for the purpose of private gain; the +second their utilization for the purpose of public service; the third +the association in the service of the public of their professional +pride, solidarity and organization. +</P> + +<P> +The difference in administrative machinery between the second and third +might not be considerable. Both involve the drastic limitation or +transference to the public of the proprietary rights of the existing +owners of industrial capital. Both would necessitate machinery for +bringing the opinion of the consumers to bear upon the service supplied +them by the industry. The difference consists in the manner in which +the obligations of the producer to the public are conceived. He may +either be the executant of orders transmitted to him by its agents; or +he may, through his organization, himself take a positive part in +determining what those orders should be. In the former case he is +responsible for his own work, but not for anything else. If he hews +his stint of coal, it is no business of his whether the pit is a +<SPAN CLASS="pagenum">{<A NAME="P128"></A>128}</SPAN> +failure; if he puts in the normal number of rivets, he disclaims all +further interest in the price or the sea-worthiness of the ship. In +the latter his function embraces something more than the performance of +the specialized piece of work allotted to him. It includes also a +responsibility for the success of the undertaking as a whole. And +since responsibility is impossible without power, his position would +involve at least so much power as is needed to secure that he can +affect in practice the conduct of the industry. It is this collective +liability for the maintenance of a certain quality of service which is, +indeed, the distinguishing feature of a profession. It is compatible +with several different kinds of government, or indeed, when the unit of +production is not a group, but an individual, with hardly any +government at all. What it does involve is that the individual, merely +by entering the profession should have committed himself to certain +obligations in respect of its conduct, and that the professional +organization, whatever it may be, should have sufficient power to +enable it to maintain them. +</P> + +<P> +The demand for the participation of the workers in the control of +industry is usually advanced in the name of the producer, as a plea for +economic freedom or industrial democracy. "Political freedom," writes +the Final Report of the United States Commission of Industrial +Relations, which was presented in 1916, "can exist only where there is +industrial freedom.... There are now within the body of our Republic +industrial communities which are virtually Principalities, oppressive +to those dependent upon them for a livelihood +<SPAN CLASS="pagenum">{<A NAME="P129"></A>129}</SPAN> +and a dreadful +menace to the peace and welfare of the nation." The vanity of +Englishmen may soften the shadows and heighten the lights. But the +concentration of authority is too deeply rooted in the very essence of +Capitalism for differences in the degree of the arbitrariness with +which it is exercised to be other than trivial. The control of a large +works does, in fact, confer a kind of private jurisdiction in matters +concerning the life and livelihood of the workers, which, as the United +States' Commission suggests, may properly be described as "industrial +feudalism." It is not easy to understand how the traditional liberties +of Englishmen are compatible with an organization of industry which, +except in so far as it has been qualified by law or trade unionism, +permits populations almost as large as those of some famous cities of +the past to be controlled in their rising up and lying down, in their +work, economic opportunities, and social life by the decisions of a +Committee of half-a-dozen Directors. +</P> + +<P> +The most conservative thinkers recognize that the present organization +of industry is intolerable in the sacrifice of liberty which it entails +upon the producer. But each effort which he makes to emancipate +himself is met by a protest that if the existing system is incompatible +with freedom, it at least secures efficient service, and that efficient +service is threatened by movements which aim at placing a greater +measure of industrial control in the hands of the workers. The attempt +to drive a wedge between the producer and the consumer is obviously the +cue of all the interests which are conscious that by themselves they +are unable to hold back +<SPAN CLASS="pagenum">{<A NAME="P130"></A>130}</SPAN> +the flood. It is natural, therefore, +that during the last few months they should have concentrated their +efforts upon representing that every advance in the demands and in the +power of any particular group of workers is a new imposition upon the +general body of the public. Eminent persons, who are not obviously +producing more than they consume, explain to the working classes that +unless they produce more they must consume less. Highly syndicated +combinations warn the public against the menace of predatory +syndicalism. The owners of mines and minerals, in their new role as +protectors of the poor, lament the "selfishness" of the miners, as +though nothing but pure philanthropy had hitherto caused profits and +royalties to be reluctantly accepted by themselves. +</P> + +<P> +The assumption upon which this body of argument rests is simple. It is +that the existing organization of industry is the safeguard of +productive efficiency, and that from every attempt to alter it the +workers themselves lose more as consumers than they can gain as +producers. The world has been drained of its wealth and demands +abundance of goods. The workers demand a larger income, greater +leisure, and a more secure and dignified status. These two demands, it +is argued, are contradictory. For how can the consumer be supplied +with cheap goods, if, as a worker, he insists on higher wages and +shorter hours? And how can the worker secure these conditions, if as a +consumer, he demands cheap goods? So industry, it is thought, moves in +a vicious circle of shorter hours and higher wages and less production, +which in time must mean +<SPAN CLASS="pagenum">{<A NAME="P131"></A>131}</SPAN> +longer hours and lower wages; and every +one receives less, because every one demands more. +</P> + +<P> +The picture is plausible, but it is fallacious. It is fallacious not +merely in its crude assumption that a rise in wages necessarily +involves an increase in costs, but for another and more fundamental +reason. In reality the cause of economic confusion is not that the +demands of producer and consumer meet in blunt opposition; for, if they +did, their incompatibility, when they were incompatible, would be +obvious, and neither could deny his responsibility to the other, +however much he might seek to evade it. It is that they do not, but +that, as industry is organized to-day, what the worker foregoes the +general body of consumers does not necessarily gain, and what the +consumer pays the general body of workers does not necessarily receive. +If the circle is vicious, its vice is not that it is closed, but that +it is always half open, so that part of production leaks away in +consumption which adds nothing to productive energies, and that the +producer, because he knows this, does not fully use even the productive +energy which he commands. +</P> + +<P> +It is the consciousness of this leak which sets every one at cross +purposes. No conceivable system of industrial organization can secure +industrial peace, if by "peace" is meant a complete absence of +disagreement. What could be secured would be that disagreements should +not flare up into a beacon of class warfare. If every member of a +group puts something into a common pool on condition of taking +something out, they may still quarrel about the size of the shares, as +children quarrel +<SPAN CLASS="pagenum">{<A NAME="P132"></A>132}</SPAN> +over cake; but if the total is known and the +claims admitted, that is all they can quarrel about, and, since they +all stand on the same footing, any one who holds out for more than his +fellows must show some good reason why he should get it. But in +industry the claims are not all admitted, for those who put nothing in +demand to take something out; both the total to be divided and the +proportion in which the division takes place are sedulously concealed; +and those who preside over the distribution of the pool and control +what is paid out of it have a direct interest in securing as large a +share as possible for themselves and in allotting as small a share as +possible to others. If one contributor takes less, so far from it +being evident that the gain will go to some one who has put something +in and has as good a right as himself, it may go to some one who has +put in nothing and has no right at all. If another claims more, he may +secure it, without plundering a fellow-worker, at the expense of a +sleeping partner who is believed to plunder both. In practice, since +there is no clear principle determining what they ought to take, both +take all that they can get. +</P> + +<P> +In such circumstances denunciations of the producer for exploiting the +consumer miss the mark. They are inevitably regarded as an economic +version of the military device used by armies which advance behind a +screen of women and children, and then protest at the brutality of the +enemy in shooting non-combatants. They are interpreted as evidence, +not that a section of the producers are exploiting the remainder, but +that a minority of property-owners, which is in opposition to +<SPAN CLASS="pagenum">{<A NAME="P133"></A>133}</SPAN> +both, can use its economic power to make efforts directed against those +who consume much and produce little rebound on those who consume little +and produce much. And the grievance, of which the Press makes so much, +that some workers may be taking too large a share compared with others, +is masked by the much greater grievance, of which it says nothing +whatever, that some idlers take any share at all. The abolition of +payments which are made without any corresponding economic service is +thus one of the indispensable conditions both of economic efficiency +and industrial peace, because their existence prevents different +classes of workers from restraining each other, by uniting them all +against the common enemy. Either the principle of industry is that of +function, in which case slack work is only less immoral than no work at +all; or it is that of grab, in which case there is no morality in the +matter. But it cannot be both. And it is useless either for +property-owners or for Governments to lament the mote in the eye of the +trade unions as long as, by insisting on the maintenance of +functionless property, they decline to remove the beam in their own. +</P> + +<P> +The truth is that only workers can prevent the abuse of power by +workers, because only workers are recognized as possessing any title to +have their claims considered. And the first step to preventing the +exploitation of the consumer by the producer is simple. It is to turn +all men into producers, and thus to remove the temptation for +particular groups of workers to force their claims at the expense of +the public, by removing the valid excuse that such gains as they may +get are +<SPAN CLASS="pagenum">{<A NAME="P134"></A>134}</SPAN> +taken from those who at present have no right to them, +because they are disproportionate to service or obtained for no service +at all. Indeed, if work were the only title to payment, the danger of +the community being exploited by highly organized groups of producers +would largely disappear. For, when no payments were made to +non-producers, there would be no debatable ground for which to +struggle, and it would become evident that if any one group of +producers took more, another must put up with less. +</P> + +<P> +Under such conditions a body of workers who used their strong strategic +position to extort extravagant terms for themselves at the expense of +their fellow-workers might properly be described as exploiting the +community. But at present such a statement is meaningless. It is +meaningless because before the community can be exploited the community +must exist, and its existence in the sphere of economics is to-day not +a fact but only an aspiration. The procedure by which, whenever any +section of workers advance demands which are regarded as inconvenient +by their masters, they are denounced as a band of anarchists who are +preying on the public may be a convenient weapon in an emergency, but, +once it is submitted to analysis, it is logically self-destructive. It +has been applied within recent years, to the postmen, to the engineers, +to the policemen, to the miners and to the railway men, a population +with their dependents, of some eight million persons; and in the case +of the last two the whole body of organized labor made common cause +with those of whose exorbitant demands it was alleged to be the victim. +But when these +<SPAN CLASS="pagenum">{<A NAME="P135"></A>135}</SPAN> +workers and their sympathizers are deducted, what +is "the community" which remains? It is a naïve arithmetic which +produces a total by subtracting one by one all the items which compose +it; and the art which discovers the public interest by eliminating the +interests of successive sections of the public smacks of the +rhetorician rather than of the statesman. +</P> + +<P> +The truth is that at present it is idle to seek to resist the demands +of any group of workers by appeals to "the interests of society," +because to-day, as long as the economic plane alone is considered, +there is not one society but two, which dwell together in uneasy +juxtaposition, like Sinbad and the Old Man of the Sea, but which in +spirit, in ideals, and in economic interest, are worlds asunder. There +is the society of those who live by labor, whatever their craft or +profession, and the society of those who live on it. All the latter +cannot command the sacrifices or the loyalty which are due to the +former, for they have no title which will bear inspection. The +instinct to ignore that tragic division instead of ending it is +amiable, and sometimes generous. But it is a sentimentality which is +like the morbid optimism of the consumptive who dares not admit even to +himself the virulence of his disease. As long as the division exists, +the general body of workers, while it may suffer from the struggles of +any one group within it, nevertheless supports them by its sympathy, +because all are interested in the results of the contest carried on by +each. Different sections of workers will exercise mutual restraint +only when the termination of the +<SPAN CLASS="pagenum">{<A NAME="P136"></A>136}</SPAN> +struggle leaves them face to +face with each other, and not as now, with the common enemy. The ideal +of a united society in which no one group uses its power to encroach +upon the standards of another is, in short, unattainable, except +through the preliminary abolition of functionless property. +</P> + +<P> +Those to whom a leisure class is part of an immutable order without +which civilization is inconceivable, dare not admit, even to +themselves, that the world is poorer, not richer, because of its +existence. So, when, as now it is important that productive energy +should be fully used, they stamp and cry, and write to <I>The Times</I> +about the necessity for increased production, though all the time they +themselves, their way of life and expenditure, and their very existence +as a leisure class, are among the causes why production is not +increased. In all their economic plans they make one reservation, +that, however necessitous the world may be, it shall still support +them. But men who work do not make that reservation, nor is there any +reason why they should; and appeals to them to produce more wealth +because the public needs it usually fall upon deaf ears, even when such +appeals are not involved in the ignorance and misapprehensions which +often characterize them. +</P> + +<P> +For the workman is not the servant of the consumer, for whose sake +greater production is demanded, but of shareholders, whose primary aim +is dividends, and to whom all production, however futile or frivolous, +so long as it yields dividends, is the same. It is useless to urge +that he should produce more wealth for the +<SPAN CLASS="pagenum">{<A NAME="P137"></A>137}</SPAN> +community, unless at +the same time he is assured that it is the community which will benefit +in proportion as more wealth is produced. If every unnecessary charge +upon coal-getting had been eliminated, it would be reasonable that the +miners should set a much needed example by refusing to extort better +terms for themselves at the expense of the public. But there is no +reason why they should work for lower wages or longer hours as long as +those who are to-day responsible for the management of the industry +conduct it with "the extravagance and waste" stigmatized by the most +eminent official witness before the Coal Commission, or why the +consumer should grumble at the rapacity of the miner as long as he +allows himself to be mulcted by swollen profits, the costs of an +ineffective organization, and unnecessary payments to superfluous +middlemen. +</P> + +<P> +If to-day the miner or any other workman produces more, he has no +guarantee that the result will be lower prices rather than higher +dividends and larger royalties, any more than, as a workman, he can +determine the quality of the wares which his employer supplies to +customers, or the price at which they are sold. Nor, as long as he is +directly the servant of a profit-making company, and only indirectly +the servant of the community, can any such guarantee be offered him. +It can be offered only in so far as he stands in an immediate and +direct relation to the public for whom industry is carried on, so that, +when all costs have been met, any surplus will pass to it, and not to +private individuals. It will be accepted only in so far as the workers +in each industry are not merely servants executing orders, but +<SPAN CLASS="pagenum">{<A NAME="P138"></A>138}</SPAN> +themselves have a collective responsibility for the character of the +service, and can use their organizations not merely to protect +themselves against exploitation, but to make positive contributions to +the administration and development of their industry. +</P> + +<BR><BR> + +<P CLASS="footnote"> +<A NAME="chap08fn1"></A> +[<A HREF="#chap08fn1text">1</A>] <I>Coal Industry Commission, Minutes of Evidence</I>, pp. 9261-9. +</P> + +<BR><BR><BR> + +<A NAME="chap09"></A> + +<SPAN CLASS="pagenum">{<A NAME="P139"></A>139}</SPAN> + +<H3 ALIGN="center"> +IX +</H3> + +<H3 ALIGN="center"> +THE CONDITION OF EFFICIENCY +</H3> + +<P> +Thus it is not only for the sake of the producers, on whom the old +industrial order weighed most heavily, that a new industrial order is +needed. It is needed for the sake of the consumers, because the +ability on which the old industrial order prided itself most and which +is flaunted most as an argument against change, the ability to serve +them effectively, is itself visibly breaking down. It is breaking down +at what was always its most vulnerable point, the control of the human +beings whom, with characteristic indifference to all but their economic +significance, it distilled for its own purposes into an abstraction +called "Labor." The first symptom of its collapse is what the first +symptom of economic collapses has usually been in the past—the failure +of customary stimuli to evoke their customary response in human effort. +</P> + +<P> +Till that failure is recognized and industry reorganized so that new +stimuli may have free play, the collapse will not correct itself, but, +doubtless with spasmodic revivals and flickerings of energy, will +continue and accelerate. The cause of it is simple. It is that those +whose business it is to direct economic activity are increasingly +incapable of directing the men upon whom economic activity depends. +The fault is not that of individuals, but of a system, of Industrialism +itself. +<SPAN CLASS="pagenum">{<A NAME="P140"></A>140}</SPAN> +During the greater part of the nineteenth century +industry was driven by two forces, hunger and fear, and the employer +commanded them both. He could grant or withhold employment as he +pleased. If men revolted against his terms he could dismiss them, and +if they were dismissed what confronted them was starvation or the +workhouse. Authority was centralized; its instruments were passive; +the one thing which they dreaded was unemployment. And since they +could neither prevent its occurrence nor do more than a little to +mitigate its horrors when it occurred, they submitted to a discipline +which they could not resist, and industry pursued its course through +their passive acquiescence in a power which could crush them +individually if they attempted to oppose it. +</P> + +<P> +That system might be lauded as efficient or denounced as inhuman. But, +at least, as its admirers were never tired of pointing out, it worked. +And, like the Prussian State, which alike in its virtues and +deficiencies it not a little resembled, as long as it worked it +survived denunciations of its methods, as a strong man will throw off a +disease. But to-day it is ceasing to have even the qualities of its +defects. It is ceasing to be efficient. It no longer secures the +ever-increasing output of wealth which it offered in its golden prime, +and which enabled it to silence criticism by an imposing spectacle of +material success. Though it still works, it works unevenly, amid +constant friction and jolts and stoppages, without the confidence of +the public and without full confidence even in itself, a tyrant who +must intrigue and cajole where formerly he commanded, a gaoler who, if +not yet +<SPAN CLASS="pagenum">{<A NAME="P141"></A>141}</SPAN> +deprived of whip, dare only administer moderate +chastisement, and who, though he still protests that he alone can keep +the treadmill moving and get the corn ground, is compelled to surrender +so much of his authority as to make it questionable whether he is worth +his keep. For the instruments through which Capitalism exercised +discipline are one by one being taken from it. It cannot pay what +wages it likes or work what hours it likes. In well-organized +industries the power of arbitrary dismissal, the very center of its +authority, is being shaken, because men will no longer tolerate a +system which makes their livelihood dependent on the caprices of an +individual. In all industries alike the time is not far distant when +the dread of starvation can no longer be used to cow dissatisfied +workers into submission, because the public will no longer allow +involuntary unemployment to result in starvation. +</P> + +<P> +And if Capitalism is losing its control of men's bodies, still more has +it lost its command of their minds. The product of a civilization +which regarded "the poor" as instruments, at worst of the luxuries, at +best of the virtues, of the rich, its psychological foundation fifty +years ago was an ignorance in the mass of mankind which led them to +reverence as wisdom the very follies of their masters, and an almost +animal incapacity for responsibility. Education and experience have +destroyed the passivity which was the condition of the perpetuation of +industrial government in the hands of an oligarchy of private +capitalists. The workman of to-day has as little belief in the +intellectual superiority of many of those who direct industry as he has +in the morality of +<SPAN CLASS="pagenum">{<A NAME="P142"></A>142}</SPAN> +the system. It appears to him to be not only +oppressive, but wasteful, unintelligent and inefficient. In the light +of his own experience in the factory and the mine, he regards the claim +of the capitalist to be the self-appointed guardian of public interests +as a piece of sanctimonious hypocrisy. For he sees every day that +efficiency is sacrificed to shortsighted financial interests; and while +as a man he is outraged by the inhumanity of the industrial order, as a +professional who knows the difference between good work and bad he has +a growing contempt at once for its misplaced parsimony and its +misplaced extravagance, for the whole apparatus of adulteration, +advertisement and quackery which seems inseparable from the pursuit of +profit as the main standard of industrial success. +</P> + +<P> +So Capitalism no longer secures strenuous work by fear, for it is +ceasing to be formidable. And it cannot secure it by respect, for it +has ceased to be respected. And the very victories by which it seeks +to reassert its waning prestige are more disastrous than defeats. +Employers may congratulate themselves that they have maintained intact +their right to freedom of management, or opposed successfully a demand +for public ownership, or broken a movement for higher wages and shorter +hours. But what is success in a trade dispute or in a political +struggle is often a defeat in the workshop: the workmen may have lost, +but it does not follow that their employers, still less that the +public, which is principally composed of workmen, have won. For the +object of industry is to produce goods, and to produce them at the +lowest cost in human effort. +<SPAN CLASS="pagenum">{<A NAME="P143"></A>143}</SPAN> +But there is no alchemy which will +secure efficient production from the resentment or distrust of men who +feel contempt for the order under which they work. It is a commonplace +that credit is the foundation of industry. But credit is a matter of +psychology, and the workman has his psychology as well as the +capitalist. If confidence is necessary to the investment of capital, +confidence is not less necessary to the effective performance of labor +by men whose sole livelihood depends upon it. If they are not yet +strong enough to impose their will, they are strong enough to resist +when their masters would impose theirs. They may work rather than +strike. But they will work to escape dismissal, not for the greater +glory of a system in which they do not believe; and, if they are +dismissed, those who take their place will do the same. +</P> + +<P> +That this is one cause of a low output has been stated both by +employers and workers in the building industry, and by the +representatives of the miners before the Coal Commission. It was +reiterated with impressive emphasis by Mr. Justice Sankey. Nor is it +seriously contested by employers themselves. What else, indeed, do +their repeated denunciations of "restriction of output" mean except +that they have failed to organize industry so as to secure the +efficient service which it is their special function to provide? Nor +is it appropriate to the situation to indulge in full-blooded +denunciations of the "selfishness" of the working classes. "To draw an +indictment against a whole nation" is a procedure which is as +impossible in industry as it is in politics. Institutions must be +adapted to human nature, not +<SPAN CLASS="pagenum">{<A NAME="P144"></A>144}</SPAN> +human nature to institutions. If +the effect of the industrial system is such that a large and increasing +number of ordinary men and women find that it offers them no adequate +motive for economic effort, it is mere pedantry to denounce men and +women instead of amending the system. +</P> + +<P> +Thus the time has come when absolutism in industry may still win its +battles, but loses the campaign, and loses it on the very ground of +economic efficiency which was of its own selection. In the period of +transition, while economic activity is distracted by the struggle +between those who have the name and habit of power, but no longer the +full reality of it, and those who are daily winning more of the reality +of power but are not yet its recognized repositories, it is the +consumer who suffers. He has neither the service of docile obedience, +nor the service of intelligent co-operation. For slavery will work—as +long as the slaves will let it; and freedom will work when men have +learned to be free; but what will not work is a combination of the two. +So the public goes short of coal not only because of the technical +deficiencies of the system under which it is raised and distributed, +but because the system itself has lost its driving force—because the +coal owners can no longer persuade the miners into producing more +dividends for them and more royalties for the owners of minerals, while +the public cannot appeal to them to put their whole power into serving +itself, because it has chosen that they should be the servants, not of +itself, but of shareholders. +</P> + +<P> +And, this dilemma is not, as some suppose, temporary, +<SPAN CLASS="pagenum">{<A NAME="P145"></A>145}</SPAN> +the +aftermath of war, or peculiar to the coal industry, as though the +miners alone were the children of sin which in the last few months they +have been described to be. It is permanent; it has spread far; and, as +sleeping spirits are stirred into life by education and one industry +after another develops a strong corporate consciousness, it will spread +further. Nor will it be resolved by lamentations or menaces or +denunciations of leaders whose only significance is that they say +openly what plain men feel privately. For the matter at bottom is one +of psychology. What has happened is that the motives on which the +industrial system relied for several generations to secure efficiency, +secure it no longer. And it is as impossible to restore them, to +revive by mere exhortation the complex of hopes and fears and ignorance +and patient credulity and passive acquiescence, which together made +men, fifty years ago, plastic instruments in the hands of +industrialism, as to restore innocence to any others of those who have +eaten of the tree of knowledge. +</P> + +<P> +The ideal of some intelligent and respectable business men, the +restoration of the golden sixties, when workmen were docile and +confiding, and trade unions were still half illegal, and foreign +competition meant English competition in foreign countries, and prices +were rising a little and not rising too much, is the one Utopia which +can never be realized. The King may walk naked as long as his +courtiers protest that he is clad; but when a child or a fool has +broken the spell a tailor is more important than all their admiration. +If the public, which suffers from the slackening of economic activity, +<SPAN CLASS="pagenum">{<A NAME="P146"></A>146}</SPAN> +desires to end its <I>malaise</I>, it will not laud as admirable and +all-sufficient the operation of motives which are plainly ceasing to +move. It will seek to liberate new motives and to enlist them in its +service. It will endeavor to find an alternative to incentives which +were always degrading, to those who used them as much as to those upon +whom they were used, and which now are adequate incentives no longer. +And the alternative to the discipline which Capitalism exercised +through its instruments of unemployment and starvation is the +self-discipline of responsibility and professional pride. +</P> + +<P> +So the demand which aims at stronger organization, fuller +responsibility, larger powers for the sake of the producer as a +condition of economic liberty, the demand for freedom, is not +antithetic to the demand for more effective work and increased output +which is being made in the interests of the consumer. It is +complementary to it, as the insistence by a body of professional men, +whether doctors or university teachers, on the maintenance of their +professional independence and dignity against attempts to cheapen the +service is not hostile to an efficient service, but, in the long run, a +condition of it. The course of wisdom for the consumer would be to +hasten, so far as he can, the transition. For, as at present +conducted, industry is working against the grain. It is compassing sea +and land in its efforts to overcome, by ingenious financial and +technical expedients, obstacles which should never have existed. It is +trying to produce its results by conquering professional feeling +instead of using it. It is carrying not only its inevitable economic +burdens, but an ever increasing +<SPAN CLASS="pagenum">{<A NAME="P147"></A>147}</SPAN> +load of ill will and skepticism. +It has in fact "shot the bird which caused the wind to blow" and goes +about its business with the corpse round its neck. Compared with that +psychological incubus, the technical deficiencies of industry, serious +though they often are, are a bagatelle, and the business men who preach +the gospel of production without offering any plan for dealing with +what is now the central fact in the economic situation, resemble a +Christian apologist who should avoid disturbing the equanimity of his +audience by carefully omitting all reference either to the fall of man +or the scheme of salvation. If it is desired to increase the output of +wealth, it is not a paradox, but the statement of an elementary +economic truism to say that active and constructive co-operation on the +part of the rank and file of workers would do more to contribute to +that result than the discovery of a new coal-field or a generation of +scientific invention. +</P> + +<BR> + +<P> +The first condition of enlisting on the side of constructive work the +professional feeling which is now apathetic, or even hostile to it, is +to secure that when it is given its results accrue to the public, not +to the owner of property in capital, in land, or in other resources. +For this reason the attenuation of the rights at present involved in +the private ownership of industrial capital, or their complete +abolition, is not the demand of idealogues, but an indispensable +element in a policy of economic efficiency, since it is the condition +of the most effective functioning of the human beings upon whom, +though, like other truisms, it is often forgotten, +<SPAN CLASS="pagenum">{<A NAME="P148"></A>148}</SPAN> +economic +efficiency ultimately depends. But it is only one element. +Co-operation may range from mere acquiescence to a vigilant and zealous +initiative. The criterion of an effective system of administration is +that it should succeed in enlisting in the conduct of industry the +latent forces of professional pride to which the present industrial +order makes little appeal, and which, indeed, Capitalism, in its war +upon trade union organization, endeavored for many years to stamp out +altogether. +</P> + +<P> +Nor does the efficacy of such an appeal repose upon the assumption of +that "change in human nature," which is the triumphant <I>reductio ad +absurdum</I> advanced by those who are least satisfied with the working of +human nature as it is. What it does involve is that certain elementary +facts should be taken into account, instead of, as at present, being +ignored. That all work is distasteful and that "every man desires to +secure the largest income with the least effort" may be as axiomatic as +it is assumed to be. But in practice it makes all the difference to +the attitude of the individual whether the collective sentiment of the +group to which he belongs is on the side of effort or against it, and +what standard of effort it sets. That, as employers complain, the +public opinion of considerable groups of workers is against an +intensification of effort as long as part of its result is increased +dividends for shareholders, is no doubt, as far as mere efficiency is +concerned, the gravest indictment of the existing industrial order. +But, even when public ownership has taken the place of private +capitalism, its ability to command +<SPAN CLASS="pagenum">{<A NAME="P149"></A>149}</SPAN> +effective service will depend +ultimately upon its success in securing not merely that professional +feeling is no longer an opposing force, but that it is actively +enlisted upon the side of maintaining the highest possible standard of +efficiency which can reasonably be demanded. +</P> + +<P> +To put the matter concretely, while the existing ownership of mines is +a positive inducement to inefficient work, public ownership +administered by a bureaucracy, if it would remove the technical +deficiencies emphasized by Sir Richard Redmayne as inseparable from the +separate administration of 3,000 pits by 1,500 different companies, +would be only too likely to miss a capital advantage which a different +type of administration would secure. It would lose both the assistance +to be derived from the technical knowledge of practical men who know by +daily experience the points at which the details of administration can +be improved, and the stimulus to efficiency springing from the +corporate pride of a profession which is responsible for maintaining +and improving the character of its service. Professional spirit is a +force like gravitation, which in itself is neither good nor bad, but +which the engineer uses, when he can, to do his work for him. If it is +foolish to idealize it, it is equally shortsighted to neglect it. In +what are described <I>par excellence</I> as "the services" it has always +been recognized that <I>esprit de corps</I> is the foundation of efficiency, +and all means, some wise and some mischievous, are used to encourage +it: in practice, indeed, the power upon which the country relied as its +main safeguard in an emergency was the professional zeal of the navy +and nothing else. Nor is +<SPAN CLASS="pagenum">{<A NAME="P150"></A>150}</SPAN> +that spirit peculiar to the professions +which are concerned with war. It is a matter of common training, +common responsibilities, and common dangers. In all cases where +difficult and disagreeable work is to be done, the force which elicits +it is normally not merely money, but the public opinion and tradition +of the little society in which the individual moves, and in the esteem +of which he finds that which men value in success. +</P> + +<P> +To ignore that most powerful of stimuli as it is ignored to-day, and +then to lament that the efforts which it produces are not forthcoming, +is the climax of perversity. To aim at eliminating from industry the +growth and action of corporate feeling, for fear lest an organized body +of producers should exploit the public, is a plausible policy. But it +is short-sighted. It is "to pour away the baby with the bath," and to +lower the quality of the service in an attempt to safeguard it. A wise +system of administration would recognize that professional solidarity +can do much of its work for it more effectively than it can do it +itself, because the spirit of his profession is part of the individual +and not a force outside him, and would make it its object to enlist +that temper in the public service. It is only by that policy, indeed, +that the elaboration of cumbrous regulations to prevent men doing what +they should not, with the incidental result of sometimes preventing +them from doing what they should—it is only by that policy that what +is mechanical and obstructive in bureaucracy can be averted. For +industry cannot run without laws. It must either control itself by +professional standards, or it must be controlled by officials who are +not of the +<SPAN CLASS="pagenum">{<A NAME="P151"></A>151}</SPAN> +craft and who, however zealous and well-meaning, can +hardly have the feel of it in their fingers. Public control and +criticism are indispensable. But they should not be too detailed, or +they defeat themselves. It would be better that, once fair standards +have been established, the professional organization should check +offenses against prices and quality than that it should be necessary +for the State to do so. The alternative to minute external supervision +is supervision from within by men who become imbued with the public +obligations of their trade in the very process of learning it. It is, +in short, professional in industry. +</P> + +<P> +For this reason collectivism by itself is too simple a solution. Its +failure is likely to be that of other rationalist systems. +</P> + +<P CLASS="poem"> +"Dann hat er die Theile in seiner Hand,<BR> +Fehlt leider! nur das geistige Band."<BR> +</P> + +<P CLASS="noindent"> +If industrial reorganization is to be a living reality, and not merely +a plan upon paper, its aim must be to secure not only that industry is +carried on for the service of the public, but that it shall be carried +on with the active co-operation of the organizations of producers. But +co-operation involves responsibility, and responsibility involves +power. It is idle to expect that men will give their best to any +system which they do not trust, or that they will trust any system in +the control of which they do not share. Their ability to carry +professional obligations depends upon the power which they possess to +remove the obstacles which prevent those obligations from being +discharged, and upon their willingness, when they possess the power, to +use it. +</P> + +<SPAN CLASS="pagenum">{<A NAME="P152"></A>152}</SPAN> + +<P> +Two causes appear to have hampered the committees which were +established in connection with coal mines during the war to increase +the output of coal. One was the reluctance of some of them to +discharge the invidious task of imposing penalties for absenteeism on +their fellow-workmen. The other was the exclusion of faults of +management from the control of many committees. In some cases all went +well till they demanded that, if the miners were penalized for +absenteeism which was due to them, the management should be penalized +similarly when men who desired to work were sent home because, as a +result of defective organization, there was no work for them to do. +Their demand was resisted as "interference with the management," and +the attempt to enforce regularity of attendance broke down. Nor, to +take another example from the same industry, is it to be expected that +the weight of the miners' organization will be thrown on to the side of +greater production, if it has no power to insist on the removal of the +defects of equipment and organization, the shortage of trams, rails, +tubs and timber, the "creaming" of the pits by the working of easily +got coal to their future detriment, their wasteful layout caused by the +vagaries of separate ownership, by which at present the output is +reduced. +</P> + +<P> +The public cannot have it both ways. If it allows workmen to be +treated as "hands" it cannot claim the service of their wills and their +brains. If it desires them to show the zeal of skilled professionals, +it must secure that they have sufficient power to allow of their +discharging professional responsibilities. In order that workmen may +abolish any restrictions on output which +<SPAN CLASS="pagenum">{<A NAME="P153"></A>153}</SPAN> +may be imposed by them, +they must be able to insist on the abolition of the restrictions, more +mischievous because more effective, which, as the Committee on Trusts +has recently told us, are imposed by organizations of employers. In +order that the miners' leaders, instead of merely bargaining as to +wages, hours and working conditions, may be able to appeal to their +members to increase the supply of coal, they must be in a position to +secure the removal of the causes of low output which are due to the +deficiencies of the management, and which are to-day a far more serious +obstacle than any reluctance on the part of the miner. If the workmen +in the building trade are to take combined action to accelerate +production, they must as a body be consulted as to the purpose to which +their energy is to be applied, and must not be expected to build +fashionable houses, when what are required are six-roomed cottages to +house families which are at present living with three persons to a room. +</P> + +<P> +It is deplorable, indeed, that any human beings should consent to +degrade themselves by producing the articles which a considerable +number of workmen turn out to-day, boots which are partly brown paper, +and furniture which is not fit to use. The revenge of outraged +humanity is certain, though it is not always obvious; and the penalty +paid by the consumer for tolerating an organization of industry which, +in the name of efficiency, destroyed the responsibility of the workman, +is that the service with which he is provided is not even efficient. +He has always paid it, though he has not seen it, in quality. To-day +he is beginning to +<SPAN CLASS="pagenum">{<A NAME="P154"></A>154}</SPAN> +realize that he is likely to pay it in +quantity as well. If the public is to get efficient service, it can +get it only from human beings, with the initiative and caprices of +human beings. It will get it, in short, in so far as it treats +industry as a responsible profession. +</P> + +<P> +The collective responsibility of the workers for the maintenance of the +standards of their profession is, then, the alternative to the +discipline which Capitalism exercised in the past, and which is now +breaking down. It involves a fundamental change in the position both +of employers and of trade unions. As long as the direction of industry +is in the hands of property-owners or their agents, who are concerned +to extract from it the maximum profit for themselves, a trade union is +necessarily a defensive organization. Absorbed, on the one hand, in +the struggle to resist the downward thrust of Capitalism upon the +workers' standard of life, and denounced, on the other, if it presumes, +to "interfere with management," even when management is most obviously +inefficient, it is an opposition which never becomes a government and +which has neither the will nor the power to assume responsibility for +the quality of the service offered to the consumer. If the abolition +of functionless property transferred the control of production to +bodies representing those who perform constructive work and those who +consume the goods produced, the relation of the worker to the public +would no longer be indirect but immediate, and associations which are +now purely defensive would be in a position not merely to criticize and +oppose but to advise, to initiate and to enforce upon their own members +the obligations of the craft. +</P> + +<SPAN CLASS="pagenum">{<A NAME="P155"></A>155}</SPAN> + +<P> +It is obvious that in such circumstances the service offered the +consumer, however carefully safeguarded by his representation on the +authorities controlling each industry, would depend primarily upon the +success of professional organizations in finding a substitute for the +discipline exercised to-day by the agents of property-owners. It would +be necessary for them to maintain by their own action the zeal, +efficiency and professional pride which, when the barbarous weapons of +the nineteenth century have been discarded, would be the only guarantee +of a high level of production. Nor, once this new function has been +made possible for professional organizations, is there any extravagance +in expecting them to perform it with reasonable competence. How far +economic motives are balked to-day and could be strengthened by a +different type of industrial organization, to what extent, and under +what conditions, it is possible to enlist in the services of industry +motives which are not purely economic, can be ascertained only after a +study of the psychology of work which has not yet been made. Such a +study, to be of value, must start by abandoning the conventional +assumptions, popularized by economic textbooks and accepted as +self-evident by practical men, that the motives to effort are simple +and constant in character, like the pressure of steam in a boiler, that +they are identical throughout all ranges of economic activity, from the +stock exchange to the shunting of wagons or laying of bricks, and that +they can be elicited and strengthened only by directly economic +incentives. In so far as motives in industry have been considered +hitherto, it has usually been done +<SPAN CLASS="pagenum">{<A NAME="P156"></A>156}</SPAN> +by writers who, like most +exponents of scientific management, have started by assuming that the +categories of business psychology could be offered with equal success +to all classes of workers and to all types of productive work. Those +categories appear to be derived from a simplified analysis of the +mental processes of the company promoter, financier or investor, and +their validity as an interpretation of the motives and habits which +determine the attitude to his work of the bricklayer, the miner, the +dock laborer or the engineer, is precisely the point in question. +</P> + +<P> +Clearly there are certain types of industry to which they are only +partially relevant. It can hardly be assumed, for example, that the +degree of skill and energy brought to his work by a surgeon, a +scientific investigator, a teacher, a medical officer of health, an +Indian civil servant and a peasant proprietor are capable of being +expressed precisely and to the same degree in terms of the economic +advantage which those different occupations offer. Obviously those who +pursue them are influenced to some considerable, though uncertain, +extent by economic incentives. Obviously, again, the precise character +of each process or step in the exercise of their respective avocations, +the performance of an operation, the carrying out of a piece of +investigation, the selection of a particular type of educational +method, the preparation of a report, the decision of a case or the care +of live stock, is not immediately dependent upon an exact calculation +of pecuniary gain or loss. What appears to be the case is that in +certain walks of life, while the occupation is chosen after a +consideration of +<SPAN CLASS="pagenum">{<A NAME="P157"></A>157}</SPAN> +its economic advantages, and while economic +reasons exact the minimum degree of activity needed to avert dismissal +from it or "failure," the actual level of energy or proficiency +displayed depend largely upon conditions of a different order. Among +them are the character of the training received before and after +entering the occupation, the customary standard of effort demanded by +the public opinion of one's fellows, the desire for the esteem of the +small circle in which the individual moves and to be recognized as +having "made good" and not to have "failed," interest in one's work, +ranging from devotion to a determination to "do justice" to it, the +pride of the craftsman, the "tradition of the service." +</P> + +<P> +It would be foolish to suggest that any considerable body of men are +uninfluenced by economic considerations. But to represent them as +amenable to such incentives only is to give a quite unreal and bookish +picture of the actual conditions under which the work of the world is +carried on. How large a part such considerations play varies from one +occupation to another, according to the character of the work which it +does and the manner in which it is organized. In what is called <I>par +excellence</I> industry, calculations of pecuniary gain and loss are more +powerful than in most of the so-called professions, though even in +industry they are more constantly present to the minds of the business +men who "direct" it, than to those of the managers and technicians, +most of whom are paid fixed salaries, or to the rank and file of +wage-workers. In the professions of teaching and medicine, in many +branches of the +<SPAN CLASS="pagenum">{<A NAME="P158"></A>158}</SPAN> +public service, the necessary qualities are +secured, without the intervention of the capitalist employer, partly by +pecuniary incentives, partly by training and education, partly by the +acceptance on the part of those entering them of the traditional +obligations of their profession as part of the normal framework of +their working lives. But this difference is not constant and +unalterable. It springs from the manner in which different types of +occupation are organized, on the training which they offer, and the +<I>morale</I> which they cultivate among their members. The psychology of a +vocation can in fact be changed; new motives can be elicited, provided +steps are taken to allow them free expression. It is as feasible to +turn building into an organized profession, with a relatively high code +of public honor, as it was to do the same for medicine or teaching. +</P> + +<P> +The truth is that we ought radically to revise the presuppositions as +to human motives on which current presentations of economic theory are +ordinarily founded and in terms of which the discussion of economic +question is usually carried on. The assumption that the stimulus of +imminent personal want is either the only spur, or a sufficient spur, +to productive effort is a relic of a crude psychology which has little +warrant either in past history or in present experience. It derives +what plausibility it possesses from a confusion between work in the +sense of the lowest <I>quantum</I> of activity needed to escape actual +starvation, and the work which is given, irrespective of the fact that +elementary wants may already have been satisfied, through the natural +disposition of ordinary men to maintain, and of extraordinary +<SPAN CLASS="pagenum">{<A NAME="P159"></A>159}</SPAN> +men +to improve upon, the level of exertion accepted as reasonable by the +public opinion of the group of which they are members. It is the old +difference, forgotten by society as often as it is learned, between the +labor of the free man and that of the slave. Economic fear may secure +the minimum effort needed to escape economic penalties. What, however, +has made progress possible in the past, and what, it may be suggested, +matters to the world to-day, is not the bare minimum which is required +to avoid actual want, but the capacity of men to bring to bear upon +their tasks a degree of energy, which, while it can be stimulated by +economic incentives, yields results far in excess of any which are +necessary merely to avoid the extremes of hunger or destitution. +</P> + +<P> +That capacity is a matter of training, tradition and habit, at least as +much as of pecuniary stimulus, and the ability of a professional +association representing the public opinion of a group of workers to +raise it is, therefore, considerable. Once industry has been liberated +from its subservience to the interests of the functionless +property-owner, it is in this sphere that trade unions may be expected +increasingly to find their function. Its importance both for the +general interests of the community and for the special interests of +particular groups of workers can hardly be exaggerated. Technical +knowledge and managerial skill are likely to be available as readily +for a committee appointed by the workers in an industry as for a +committee appointed, as now, by the shareholders. But it is more and +more evident to-day that the crux of the economic situation is not +<SPAN CLASS="pagenum">{<A NAME="P160"></A>160}</SPAN> +the technical deficiencies of industrial organization, but the +growing inability of those who direct industry to command the active +good will of the <I>personnel</I>. Their co-operation is promised by the +conversion of industry into a profession serving the public, and +promised, as far as can be judged, by that alone. +</P> + +<P> +Nor is the assumption of the new and often disagreeable obligations of +internal discipline and public responsibility one which trade unionism +can afford, once the change is accomplished, to shirk, however alien +they may be to its present traditions. For ultimately, if by slow +degrees, power follows the ability to wield it; authority goes with +function. The workers cannot have it both ways. They must choose +whether to assume the responsibility for industrial discipline and +become free, or to repudiate it and continue to be serfs. If, +organized as professional bodies, they can provide a more effective +service than that which is now, with increasing difficulty, extorted by +the agents of capital, they will have made good their hold upon the +future. If they cannot, they will remain among the less calculable +instruments of production which many of them are to-day. The instinct +of mankind warns it against accepting at their face value spiritual +demands which cannot justify themselves by practical achievements. And +the road along which the organized workers, like any other class, must +climb to power, starts from the provision of a more effective economic +service than their masters, as their grip upon industry becomes +increasingly vacillating and uncertain, are able to supply. +</P> + +<BR><BR><BR> + +<A NAME="chap10"></A> + +<SPAN CLASS="pagenum">{<A NAME="P161"></A>161}</SPAN> + +<H3 ALIGN="center"> +X +</H3> + +<H3 ALIGN="center"> +THE POSITION OF THE BRAIN WORKER +</H3> + +<P> +The conversion of industry into a profession will involve at least as +great a change in the position of the management as in that of the +manual workers. As each industry is organized for the performance of +function, the employer will cease to be a profit maker and become what, +in so far as he holds his position by a reputable title, he already is, +one workman among others. In some industries, where the manager is a +capitalist as well, the alteration may take place through such a +limitation of his interest as a capitalist as it has been proposed by +employers and workers to introduce into the building industry. In +others, where the whole work of administration rests on the shoulders +of salaried managers, it has already in part been carried out. The +economic conditions of this change have, indeed, been prepared by the +separation of ownership from management, and by the growth of an +intellectual proletariat to whom the scientific and managerial work of +industry is increasingly intrusted. The concentration of businesses, +the elaboration of organization, and the developments springing from +the application of science to industry have resulted in the +multiplication of a body of industrial brain workers who make the old +classifications into "employers and workmen," which is still current in +common speech, an absurdly +<SPAN CLASS="pagenum">{<A NAME="P162"></A>162}</SPAN> +misleading description of the +industrial system as it exists to-day. +</P> + +<P> +To complete the transformation all that is needed is that this new +class of officials, who fifty years ago were almost unknown, should +recognize that they, like the manual workers, are the victims of the +domination of property, and that both professional pride and economic +interest require that they should throw in their lot with the rest of +those who are engaged in constructive work. Their position to-day is +often, indeed, very far from being a happy one. Many of them, like +some mine managers, are miserably paid. Their tenure of their posts is +sometimes highly insecure. Their opportunities for promotion may be +few, and distributed with a singular capriciousness. They see the +prizes of industry awarded by favoritism, or by the nepotism which +results in the head of a business unloading upon it a family of sons +whom it would be economical to pay to keep out of it, and which, +indignantly denounced on the rare occasions on which it occurs in the +public service, is so much the rule in private industry that no one +even questions its propriety. During the war they have found that, +while the organized workers have secured advances, their own salaries +have often remained almost stationary, because they have been too +genteel to take part in trade unionism, and that to-day they are +sometimes paid less than the men for whose work they are supposed to be +responsible. Regarded by the workmen as the hangers-on of the masters, +and by their employers as one section among the rest of the "hands," +they have the odium of capitalism without its power or its profits. +</P> + +<SPAN CLASS="pagenum">{<A NAME="P163"></A>163}</SPAN> + +<P> +From the conversion of industry into a profession those who at present +do its intellectual work have as much to gain as the manual workers. +For the principle of function, for which we have pleaded as the basis +of industrial organization, supplies the only intelligible standard by +which the powers and duties of the different groups engaged in industry +can be determined. At the present time no such standard exists. The +social order of the pre-industrial era, of which faint traces have +survived in the forms of academic organization, was marked by a careful +grading of the successive stages in the progress from apprentice to +master, each of which was distinguished by clearly defined rights and +duties, varying from grade to grade and together forming a hierarchy of +functions. The industrial system which developed in the course of the +nineteenth century did not admit any principle of organization other +than the convenience of the individual, who by enterprise, skill, good +fortune, unscrupulous energy or mere nepotism, happened at any moment +to be in a position to wield economic authority. His powers were what +he could exercise; his rights were what at any time he could assert. +The Lancashire mill-owner of the fifties was, like the Cyclops, a law +unto himself. Hence, since subordination and discipline are +indispensable in any complex undertaking, the subordination which +emerged in industry was that of servant to master, and the discipline +such as economic strength could impose upon economic weakness. +</P> + +<P> +The alternative to the allocation of power by the struggle of +individuals for self-aggrandizement is its +<SPAN CLASS="pagenum">{<A NAME="P164"></A>164}</SPAN> +allocation according +to function, that each group in the complex process of production +should wield so much authority as, and no more authority than, is +needed to enable it to perform the special duties for which it is +responsible. An organization of industry based on this principle does +not imply the merging of specialized economic functions in an +undifferentiated industrial democracy, or the obliteration of the brain +workers beneath the sheer mass of artisans and laborers. But it is +incompatible with the unlimited exercise of economic power by any class +or individual. It would have as its fundamental rule that the only +powers which a man can exercise are those conferred upon him in virtue +of his office. There would be subordination. But it would be +profoundly different from that which exists to-day. For it would not +be the subordination of one man to another, but of all men to the +purpose for which industry is carried on. There would be authority. +But it would not be the authority of the individual who imposes rules +in virtue of his economic power for the attainment of his economic +advantage. It would be the authority springing from the necessity of +combining different duties to attain a common end. There would be +discipline. But it would be the discipline involved in pursuing that +end, not the discipline enforced upon one man for the convenience or +profit of another. Under such an organization of industry the brain +worker might expect, as never before, to come to his own. He would be +estimated and promoted by his capacity, not by his means. He would be +less likely than at present to find doors closed to him because of +poverty. His +<SPAN CLASS="pagenum">{<A NAME="P165"></A>165}</SPAN> +judges would be his colleagues, not an owner of +property intent on dividends. He would not suffer from the perversion +of values which rates the talent and energy by which wealth is created +lower than the possession of property, which is at best their pensioner +and at worst the spend-thrift of what intelligence has produced. In a +society organized for the encouragement of creative activity those who +are esteemed most highly will be those who create, as in a world +organized for enjoyment they are those who own. +</P> + +<P> +Such considerations are too general and abstract to carry conviction. +Greater concreteness may be given them by comparing the present +position of mine-managers with that which they would occupy were effect +given to Mr. Justice Sankey's scheme for the nationalization of the +Coal Industry. A body of technicians who are weighing the probable +effects of such a reorganization will naturally consider them in +relation both to their own professional prospects and to the efficiency +of the service of which they are the working heads. They will properly +take into account questions of salaries, pensions, security of status +and promotion. At the same time they will wish to be satisfied as to +points which, though not less important, are less easily defined. +Under which system, private or public ownership, will they have most +personal discretion or authority over the conduct of matters within +their professional competence? Under which will they have the best +guarantees that their special knowledge will carry due weight, and +that, when handling matters of art, they will not be overridden or +obstructed by amateurs? +</P> + +<SPAN CLASS="pagenum">{<A NAME="P166"></A>166}</SPAN> + +<P> +As far as the specific case of the Coal Industry is concerned the +question of security and salaries need hardly be discussed. The +greatest admirer of the present system would not argue that security of +status is among the advantages which it offers to its employees. It is +notorious that in some districts, at least, managers are liable to be +dismissed, however professionally competent they may be, if they +express in public views which are not approved by the directors of +their company. Indeed, the criticism which is normally made on the +public services, and made not wholly without reason, is that the +security which they offer is excessive. On the question of salaries +rather more than one-half of the colliery companies of Great Britain +themselves supplied figures to the Coal Industry Commission.[<A NAME="chap10fn1text"></A><A HREF="#chap10fn1">1</A>] If +their returns may be trusted, it would appear that mine-managers are +paid, as a class, salaries the parsimony of which is the more +surprising in view of the emphasis laid, and quite properly laid, by +the mine-owners on the managers' responsibilities. The service of the +State does not normally offer, and ought not to offer, financial prizes +comparable with those of private industry. But it is improbable, had +the mines been its property during +<SPAN CLASS="pagenum">{<A NAME="P167"></A>167}</SPAN> +the last ten years, that more +than one-half the managers would have been in receipt of salaries of +under £301 per year, and of less than £500 in 1919, by which time +prices had more than doubled, and the aggregate profits of the +mine-owners (of which the greater part was, however, taken by the State +in taxation) had amounted in five years to £160,000,000. It would be +misleading to suggest that the salaries paid to mine-managers are +typical of private industry, nor need it be denied that the probable +effect of turning an industry into a public service would be to reduce +the size of the largest prizes at present offered. What is to be +expected is that the lower and medium salaries would be raised, and the +largest somewhat diminished. It is hardly to be denied, at any rate, +that the majority of brain workers in industry have nothing to fear on +financial grounds from such a change as is proposed by Mr. Justice +Sankey. Under the normal organization of industry, profits, it cannot +be too often insisted, do not go to them but to shareholders. There +does not appear to be any reason to suppose that the salaries of +managers in the mines making more than 5/- profit a ton were any larger +than those making under 3/-. +</P> + +<P> +The financial aspect of the change is not, however, the only point +which a group of managers or technicians have to consider. They have +also to weigh its effect on their professional status. Will they have +as much freedom, initiative and authority in the service of the +community as under private ownership? How that question is answered +depends upon the form given to the administrative system through which +a public service is +<SPAN CLASS="pagenum">{<A NAME="P168"></A>168}</SPAN> +conducted. It is possible to conceive an +arrangement under which the life of a mine-manager would be made a +burden to him by perpetual recalcitrance on the part of the men at the +pit for which he is responsible. It is possible to conceive one under +which he would be hampered to the point of paralysis by irritating +interference from a bureaucracy at headquarters. In the past some +managers of "co-operative workshops" suffered, it would seem, from the +former: many officers of Employment Exchanges are the victims, unless +common rumor is misleading, of the latter. It is quite legitimate, +indeed it is indispensable, that these dangers should be emphasized. +The problem of reorganizing industry is, as has been said above, a +problem of constitution making. It is likely to be handled +successfully only if the defects to which different types of +constitutional machinery are likely to be liable are pointed out in +advance. Once, however, these dangers are realized, to devise +precautions against them appears to be a comparatively simple matter. +If Mr. Justice Sankey's proposals be taken as a concrete example of the +position which would be occupied by the managers in a nationalized +industry, it will be seen that they do not involve either of the two +dangers which are pointed out above. The manager will, it is true, +work with a Local Mining Council or pit committee, which is to "meet +fortnightly, or oftener if need be, to advise the manager on all +questions concerning the direction and safety of the mine," and "if the +manager refuses to take the advice of the Local Mining Council on any +question concerning the safety and health of the mine, such question +shall be referred to +<SPAN CLASS="pagenum">{<A NAME="P169"></A>169}</SPAN> +the District Mining Council." It is true +also that, once such a Local Mining Council is formally established, +the manager will find it necessary to win its confidence, to lead by +persuasion, not by mere driving, to establish, in short, the same +relationships of comradeship and good will as ought to exist between +the colleagues in any common undertaking. But in all this there is +nothing to undermine his authority, unless "authority" be understood to +mean an arbitrary power which no man is fit to exercise, and which few +men, in their sober moments, would claim. The manager will be +appointed by, and responsible to, not the men whose work he supervises, +but the District Mining Council, which controls all the pits in a +district, and on that council he will be represented. Nor will he be +at the mercy of a distant "clerkocracy," overwhelming him with +circulars and overriding his expert knowledge with impracticable +mandates devised in London. The very kernel of the schemes advanced +both by Justice Sankey and by the Miners' Federation is decentralized +administration within the framework of a national system. There is no +question of "managing the industry from Whitehall." The +characteristics of different coal-fields vary so widely that reliance +on local knowledge and experience are essential, and it is to local +knowledge and experience that it is proposed to intrust the +administration of the industry. The constitution which is recommended +is, in short, not "Unitary" but "Federal." There will be a division of +functions and power between central authorities and district +authorities. The former will lay down general rules as to those +matters which must necessarily +<SPAN CLASS="pagenum">{<A NAME="P170"></A>170}</SPAN> +be dealt with on a national basis. +The latter will administer the industry within their own districts, +and, as long as they comply with those rules and provide their quota of +coal, will possess local autonomy and will follow the method of working +the pits which they think best suited to local conditions. +</P> + +<P> +Thus interpreted, public ownership does not appear to confront the +brain worker with the danger of unintelligent interference with his +special technique, of which he is, quite naturally, apprehensive. It +offers him, indeed, far larger opportunities of professional +development than are open to all but a favored few to-day, when the +considerations of productive efficiency, which it is his special +<I>métier</I> to promote, are liable to be overridden by short-sighted +financial interests operating through the pressure of a Board of +Directors who desire to show an immediate profit to their shareholders, +and who, to obtain it, will "cream" the pit, or work it in a way other +than considerations of technical efficiency would dictate. And the +interest of the community in securing that the manager's professional +skill is liberated for the service of the public, is as great as his +own. For the economic developments of the last thirty years have made +the managerial and technical <I>personnel</I> of industry the repositories +of public responsibilities of quite incalculable importance, which, +with the best will in the world, they can hardly at present discharge. +The most salient characteristic of modern industrial organization is +that production is carried on under the general direction of business +men, who do not themselves necessarily know anything of productive +processes. "Business" +<SPAN CLASS="pagenum">{<A NAME="P171"></A>171}</SPAN> +and "industry" tend to an increasing +extent to form two compartments, which, though united within the same +economic system, employ different types of <I>personnel</I>, evoke different +qualities and recognize different standards of efficiency and +workmanship. The technical and managerial staff of industry is, of +course, as amenable as other men to economic incentives. But their +special work is production, not finance; and, provided they are not +smarting under a sense of economic injustice, they want, like most +workmen, to "see the job done properly." The business men who +ultimately control industry are concerned with the promotion and +capitalization of companies, with competitive selling and the +advertisement of wares, the control of markets, the securing of special +advantages, and the arrangement of pools, combines and monopolies. +They are preoccupied, in fact, with financial results, and are +interested in the actual making of goods only in so far as financial +results accrue from it. +</P> + +<BR> + +<P> +The change in organization which has, to a considerable degree, +specialized the spheres of business and management is comparable in its +importance to that which separated business and labor a century and a +half ago. It is specially momentous for the consumer. As long as the +functions of manager, technician and capitalist were combined, as in +the classical era of the factory system, in the single person of "the +employer," it was not unreasonable to assume that profits and +productive efficiency ran similarly together. In such circumstances +the ingenuity with which economists proved +<SPAN CLASS="pagenum">{<A NAME="P172"></A>172}</SPAN> +that, in obedience to +"the law of substitution," he would choose the most economical process, +machine, or type of organization, wore a certain plausibility. True, +the employer might, even so, adulterate his goods or exploit the labor +of a helpless class of workers. But as long as the person directing +industry was himself primarily a manager, he could hardly have the +training, ability or time, even if he had the inclination, to +concentrate special attention on financial gains unconnected with, or +opposed to, progress in the arts of production, and there was some +justification for the conventional picture which represented "the +manufacturer" as the guardian of the interests of the consumer. With +the drawing apart of the financial and technical departments of +industry—with the separation of "business" from "production"—the link +which bound profits to productive efficiency is tending to be snapped. +There are more ways than formerly of securing the former without +achieving the latter; and when it is pleaded that the interests of the +captain of industry stimulate the adoption of the most "economical" +methods and thus secure industrial progress, it is necessary to ask +"economical for whom"? Though the organization of industry which is +most efficient, in the sense of offering the consumer the best service +at the lowest real cost, may be that which is most profitable to the +firm, it is also true that profits are constantly made in ways which +have nothing to do with efficient production, and which sometimes, +indeed, impede it. +</P> + +<P> +The manner in which "business" may find that the methods which pay +itself best are those which a truly +<SPAN CLASS="pagenum">{<A NAME="P173"></A>173}</SPAN> +scientific "management" would +condemn may be illustrated by three examples. In the first place, the +whole mass of profits which are obtained by the adroit capitalization +of a new business, or the reconstruction of one which already exists, +have hardly any connection with production at all. When, for instance, +a Lancashire cotton mill capitalized at £100,000 is bought by a London +syndicate which re-floats it with a capital of £500,000—not at all an +extravagant case—what exactly has happened? In many cases the +equipment of the mill for production remains, after the process, what +it was before it. It is, however, valued at a different figure, +because it is anticipated that the product of the mill will sell at a +price which will pay a reasonable profit not only upon the lower, but +upon the higher, capitalization. If the apparent state of the market +and prospects of the industry are such that the public can be induced +to believe this, the promoters of the reconstruction find it worth +while to recapitalize the mill on the new basis. They make their +profit not as manufacturers, but as financiers. They do not in any way +add to the productive efficiency of the firm, but they acquire shares +which will entitle them to an increased return. Normally, if the +market is favorable, they part with the greater number of them as soon +as they are acquired. But, whether they do so or not, what has +occurred is a process by which the business element in industry obtains +the right to a larger share of the product, without in any way +increasing the efficiency of the service which is offered to the +consumer. +</P> + +<P> +Other examples of the manner in which the control of +<SPAN CLASS="pagenum">{<A NAME="P174"></A>174}</SPAN> +production +by "business" cuts across the line of economic progress are the wastes +of competitive industry and the profits of monopoly. It is well known +that the price paid by the consumer includes marketing costs, which to +a varying, but to a large, extent are expenses not of supplying the +goods, but of supplying them under conditions involving the expenses of +advertisement and competitive distribution. For the individual firm +such expenses, which enable it to absorb part of a rival's trade, may +be an economy: to the consumer of milk or coal—to take two flagrant +instances—they are pure loss. Nor, as is sometimes assumed, are such +wastes confined to distribution. Technical reasons are stated by +railway managers to make desirable a unification of railway +administration and by mining experts of mines. But, up to the war, +business considerations maintained the expensive system under which +each railway company was operated as a separate system, and still +prevent collieries, even collieries in the same district, from being +administered as parts of a single organization. Pits are drowned out +by water, because companies cannot agree to apportion between them the +costs of a common drainage system; materials are bought, and products +sold, separately, because collieries will not combine; small coal is +left in to the amount of millions of tons because the most economical +and technically efficient working of the seams is not necessarily that +which yields the largest profit to the business men who control +production. In this instance the wide differences in economic strength +which exist between different mines discourage the unification which is +economically desirable; naturally the +<SPAN CLASS="pagenum">{<A NAME="P175"></A>175}</SPAN> +directors of a company +which owns "a good thing" do not desire to merge interests with a +company working coal that is poor in quality or expensive to mine. +When, as increasingly happens in other industries, competitive wastes, +or some of them, are eliminated by combination, there is a genuine +advance in technical efficiency, which must be set to the credit of +business motives. In that event, however, the divergence between +business interests and those of the consumers is merely pushed one +stage further forward; it arises, of course, over the question of +prices. If any one is disposed to think that this picture of the +economic waste which accompanies the domination of production by +business interests is overdrawn, he may be invited to consider the +criticisms upon the system passed by the "efficiency engineers," who +are increasingly being called upon to advise as to industrial +organization and equipment. "The higher officers of the corporation," +writes Mr. H. L. Gantt of a Public Utility Company established in +America during the war, "have all without exception been men of the +'business' type of mind, who have made their success through +financiering, buying, selling, etc.... As a matter of fact it is well +known that our industrial system has not measured up as we had +expected.... <I>The reason for its falling short is undoubtedly that the +men directing it had been trained in a business system operated for +profits, and did not understand one operated solely for production</I>. +This is no criticism of the men as individuals; they simply did not +know the job, and, what is worse, they did not know that they did not +know it." +</P> + +<SPAN CLASS="pagenum">{<A NAME="P176"></A>176}</SPAN> + +<P> +In so far, then, as "Business" and "Management" are separated, the +latter being employed under the direction of the former, it cannot be +assumed that the direction of industry is in the hands of persons whose +primary concern is productive efficiency. That a considerable degree +of efficiency will result incidentally from the pursuit of business +profits is not, of course, denied. What seems to be true, however, is +that the main interest of those directing an industry which has reached +this stage of development is given to financial strategy and the +control of markets, because the gains which these activities offer are +normally so much larger than those accruing from the mere improvement +of the processes of production. It is evident, however, that it is +precisely that improvement which is the main interest of the consumer. +He may tolerate large profits as long as they are thought to be the +symbol of efficient production. But what he is concerned with is the +supply of goods, not the value of shares, and when profits appear to be +made, not by efficient production, but by skilful financiering or +shrewd commercial tactics, they no longer appear meritorious. If, in +disgust at what he has learned to call "profiteering," the consumer +seeks an alternative to a system under which product is controlled by +"Business," he can hardly find it except by making an ally of the +managerial and technical <I>personnel</I> of industry. They organize the +service which he requires; they are relatively little implicated, +either by material interest or by psychological bias, in the financial +methods which he distrusts; they often find the control of their +professions by business men who are +<SPAN CLASS="pagenum">{<A NAME="P177"></A>177}</SPAN> +primarily financiers +irritating in the obstruction which it offers to technical efficiency, +as well as sharp and close-fisted in the treatment of salaries. Both +on public and professional grounds they belong to a group which ought +to take the initiative in promoting a partnership between the producers +and the public. They can offer the community the scientific knowledge +and specialized ability which is the most important condition of +progress in the arts of production. It can offer them a more secure +and dignified status, larger opportunities for the exercise of their +special talents, and the consciousness that they are giving the best of +their work and their lives, not to enriching a handful of uninspiring, +if innocuous, shareholders, but to the service of the great body of +their fellow-countrymen. If the last advantage be dismissed as a +phrase—if medical officers of health, directors of education, +directors of the co-operative wholesale be assumed to be quite +uninfluenced by any consciousness of social service—the first two, at +any rate, remain. And they are considerable. +</P> + +<P> +It is this gradual disengagement of managerial technique from financial +interests which would appear the probable line along which "the +employer" of the future will develop. The substitution throughout +industry of fixed salaries for fluctuating profits would, in itself, +deprive his position of half the humiliating atmosphere of predatory +enterprise which embarrasses to-day any man of honor who finds himself, +when he has been paid for his services, in possession of a surplus for +which there is no assignable reason. Nor, once large incomes from +profits have been extinguished, need his salary be large, +<SPAN CLASS="pagenum">{<A NAME="P178"></A>178}</SPAN> +as +incomes are reckoned to-day. It is said that among the barbarians, +where wealth is still measured by cattle, great chiefs are described as +hundred-cow men. The manager of a great enterprise who is paid +$400,000 a year, might similarly be described as a hundred-family man, +since he receives the income of a hundred families. It is true that +special talent is worth any price, and that a payment of $400,000 a +year to the head of a business with a turnover of millions is +economically a bagatelle. But economic considerations are not the only +considerations. There is also "the point of honor." And the truth is +that these hundred-family salaries are ungentlemanly. +</P> + +<P> +When really important issues are at stake every one realizes that no +decent man can stand out for his price. A general does not haggle with +his government for the precise pecuniary equivalent of his contribution +to victory. A sentry who gives the alarm to a sleeping battalion does +not spend next day collecting the capital value of the lives he has +saved; he is paid 1/- a day and is lucky if he gets it. The commander +of a ship does not cram himself and his belongings into the boats and +leave the crew to scramble out of the wreck as best they can; by the +tradition of the service he is the last man to leave. There is no +reason why the public should insult manufacturers and men of business +by treating them as though they were more thick-skinned than generals +and more extravagant than privates. To say that they are worth a good +deal more than even the exorbitant salaries which a few of them get is +often true. But it is beside the point. No one has any business to +<SPAN CLASS="pagenum">{<A NAME="P179"></A>179}</SPAN> +expect to be paid "what he is worth," for what he is worth is a +matter between his own soul and God. What he has a right to demand, +and what it concerns his fellow-men to see that he gets, is enough to +enable him to perform his work. When industry is organized on a basis +of function, that, and no more than that, is what he will be paid. To +do the managers of industry justice, this whining for more money is a +vice to which they (as distinct from their shareholders) are not +particularly prone. There is no reason why they should be. If a man +has important work, and enough leisure and income to enable him to do +it properly, he is in possession of as much happiness as is good for +any of the children of Adam. +</P> + +<BR><BR> + +<P CLASS="footnote"> +<A NAME="chap10fn1"></A> +[<A HREF="#chap10fn1text">1</A>] The Coal Mines Department supplied the following figures to the +Coal Industry Commission (Vol. III, App. 66). They relate to 57 per +cent. of the collieries of the United Kingdom. +</P> + +<PRE STYLE="margin-left: 10%; font-size: 70%"> +Salary, including bonus and Number of Managers +value of house and coal 1913 1919 + +£100 or less ............................... 4 2 +£101 to £200 ............................... 134 3 +£201 to £300 ............................... 280 29 +£301 to £400 ............................... 161 251 +£401 to £500 ............................... 321 213 +£501 to £600 ............................... 57 146 +£601 and over .............................. 50 152 +</PRE> + +<BR><BR><BR> + +<A NAME="chap11"></A> + +<SPAN CLASS="pagenum">{<A NAME="P180"></A>180}</SPAN> + +<H3 ALIGN="center"> +XI +</H3> + +<H3 ALIGN="center"> +PORRO UNUM NECESSARIUM +</H3> + +<P> +So the organization of society on the basis of function, instead of on +that of rights, implies three things. It means, first, that +proprietary rights shall be maintained when they are accompanied by the +performance of service and abolished when they are not. It means, +second, that the producers shall stand in a direct relation to the +community for whom production is carried on, so that their +responsibility to it may be obvious and unmistakable, not lost, as at +present, through their immediate subordination to shareholders whose +interest is not service but gain. It means, in the third place, that +the obligation for the maintenance of the service shall rest upon the +professional organization of those who perform it, and that, subject to +the supervision and criticism of the consumer, those organizations +shall exercise so much voice in the government of industry as may be +needed to secure that the obligation is discharged. It is obvious, +indeed, that no change of system or machinery can avert those causes of +social <I>malaise</I> which consist in the egotism, greed, or +quarrelsomeness of human nature. What it can do is to create an +environment in which those are not the qualities which are encouraged. +It cannot secure that men live up to their principles. What it can do +is to establish their social order upon principles to which, if they +please, they can +<SPAN CLASS="pagenum">{<A NAME="P181"></A>181}</SPAN> +live up and not live down. It cannot control +their actions. It can offer them an end on which to fix their minds. +And, as their minds are, so, in the long run and with exceptions, their +practical activity will be. +</P> + +<P> +The first condition of the right organization of industry is, then, the +intellectual conversion which, in their distrust of principles, +Englishmen are disposed to place last or to omit altogether. It is +that emphasis should be transferred from the opportunities which it +offers individuals to the social functions which it performs; that they +should be clear as to its end and should judge it by reference to that +end, not by incidental consequences which are foreign to it, however +brilliant or alluring those consequences may be. What gives its +meaning to any activity which is not purely automatic is its purpose. +It is because the purpose of industry, which is the conquest of nature +for the service of man, is neither adequately expressed in its +organization nor present to the minds of those engaged in it, because +it is not regarded as a function but as an opportunity for personal +gain or advancement or display, that the economic life of modern +societies is in a perpetual state of morbid irritation. If the +conditions which produce that unnatural tension are to be removed, it +can only be effected by the growth of a habit of mind which will +approach questions of economic organization from the standpoint of the +purpose which it exists to serve, and which will apply to it something +of the spirit expressed by Bacon when he said that the work of man +ought to be carried on "for the glory of God and the relief of men's +estate." +</P> + +<SPAN CLASS="pagenum">{<A NAME="P182"></A>182}</SPAN> + +<P> +Viewed from that angle issues which are insoluble when treated on the +basis of rights may be found more susceptible of reasonable treatment. +For a purpose, is, in the first place a principle of limitation. It +determines the end for which, and therefore the limits within which, an +activity is to be carried on. It divided what is worth doing from what +is not, and settles the scale upon which what is worth doing ought to +be done. It is in the second place, a principle of unity, because it +supplies a common end to which efforts can be directed, and submits +interests, which would otherwise conflict, to the judgment of an +over-ruling object. It is, in the third place, a principle of +apportionment or distribution. It assigns to the different parties of +groups engaged in a common undertaking the place which they are to +occupy in carrying it out. Thus it establishes order, not upon chance +or power, but upon a principle, and bases remuneration not upon what +men can with good fortune snatch for themselves nor upon what, if +unlucky, they can be induced to accept, but upon what is appropriate to +their function, no more and no less, so that those who perform no +function receive no payment, and those who contribute to the common end +receive honourable payment for honourable service. +</P> + +<P CLASS="poem"> +Frate, la nostra volontà quieta<BR> +Virtù di carità, che fa volerne<BR> +Sol quel ch'avemo, e d'altro non ci asseta.<BR> +Si disiassimo esse più superne,<BR> +Foran discordi li nostri disiri<BR> +Dal voler di colui che qui ne cerne.<BR> +<SPAN STYLE="margin-left: 1.5em">* * * * *</SPAN><BR> +</P> + +<SPAN CLASS="pagenum">{<A NAME="P183"></A>183}</SPAN> + +<P CLASS="poem"> +Anzi è formale ad esto beato esse<BR> +Tenersi dentro alla divina vogli,<BR> +Per ch'una fansi nostre vogli e stesse.<BR> +<SPAN STYLE="margin-left: 1.5em">* * * * *</SPAN><BR> +Chiaro mi fu allor com' ogni dove<BR> +In Cielo è paradiso, e sì la grazia<BR> +Del sommo ben d'un modo non vi piove.<BR> +</P> + +<P CLASS="noindent"> +The famous lines in which Piccarda explains to Dante the order of +Paradise are a description of a complex and multiform society which is +united by overmastering devotion to a common end. By that end all +stations are assigned and all activities are valued. The parts derive +their quality from their place in the system, and are so permeated by +the unity which they express that they themselves are glad to be +forgotten, as the ribs of an arch carry the eye from the floor from +which they spring to the vault in which they meet and interlace. +</P> + +<P> +Such a combination of unity and diversity is possible only to a society +which subordinates its activities to the principle of purpose. For +what that principle offers is not merely a standard for determining the +relations of different classes and groups of producers, but a scale of +moral values. Above all, it assigns to economic activity itself its +proper place as the servant, not the master, of society. The burden of +our civilization is not merely, as many suppose, that the product of +industry is ill-distributed, or its conduct tyrannical, or its +operation interrupted by embittered disagreements. It is that industry +itself has come to hold a position of exclusive predominance among +human interests, which no single interest, and least of all the +provision of the +<SPAN CLASS="pagenum">{<A NAME="P184"></A>184}</SPAN> +material means of existence, is fit to occupy. +Like a hypochondriac who is so absorbed in the processes of his own +digestion that he goes to his grave before he has begun to live, +industrialized communities neglect the very objects for which it is +worth while to acquire riches in their feverish preoccupation with the +means by which riches can be acquired. +</P> + +<P> +That obsession by economic issues is as local and transitory as it is +repulsive and disturbing. To future generations it will appear as +pitiable as the obsession of the seventeenth century by religious +quarrels appears to-day; indeed, it is less rational, since the object +with which it is concerned is less important. And it is a poison which +inflames every wound and turns each trivial scratch into a malignant +ulcer. Society will not solve the particular problems of industry +which afflict it, until that poison is expelled, and it has learned to +see industry itself in the right perspective. If it is to do that, it +must rearrange its scale of values. It must regard economic interests +as one element in life, not as the whole of life. It must persuade its +members to renounce the opportunity of gains which accrue without any +corresponding service, because the struggle for them keeps the whole +community in a fever. It must so organize industry that the +instrumental character of economic activity is emphasized by its +subordination to the social purpose for which it is carried on. +</P> + +<BR><BR><BR> + +<A NAME="chap12"></A> + +<SPAN CLASS="pagenum">{<A NAME="P185"></A>185}</SPAN> + +<H3 ALIGN="center"> +INDEX +</H3> + +<BR> + +<P CLASS="index"> +Abolition of private ownership, <A HREF="#P147">147</A> +</P> +<P CLASS="index"> +Absenteeism, <A HREF="#P152">152</A> +</P> +<P CLASS="index"> +Absolute rights, <A HREF="#P50">50-51</A> +</P> +<P CLASS="index"> +Absolutism in industry, <A HREF="#P144">144</A> +</P> +<P CLASS="index"> +Acquisitive societies, <A HREF="#P29">29-32</A> +</P> +<P CLASS="index"> +Administration, <A HREF="#P115">115-116</A> +</P> +<P CLASS="index"> +Allocation of power, <A HREF="#P163">163-164</A> +</P> +<P CLASS="index"> +American Constitution, <A HREF="#P18">18-19</A>, <A HREF="#P52">52</A> +</P> +<P CLASS="index"> +Annuities, <A HREF="#P74">74</A> +</P> +<P CLASS="index"> +Arbitration, compulsory, <A HREF="#P101">101</A> +</P> + +<BR> + +<P CLASS="index"> +Bacon, quoted, <A HREF="#P58">58</A>, <A HREF="#P181">181</A> +</P> +<P CLASS="index"> +Bentham, <A HREF="#P16">16</A>, <A HREF="#P52">52</A>, <A HREF="#P55">55</A> +</P> +<P CLASS="index"> +Brain workers, position of the, <A HREF="#P161">161-171</A> +</P> +<P CLASS="index"> +British Coal Industry, reorganization of, <A HREF="#P166">166-171</A> +</P> +<P CLASS="index"> +Building Guilds, <A HREF="#P103">103</A> +</P> +<P CLASS="index"> +Building Trade Report, <A HREF="#P106">106-110</A> +</P> +<P CLASS="index"> +Bureaucracy, <A HREF="#P116">116</A>, <A HREF="#P149">149</A> +</P> + +<BR> + +<P CLASS="index"> +Capitalism, and production, <A HREF="#P173">173-176</A>; downward thrust of, <A HREF="#P154">154</A>; +in America, <A HREF="#P101">101</A>; losing control, <A HREF="#P141">141-142</A>, <A HREF="#P148">148</A> +</P> +<P CLASS="index"> +Cecil, Lord Hugh, <A HREF="#P23">23</A>, <A HREF="#P58">58</A> +</P> +<P CLASS="index"> +Cecil, Robert, <A HREF="#P59">59</A> +</P> +<P CLASS="index"> +Cecil, William, <A HREF="#P59">59</A> +</P> +<P CLASS="index"> +Church and State, <A HREF="#P10">10-13</A> +</P> +<P CLASS="index"> +Coal Industry Commission, <A HREF="#P71">71</A>, <A HREF="#P126">126</A>, <A HREF="#P137">137</A>, <A HREF="#P143">143</A>; report of, <A HREF="#P166">166-167</A> +</P> +<P CLASS="index"> +Coal Mines Committees, <A HREF="#P152">152</A> +</P> +<P CLASS="index"> +Combinations, <A HREF="#P125">125</A>, <A HREF="#P130">130</A> +</P> +<P CLASS="index"> +Committee on Trusts, <A HREF="#P153">153</A> +</P> +<P CLASS="index"> +Competition, <A HREF="#P27">27</A> +</P> +<P CLASS="index"> +Compulsory arbitration, <A HREF="#P101">101</A> +</P> +<P CLASS="index"> +Confiscations, <A HREF="#P103">103</A> +</P> +<P CLASS="index"> +Conservatism, the New, <A HREF="#P28">28</A> +</P> +<P CLASS="index"> +Consumer, exploitation of the, <A HREF="#P133">133-134</A> +</P> +<P CLASS="index"> +Co-operative Movement and cost of coal, <A HREF="#P125">125</A> +</P> + +<BR> + +<P CLASS="index"> +Dante, quoted, <A HREF="#P182">182-183</A> +</P> +<P CLASS="index"> +Death Duties, <A HREF="#P22">22</A> +</P> +<P CLASS="index"> +Democratic control, <A HREF="#P116">116</A> +</P> +<P CLASS="index"> +Dickenson, Sir Arthur Lowes, <A HREF="#P71">71</A> +</P> +<P CLASS="index"> +Directorate control, <A HREF="#P129">129</A> +</P> +<P CLASS="index"> +Duckham, Sir Arthur, <A HREF="#P119">119</A> +</P> +<P CLASS="index"> +Duke of Wellington, quoted, <A HREF="#P123">123</A> +</P> + +<BR> + +<P CLASS="index"> +Economic confusion, cause of, <A HREF="#P131">131-132</A> +</P> +<P CLASS="index"> +Economic discontent, increase of, <A HREF="#P5">5</A> +</P> +<P CLASS="index"> +Economic egotism, <A HREF="#P27">27</A>, +</P> +<P CLASS="index"> +Economic expansion, <A HREF="#P9">9</A> +</P> +<P CLASS="index"> +Efficiency, the condition of, <A HREF="#P139">139-160</A>; through <I>Esprit de Corps</I>, <A HREF="#P149">149-150</A> +</P> +<P CLASS="index"> +Employer, waning power of the, <A HREF="#P140">140</A> +</P> +<P CLASS="index"> +England, and natural right, <A HREF="#P15">15-16</A>; and France contrasted, <A HREF="#P16">16-17</A>; +Industrialism in, <A HREF="#P44">44-47</A>; Liberal Movement in, <A HREF="#P18">18</A>; +over-crowding of population in, <A HREF="#P37">37</A>; proprietary rights in, +<A HREF="#P64">64</A> <I>et seq.</I> +</P> +<P CLASS="index"> +English landlordism, <A HREF="#P22">22-23</A> +</P> +<P CLASS="index"> +Englishmen, characteristics of, <A HREF="#P1">1-3</A>; vanity of, <A HREF="#P129">129</A> +</P> +<P CLASS="index"> +English Revolution of 1688, <A HREF="#P52">52</A> +</P> +<P CLASS="index"> +Esch-Cummins Act, <A HREF="#P118">118</A> +</P> +<P CLASS="index"> +Expediency, rule of, <A HREF="#P16">16</A> +</P> + +<BR> + +<P CLASS="index"> +Feudalism, <A HREF="#P18">18</A> +</P> +<P CLASS="index"> +Fixed salaries, <A HREF="#P177">177-178</A> +</P> +<P CLASS="index"> +Forced labor, <A HREF="#P102">102</A> +</P> +<P CLASS="index"> +France, social and industrial conditions in, <A HREF="#P16">16-17</A>; +Feudalism in, <A HREF="#P18">18</A>; Revolution in, <A HREF="#P15">15</A>, <A HREF="#P65">65</A>, <A HREF="#P69">69</A> +</P> +<P CLASS="index"> +French Revolution, <A HREF="#P15">15</A>, <A HREF="#P65">65</A>, <A HREF="#P69">69</A> +</P> +<P CLASS="index"> +Function, definition of, <A HREF="#P8">8</A>; as a basis for remuneration, <A HREF="#P41">41-42</A>; +as a basis of social reorganization, <A HREF="#P180">180</A>; Function and Freedom, <A HREF="#P7">7</A> +</P> +<P CLASS="index"> +Functional Society, <A HREF="#P29">29</A>, <A HREF="#P84">84-90</A> +</P> +<P CLASS="index"> +Functionless property-owners, <A HREF="#P79">79</A>, <A HREF="#P86">86</A>; abolishment of, <A HREF="#P87">87-88</A>; +an expensive luxury, <A HREF="#P87">87</A> +</P> + +<BR> + +<P CLASS="index"> +Gainford, Lord, quoted, <A HREF="#P26">26</A>, <A HREF="#P111">111</A> +</P> +<P CLASS="index"> +Gantt, H. L., <A HREF="#P175">175</A> +</P> +<P CLASS="index"> +Government control in war time, <A HREF="#P25">25-26</A> +</P> +<P CLASS="index"> +Ground-rents, <A HREF="#P89">89-90</A>, <A HREF="#P91">91</A> +</P> + +<BR> + +<P CLASS="index"> +Hobson, Mr., <A HREF="#P63">63</A> +</P> +<P CLASS="index"> +"Hundred-Family Man," <A HREF="#P178">178</A> +</P> + +<BR> + +<P CLASS="index"> +Imperial Tobacco Company, <A HREF="#P116">116</A> +</P> +<P CLASS="index"> +Incomes, <A HREF="#P41">41</A> +</P> +<P CLASS="index"> +Income Tax, <A HREF="#P22">22</A> +</P> +<P CLASS="index"> +Income without service, <A HREF="#P68">68</A> +</P> +<P CLASS="index"> +Individualism, <A HREF="#P48">48-49</A> +</P> +<P CLASS="index"> +Individual rights, <A HREF="#P9">9</A> +</P> +<P CLASS="index"> +Individual rights <I>vs.</I> social functions, <A HREF="#P27">27</A> +</P> +<P CLASS="index"> +Industrial problems, <A HREF="#P7">7</A> +</P> +<P CLASS="index"> +Industrial reorganization, <A HREF="#P151">151</A>, <A HREF="#P155">155</A> +</P> +<P CLASS="index"> +Industrial revolution, <A HREF="#P9">9</A> +</P> +<P CLASS="index"> +Industrial societies, <A HREF="#P9">9</A> +</P> +<P CLASS="index"> +Industrial warfare, cause of, and remedy for, <A HREF="#P40">40-42</A> +</P> +<P CLASS="index"> +Industrialism, <A HREF="#P18">18</A>; a poison, <A HREF="#P184">184</A>; compared to Militarism, <A HREF="#P44">44-46</A>; +exaggerated estimate of its importance, <A HREF="#P45">45-46</A>; failure of present +system, <A HREF="#P139">139-141</A>; nemesis of, <A HREF="#P33">33-51</A>; spread of, <A HREF="#P30">30</A>; tendency of, +<A HREF="#P31">31-32</A> +</P> +<P CLASS="index"> +Industry, and a profession, <A HREF="#P94">94</A>, <A HREF="#P97">97</A>; as a profession, <A HREF="#P91">91</A> <I>et seq.</I>, +<A HREF="#P125">125-126</A>; deficiencies of, <A HREF="#P147">147</A>; definition of, <A HREF="#P6">6</A>; how private +control of may be terminated, <A HREF="#P103">103-104</A>; and the advantages of such +a change, <A HREF="#P106">106</A>; Building Trades' Plan for, <A HREF="#P108">108</A>, <A HREF="#P111">111</A>; motives in, +<A HREF="#P155">155-159</A>; nationalization of, <A HREF="#P104">104</A>, <A HREF="#P114">114-118</A>; present organization +of intolerable, <A HREF="#P129">129</A>; purpose of, <A HREF="#P8">8</A>, <A HREF="#P46">46</A>, <A HREF="#P181">181</A>; right organization +of, <A HREF="#P6">6-7</A>; the means not the end, <A HREF="#P46">46-47</A> +</P> +<P CLASS="index"> +Inheritance taxes, <A HREF="#P90">90</A> +</P> +<P CLASS="index"> +Insurance, <A HREF="#P74">74</A> +</P> + +<BR> + +<P CLASS="index"> +Joint control, <A HREF="#P111">111-112</A> +</P> +<P CLASS="index"> +Joint-stock companies, <A HREF="#P66">66</A> +</P> +<P CLASS="index"> +Joint-stock organizations, <A HREF="#P97">97</A> +</P> + +<BR> + +<P CLASS="index"> +Labor, absolute rights of, <A HREF="#P28">28</A>; and capital, <A HREF="#P98">98-100</A>, <A HREF="#P108">108</A>; compulsory, +<A HREF="#P100">100</A>; control of breaking down, <A HREF="#P139">139</A> <I>et seq.</I>; degradation of, <A HREF="#P35">35</A>; +forced, <A HREF="#P102">102</A> +</P> +<P CLASS="index"> +League of Nations, <A HREF="#P101">101</A> +</P> +<P CLASS="index"> +Liberal Movement, <A HREF="#P18">18</A> +</P> +<P CLASS="index"> +Locke, <A HREF="#P14">14</A>, <A HREF="#P52">52</A>, <A HREF="#P55">55</A> +</P> + +<BR> + +<P CLASS="index"> +Management divorced from ownership, <A HREF="#P112">112-113</A> +</P> +<P CLASS="index"> +Mann, Sir John, <A HREF="#P126">126</A> +</P> +<P CLASS="index"> +Militarism, <A HREF="#P44">44-45</A> +</P> +<P CLASS="index"> +Mill, quoted, <A HREF="#P89">89</A> +</P> +<P CLASS="index"> +Mine managers, position of, <A HREF="#P162">162</A>, <A HREF="#P166">166-168</A> +</P> +<P CLASS="index"> +Mining royalties, <A HREF="#P23">23-24</A>, <A HREF="#P88">88</A> +</P> + +<BR> + +<P CLASS="index"> +Nationalism, <A HREF="#P48">48-49</A> +</P> +<P CLASS="index"> +Nationalization, <A HREF="#P114">114</A>, <A HREF="#P117">117</A>; of the Coal Industry, <A HREF="#P115">115</A>, <A HREF="#P165">165</A>, <A HREF="#P168">168-169</A> +</P> +<P CLASS="index"> +Natural right in France, <A HREF="#P15">15</A>; in England, <A HREF="#P15">15-16</A>; doctrine of, <A HREF="#P21">21</A> +</P> + +<BR> + +<P CLASS="index"> +Officials, position under the present economic system, <A HREF="#P162">162</A> +</P> +<P CLASS="index"> +Old industrial order a failure, <A HREF="#P139">139</A>; its effect on the consumer, <A HREF="#P144">144</A> +</P> +<P CLASS="index"> +Organization, for public service instead of private gains, <A HREF="#P127">127</A> +</P> +<P CLASS="index"> +Over-centralization, <A HREF="#P121">121</A> +</P> +<P CLASS="index"> +Ownership, a new system of, <A HREF="#P112">112-114</A> +</P> + +<BR> + +<P CLASS="index"> +Pensioners, <A HREF="#P34">34</A> +</P> +<P CLASS="index"> +Poverty a symptom of social disorder, <A HREF="#P5">5</A> +</P> +<P CLASS="index"> +Private enterprise and public ownership, <A HREF="#P118">118-120</A> +</P> +<P CLASS="index"> +Private ownership, <A HREF="#P120">120</A>; abolition of, <A HREF="#P147">147</A>; of industrial capital, +<A HREF="#P105">105-106</A> +</P> +<P CLASS="index"> +Private rights and public welfare, <A HREF="#P14">14-15</A> +</P> +<P CLASS="index"> +Privileges, <A HREF="#P24">24</A> +</P> +<P CLASS="index"> +Producer, obligation of the, <A HREF="#P127">127-128</A>; responsibility of, <A HREF="#P128">128</A> +</P> +<P CLASS="index"> +Production, increased, <A HREF="#P5">5</A>; large scale and small scale, <A HREF="#P87">87</A>; +misdirection of, <A HREF="#P37">37-39</A>; why not increased, <A HREF="#P136">136</A> +</P> +<P CLASS="index"> +Productivity, <A HREF="#P4">4</A>, <A HREF="#P46">46</A> +</P> +<P CLASS="index"> +Professional Spirit, the, <A HREF="#P149">149-150</A> +</P> +<P CLASS="index"> +Profits, and production, <A HREF="#P173">173-176</A>; division of, <A HREF="#P133">133</A> +</P> +<P CLASS="index"> +Proletariat, <A HREF="#P19">19</A>, <A HREF="#P65">65</A> +</P> +<P CLASS="index"> +Property, absolute rights of, <A HREF="#P52">52</A>, <A HREF="#P80">80</A>; and creative work, <A HREF="#P52">52</A> <I>et seq.</I>; +classification of, <A HREF="#P63">63</A>, <A HREF="#P64">64</A>; complexity of, <A HREF="#P75">75</A>; functionless, <A HREF="#P76">76-77</A>, <A HREF="#P81">81</A>; +in land, <A HREF="#P56">56-60</A>; in rights and royalties, <A HREF="#P62">62</A>; minority ownership +of, <A HREF="#P79">79</A>; most ambiguous of categories, <A HREF="#P53">53-54</A>; passive ownership of, +<A HREF="#P62">62</A>; private, <A HREF="#P70">70-72</A>; protection of, <A HREF="#P78">78-70</A>; rights, <A HREF="#P50">50-51</A>; security in, +<A HREF="#P72">72-73</A>; socialist fallacy regarding, <A HREF="#P86">86</A> +</P> +<P CLASS="index"> +Proudhon, <A HREF="#P54">54</A> +</P> +<P CLASS="index"> +Publicity of costs and profits, <A HREF="#P85">85</A>, <A HREF="#P123">123-124</A>, <A HREF="#P126">126</A>, <A HREF="#P132">132</A> +</P> + +<BR> + +<P CLASS="index"> +Redmayne, Sir Richard, <A HREF="#P149">149</A> +</P> +<P CLASS="index"> +Reformation the, <A HREF="#P10">10-13</A>; effect on society, <A HREF="#P12">12-14</A> +</P> +<P CLASS="index"> +Reform Bill of 1832, <A HREF="#P69">69</A> +</P> +<P CLASS="index"> +Religion, <A HREF="#P10">10</A>; changes in, <A HREF="#P11">11-12</A> +</P> +<P CLASS="index"> +Report of the United States Industrial Commission, 1916, <A HREF="#P128">128-129</A> +</P> +<P CLASS="index"> +Riches, meaning of, <A HREF="#P98">98</A> +</P> +<P CLASS="index"> +Rights of Man, French Declaration of, the, <A HREF="#P16">16</A>, <A HREF="#P52">52</A> +</P> +<P CLASS="index"> +Rights, and Functions, <A HREF="#P8">8-19</A>; doctrine of, <A HREF="#P21">21</A> <I>et seq.</I>, <A HREF="#P43">43-44</A>; without +functions, <A HREF="#P61">61</A> +</P> +<P CLASS="index"> +Rights of the shareholder, <A HREF="#P75">75</A> +</P> +<P CLASS="index"> +Royalties, <A HREF="#P23">23-24</A>, <A HREF="#P62">62</A> +</P> +<P CLASS="index"> +Royalties, and property, <A HREF="#P70">70</A>; from coal mining properties, <A HREF="#P88">88</A>; a tax +upon the industry of others, <A HREF="#P89">89</A> +</P> + +<BR> + +<P CLASS="index"> +Sankey, Justice, <A HREF="#P115">115</A>, <A HREF="#P117">117</A>, <A HREF="#P143">143</A>, <A HREF="#P165">165</A>, <A HREF="#P167">167</A>, <A HREF="#P168">168</A>, <A HREF="#P169">169</A> +</P> +<P CLASS="index"> +Security of income, <A HREF="#P73">73-75</A> +</P> +<P CLASS="index"> +Service as a basis of remuneration, <A HREF="#P25">25</A>, <A HREF="#P41">41-42</A>, <A HREF="#P85">85</A>, <A HREF="#P133">133</A> +</P> +<P CLASS="index"> +Shareholders, <A HREF="#P91">91-92</A> +</P> +<P CLASS="index"> +Shells, cost of making, <A HREF="#P124">124-125</A> +</P> +<P CLASS="index"> +Smith, Adam, <A HREF="#P15">15</A>, <A HREF="#P52">52</A>, <A HREF="#P95">95</A> +</P> +<P CLASS="index"> +Social inequality, <A HREF="#P36">36-37</A> +</P> +<P CLASS="index"> +Social reorganizations, schemes for, <A HREF="#P5">5</A> +</P> +<P CLASS="index"> +Social war, <A HREF="#P40">40</A> +</P> +<P CLASS="index"> +Socialism, <A HREF="#P53">53</A> +</P> +<P CLASS="index"> +Society, duality of modern, <A HREF="#P135">135</A> +</P> +<P CLASS="index"> +Society, functional organization of, <A HREF="#P52">52</A> +</P> +<P CLASS="index"> +State management, <A HREF="#P116">116</A>, <A HREF="#P117">117</A> +</P> +<P CLASS="index"> +Steel Corporation, <A HREF="#P116">116</A> +</P> +<P CLASS="index"> +Supervision from within, <A HREF="#P151">151</A> +</P> +<P CLASS="index"> +Syndicalism, <A HREF="#P130">130</A> +</P> + +<BR> + +<P CLASS="index"> +Taxation, <A HREF="#P22">22</A> +</P> +<P CLASS="index"> +Trusts, Report on, <A HREF="#P23">23</A> +</P> + +<BR> + +<P CLASS="index"> +United States, transformation in, <A HREF="#P65">65</A> +</P> +<P CLASS="index"> +Utilitarians, the English, <A HREF="#P17">17</A> +</P> +<P CLASS="index"> +Utility, <A HREF="#P16">16-17</A> +</P> + +<BR> + +<P CLASS="index"> +"Vicious Circle," the, <A HREF="#P43">43</A>, <A HREF="#P123">123-138</A> +</P> +<P CLASS="index"> +Voltaire, quoted, <A HREF="#P55">55</A> +</P> + +<BR> + +<P CLASS="index"> +Wages and costs, <A HREF="#P131">131</A> +</P> +<P CLASS="index"> +Wages and profits, <A HREF="#P78">78</A> +</P> +<P CLASS="index"> +Wealth, acquisition of, <A HREF="#P20">20</A> <I>et seq.</I>; as foundation for public esteem, +<A HREF="#P35">35-36</A>; distribution of on basis of function, <A HREF="#P77">77</A>; fallacy of increased, +<A HREF="#P42">42-45</A>; how to increase output of, <A HREF="#P147">147</A>; inequality of, <A HREF="#P37">37-38</A>; +limitation of, <A HREF="#P36">36-37</A>; output of, <A HREF="#P37">37-38</A>; production and consumption +of—a contrast, <A HREF="#P77">77-78</A>; waste of, <A HREF="#P37">37-39</A> +</P> +<P CLASS="index"> +Whitley Councils, <A HREF="#P110">110</A> +</P> +<P CLASS="index"> +Women self-supporting, <A HREF="#P74">74</A> +</P> +<P CLASS="index"> +Worker and Spender, <A HREF="#P77">77-78</A> +</P> +<P CLASS="index"> +Workers, collective responsibility of, <A HREF="#P154">154</A> +</P> +<P CLASS="index"> +Workers' control, <A HREF="#P128">128</A> +</P> +<P CLASS="index"> +Workmen, as "hands," <A HREF="#P152">152</A>; present independence of, <A HREF="#P145">145-146</A>; +responsibility of destroyed, <A HREF="#P153">153-154</A>; servants of shareholders, +<A HREF="#P136">136-137</A>; treatment of, <A HREF="#P152">152-153</A> +</P> + +<BR><BR><BR><BR> + + + + + + + + +<pre> + + + + + +End of the Project Gutenberg EBook of The Acquisitive Society, by R. 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You may copy it, give it away or +re-use it under the terms of the Project Gutenberg License included +with this eBook or online at www.gutenberg.org + + +Title: The Acquisitive Society + +Author: R. H. Tawney + +Release Date: September 16, 2010 [EBook #33741] + +Language: English + +Character set encoding: ASCII + +*** START OF THIS PROJECT GUTENBERG EBOOK THE ACQUISITIVE SOCIETY *** + + + + +Produced by Al Haines + + + + + + + + + +THE ACQUISITIVE SOCIETY + + + +BY + +R. H. TAWNEY + + +FELLOW OF BALLIOL COLLEGE, OXFORD; LATE MEMBER + OF THE COAL INDUSTRY COMMISSION + + + + +NEW YORK + +HARCOURT, BRACE AND COMPANY + + + + +COPYRIGHT, 1920, BY + +HARCOURT, BRACE AND HOWE, INC. + + + +PRINTED IN THE U. S. A. BY + +THE QUINN & BODEN COMPANY + +RAHWAY, N. J. + + + + +CONTENTS + + +CHAPTER + + I INTRODUCTORY + II RIGHTS AND FUNCTIONS + III THE ACQUISITIVE SOCIETY + IV THE NEMESIS OF INDUSTRIALISM + V PROPERTY AND CREATIVE WORK + VI THE FUNCTIONAL SOCIETY + VII INDUSTRY AS A PROFESSION + VIII THE "VICIOUS CIRCLE" + IX THE CONDITION OF EFFICIENCY + X THE POSITION OF THE BRAIN WORKER + XI PORRO UNUM NECESSARIUM + + + + +_The author desires to express his acknowledgments to the Editor of +the_ Hibbert Journal _for permission to reprint an article which +appeared in it_. + + + + +{1} + +THE ACQUISITIVE SOCIETY + + +I + +INTRODUCTORY + +It is a commonplace that the characteristic virtue of Englishmen is +their power of sustained practical activity, and their characteristic +vice a reluctance to test the quality of that activity by reference to +principles. They are incurious as to theory, take fundamentals for +granted, and are more interested in the state of the roads than in +their place on the map. And it might fairly be argued that in ordinary +times that combination of intellectual tameness with practical energy +is sufficiently serviceable to explain, if not to justify, the +equanimity with which its possessors bear the criticism of more +mentally adventurous nations. It is the mood of those who have made +their bargain with fate and are content to take what it offers without +re-opening the deal. It leaves the mind free to concentrate +undisturbed upon profitable activities, because it is not distracted by +a taste for unprofitable speculations. Most generations, it might be +said, walk in a path which they neither make, nor discover, but accept; +the main thing is that they should march. The blinkers worn by +Englishmen enable them to trot all the more steadily along the beaten +{2} road, without being disturbed by curiosity as to their destination. + +But if the medicine of the constitution ought not to be made its daily +food, neither can its daily food be made its medicine. There are times +which are not ordinary, and in such times it is not enough to follow +the road. It is necessary to know where it leads, and, if it leads +nowhere, to follow another. The search for another involves +reflection, which is uncongenial to the bustling people who describe +themselves as practical, because they take things as they are and leave +them as they are. But the practical thing for a traveler who is +uncertain of his path is not to proceed with the utmost rapidity in the +wrong direction: it is to consider how to find the right one. And the +practical thing for a nation which has stumbled upon one of the +turning-points of history is not to behave as though nothing very +important were involved, as if it did not matter whether it turned to +the right or to the left, went up hill or down dale, provided that it +continued doing with a little more energy what it has done hitherto; +but to consider whether what it has done hitherto is wise, and, if it +is not wise, to alter it. When the broken ends of its industry, its +politics, its social organization, have to be pieced together after a +catastrophe, it must make a decision; for it makes a decision even if +it refuses to decide. If it is to make a decision which will wear, it +must travel beyond the philosophy momentarily in favor with the +proprietors of its newspapers. Unless it is to move with the energetic +futility of a squirrel in a revolving cage, it must have a clear +apprehension both of the {3} deficiency of what is, and of the +character of what ought to be. And to obtain this apprehension it must +appeal to some standard more stable than the momentary exigencies of +its commerce or industry or social life, and judge them by it. It +must, in short, have recourse to Principles. + + +Such considerations are, perhaps, not altogether irrelevant at a time +when facts have forced upon Englishmen the reconsideration of their +social institutions which no appeal to theory could induce them to +undertake. An appeal to principles is the condition of any +considerable reconstruction of society, because social institutions are +the visible expression of the scale of moral values which rules the +minds of individuals, and it is impossible to alter institutions +without altering that moral valuation. Parliament, industrial +organizations, the whole complex machinery through which society +expresses itself, is a mill which grinds only what is put into it, and +when nothing is put into it grinds air. There are many, of course, who +desire no alteration, and who, when it is attempted, will oppose it. +They have found the existing economic order profitable in the past. +They desire only such changes as will insure that it is equally +profitable in the future. _Quand le Roi avait bu, la Pologne etait +ivre_. They are genuinely unable to understand why their countrymen +cannot bask happily by the fire which warms themselves, and ask, like +the French farmer-general:--"When everything goes so happily, why +trouble to change it?" Such persons are to be pitied, for they lack +the social quality which is {4} proper to man. But they do not need +argument; for Heaven has denied them one of the faculties required to +apprehend it. + +There are others, however, who are conscious of the desire for a new +social order, but who yet do not grasp the implications of their own +desire. Men may genuinely sympathize with the demand for a radical +change. They may be conscious of social evils and sincerely anxious to +remove them. They may set up a new department, and appoint new +officials, and invent a new name to express their resolution to effect +something more drastic than reform, and less disturbing than +revolution. But unless they will take the pains, not only to act, but +to reflect, they end by effecting nothing. For they deliver themselves +bound to those who think they are practical, because they take their +philosophy so much for granted as to be unconscious of its +implications, and directly they try to act, that philosophy re-asserts +itself, and serves as an overruling force which presses their action +more deeply into the old channels. "Unhappy man that I am; who shall +deliver me from the body of this death?" When they desire to place +their economic life on a better foundation, they repeat, like parrots, +the word "Productivity," because that is the word that rises first in +their minds; regardless of the fact that productivity is the foundation +on which it is based already, that increased productivity is the one +characteristic achievement of the age before the war, as religion was +of the Middle Ages or art of classical Athens, and that it is precisely +in the century which has seen the greatest increase in {5} productivity +since the fall of the Roman Empire that economic discontent has been +most acute. When they are touched by social compunction, they can +think of nothing more original than the diminution of poverty, because +poverty, being the opposite of the riches which they value most, seems +to them the most terrible of human afflictions. They do not understand +that poverty is a symptom and a consequence of social disorder, while +the disorder itself is something at once more fundamental and more +incorrigible, and that the quality in their social life which causes it +to demoralize a few by excessive riches, is also the quality which +causes it to demoralize many by excessive poverty. + +"But increased production is important." Of course it is! That plenty +is good and scarcity evil--it needs no ghost from the graves of the +past five years to tell us that. But plenty depends upon co-operative +effort, and co-operation upon moral principles. And moral principles +are what the prophets of this dispensation despise. So the world +"continues in scarcity," because it is too grasping and too +short-sighted to seek that "which maketh men to be of one mind in a +house." The well-intentioned schemes for social reorganization put +forward by its commercial teachers are abortive, because they endeavor +to combine incompatibles, and, if they disturb everything, settle +nothing. They are like a man who, when he finds that his shoddy boots +wear badly, orders a pair two sizes larger instead of a pair of good +leather, or who makes up for putting a bad sixpence in the plate on +Sunday by putting in a bad shilling the next. And when their fit of +feverish energy {6} has spent itself, and there is nothing to show for +it except disillusionment, they cry that reform is impracticable, and +blame human nature, when what they ought to blame is themselves. + +Yet all the time the principles upon which industry should be based are +simple, however difficult it may be to apply them; and if they are +overlooked it is not because they are difficult, but because they are +elementary. They are simple because industry is simple. An industry, +when all is said, is, in its essence, nothing more mysterious than a +body of men associated, in various degrees of competition and +co-operation, to win their living by providing the community with some +service which it requires. Organize it as you will, let it be a group +of craftsmen laboring with hammer and chisel, or peasants plowing their +own fields, or armies of mechanics of a hundred different trades +constructing ships which are miracles of complexity with machines which +are the climax of centuries of invention, its function is service, its +method is association. Because its function is service, an industry as +a whole has rights and duties towards the community, the abrogation of +which involves privilege. Because its method is association, the +different parties within it have rights and duties towards each other; +and the neglect or perversion of these involves oppression. + +The conditions of a right organization of industry are, therefore, +permanent, unchanging, and capable of being apprehended by the most +elementary intelligence, provided it will read the nature of its +countrymen in the large outlines of history, not in the bloodless {7} +abstractions of experts. The first is that it should be subordinated +to the community in such a way as to render the best service +technically possible, that those who render no service should not be +paid at all, because it is of the essence of a function that it should +find its meaning in the satisfaction, not of itself, but of the end +which it serves. The second is that its direction and government +should be in the hands of persons who are responsible to those who are +directed and governed, because it is the condition of economic freedom +that men should not be ruled by an authority which they cannot control. +The industrial problem, in fact, is a problem of right, not merely of +material misery, and because it is a problem of right it is most acute +among those sections of the working classes whose material misery is +least. It is a question, first of Function, and secondly of Freedom. + + + + +{8} + +II + +RIGHTS AND FUNCTIONS + +A function may be defined as an activity which embodies and expresses +the idea of social purpose. The essence of it is that the agent does +not perform it merely for personal gain or to gratify himself, but +recognizes that he is responsible for its discharge to some higher +authority. The purpose of industry is obvious. It is to supply man +with things which are necessary, useful or beautiful, and thus to bring +life to body or spirit. In so far as it is governed by this end, it is +among the most important of human activities. In so far as it is +diverted from it, it may be harmless, amusing, or even exhilarating to +those who carry it on, but it possesses no more social significance +than the orderly business of ants and bees, the strutting of peacocks, +or the struggles of carnivorous animals over carrion. + +Men have normally appreciated this fact, however unwilling or unable +they may have been to act upon it; and therefore from time to time, in +so far as they have been able to control the forces of violence and +greed, they have adopted various expedients for emphasizing the social +quality of economic activity. It is not easy, however, to emphasize it +effectively, because to do so requires a constant effort of will, +against which egotistical instincts are in rebellion, and because, if +that will is to prevail, it must be embodied in some social {9} and +political organization, which may itself become so arbitrary, +tyrannical and corrupt as to thwart the performance of function instead +of promoting it. When this process of degeneration has gone far, as in +most European countries it had by the middle of the eighteenth century, +the indispensable thing is to break the dead organization up and to +clear the ground. In the course of doing so, the individual is +emancipated and his rights are enlarged; but the idea of social purpose +is discredited by the discredit justly attaching to the obsolete order +in which it is embodied. + +It is not surprising, therefore, that in the new industrial societies +which arose on the ruins of the old regime the dominant note should +have been the insistence upon individual rights, irrespective of any +social purpose to which their exercise contributed. The economic +expansion which concentrated population on the coal-measures was, in +essence, an immense movement of colonization drifting from the south +and east to the north and west; and it was natural that in those +regions of England, as in the American settlements, the characteristic +philosophy should be that of the pioneer and the mining camp. The +change of social quality was profound. But in England, at least, it +was gradual, and the "industrial revolution," though catastrophic in +its effects, was only the visible climax of generations of subtle moral +change. The rise of modern economic relations, which may be dated in +England from the latter half of the seventeenth century, was coincident +with the growth of a political theory which replaced the conception of +purpose by that of mechanism. During a great part of history men had +{10} found the significance of their social order in its relation to +the universal purposes of religion. It stood as one rung in a ladder +which stretched from hell to Paradise, and the classes who composed it +were the hands, the feet, the head of a corporate body which was itself +a microcosm imperfectly reflecting a larger universe. When the +Reformation made the Church a department of the secular government, it +undermined the already enfeebled spiritual forces which had erected +that sublime, but too much elaborated, synthesis. But its influence +remained for nearly a century after the roots which fed it had been +severed. It was the atmosphere into which men were born, and from +which, however practical, or even Machiavellian, they could not easily +disengage their spirits. Nor was it inconvenient for the new +statecraft to see the weight of a traditional religious sanction added +to its own concern in the subordination of all classes and interests to +the common end, of which it conceived itself, and during the greater +part of the sixteenth century was commonly conceived, to be the +guardian. The lines of the social structure were no longer supposed to +reproduce in miniature the plan of a universal order. But common +habits, common traditions and beliefs, common pressure from above gave +them a unity of direction, which restrained the forces of individual +variation and lateral expansion; and the center towards which they +converged, formerly a Church possessing some of the characteristics of +a State, was now a State that had clothed itself with many of the +attributes of a Church. + +The difference between the England of Shakespeare, {11} still visited +by the ghosts of the Middle Ages, and the England which merged in 1700 +from the fierce polemics of the last two generations, was a difference +of social and political theory even more than of constitutional and +political arrangements. Not only the facts, but the minds which +appraised them, were profoundly modified. The essence of the change +was the disappearance of the idea that social institutions and economic +activities were related to common ends, which gave them their +significance and which served as their criterion. In the eighteenth +century both the State and the Church had abdicated that part of the +sphere which had consisted in the maintenance of a common body of +social ethics; what was left of it was repression of a class, not the +discipline of a nation. Opinion ceased to regard social institutions +and economic activity as amenable, like personal conduct, to moral +criteria, because it was no longer influenced by the spectacle of +institutions which, arbitrary, capricious, and often corrupt in their +practical operation, had been the outward symbol and expression of the +subordination of life to purposes transcending private interests. That +part of government which had been concerned with social administration, +if it did not end, became at least obsolescent. For such democracy as +had existed in the Middle Ages was dead, and the democracy of the +Revolution was not yet born, so that government passed into the +lethargic hand of classes who wielded the power of the State in the +interests of an irresponsible aristocracy. And the Church was even +more remote from the daily life of mankind than the State. +Philanthropy abounded; but religion, {12} once the greatest social +force, had become a thing as private and individual as the estate of +the squire or the working clothes of the laborer. There were special +dispensations and occasional interventions, like the acts of a monarch +who reprieved a criminal or signed an order for his execution. But +what was familiar, and human and lovable--what was Christian in +Christianity had largely disappeared. God had been thrust into the +frigid altitudes of infinite space. There was a limited monarchy in +Heaven, as well as upon earth. Providence was the spectator of the +curious machine which it had constructed and set in motion, but the +operation of which it was neither able nor willing to control. Like +the occasional intervention of the Crown in the proceedings of +Parliament, its wisdom was revealed in the infrequency of its +interference. + +The natural consequence of the abdication of authorities which had +stood, however imperfectly, for a common purpose in social +organization, was the gradual disappearance from social thought of the +idea of purpose itself. Its place in the eighteenth century was taken +by the idea of mechanism. The conception of men as united to each +other, and of all mankind as united to God, by mutual obligations +arising from their relation to a common end, which vaguely conceived +and imperfectly realized, had been the keystone holding together the +social fabric, ceased to be impressed upon men's minds, when Church and +State withdrew from the center of social life to its circumference. +What remained when the keystone of the arch was removed, was private +rights and private interests, the materials of a society rather {13} +than a society itself. These rights and interests were the natural +order which had been distorted by the ambitions of kings and priests, +and which emerged when the artificial super-structure disappeared, +because they were the creation, not of man, but of Nature herself. +They had been regarded in the past as relative to some public end, +whether religion or national welfare. Henceforward they were thought +to be absolute and indefeasible, and to stand by their own virtue. +They were the ultimate political and social reality; and since they +were the ultimate reality, they were not subordinate to other aspects +of society, but other aspects of society were subordinate to them. + +The State could not encroach upon these rights, for the State existed +for their maintenance. They determined the relation of classes, for +the most obvious and fundamental of all rights was property--property +absolute and unconditioned--and those who possessed it were regarded as +the natural governors of those who did not. Society arose from their +exercise, through the contracts of individual with individual. It +fulfilled its object in so far as, by maintaining contractual freedom, +it secured full scope for their unfettered exercise. It failed in so +far as, like the French monarchy, it overrode them by the use of an +arbitrary authority. Thus conceived, society assumed something of the +appearance of a great joint-stock company, in which political power and +the receipt of dividends were justly assigned to those who held the +most numerous shares. The currents of social activity did not converge +upon common ends, but were dispersed through a multitude of channels, +{14} created by the private interests of the individuals who composed +society. But in their very variety and spontaneity, in the very +absence of any attempt to relate them to a larger purpose than that of +the individual, lay the best security of its attainment. There is a +mysticism of reason as well as of emotion, and the eighteenth century +found, in the beneficence of natural instincts, a substitute for the +God whom it had expelled from contact with society, and did not +hesitate to identify them. + + "Thus God and nature planned the general frame + And bade self-love and social be the same." + + +The result of such ideas in the world of practice was a society which +was ruled by law, not by the caprice of Governments, but which +recognized no moral limitation on the pursuit by individuals of their +economic self-interest. In the world of thought, it was a political +philosophy which made rights the foundation of the social order, and +which considered the discharge of obligations, when it considered it at +all, as emerging by an inevitable process from their free exercise. +The first famous exponent of this philosophy was Locke, in whom the +dominant conception is the indefeasibility of private rights, not the +pre-ordained harmony between private rights and public welfare. In the +great French writers who prepared the way for the Revolution, while +believing that they were the servants of an enlightened absolutism, +there is an almost equal emphasis upon the sanctity of rights and upon +the infallibility of the {15} alchemy by which the pursuit of private +ends is transmuted into the attainment of public good. Though their +writings reveal the influence of the conception of society as a +self-adjusting mechanism, which afterwards became the most +characteristic note of the English individualism, what the French +Revolution burned into the mind of Europe was the former not the +latter. In England the idea of right had been negative and defensive, +a barrier to the encroachment of Governments. The French leapt to the +attack from trenches which the English had been content to defend, and +in France the idea became affirmative and militant, not a weapon of +defense, but a principle of social organization. The attempt to +refound society upon rights, and rights springing not from musty +charters, but from the very nature of man himself, was at once the +triumph and the limitation of the Revolution. It gave it the +enthusiasm and infectious power of religion. + +What happened in England might seem at first sight to have been +precisely the reverse. English practical men, whose thoughts were +pitched in a lower key, were a little shocked by the pomp and +brilliance of that tremendous creed. They had scanty sympathy with the +absolute affirmations of France. What captured their imagination was +not the right to liberty, which made no appeal to their commercial +instincts, but the expediency of liberty, which did; and when the +Revolution had revealed the explosive power of the idea of natural +right, they sought some less menacing formula. It had been offered +them first by Adam Smith and his precursors, who showed how the +mechanism of economic life {16} converted "as with an invisible hand," +the exercise of individual rights into the instrument of public good. +Bentham, who despised metaphysical subtleties, and thought the +Declaration of the Rights of Man as absurd as any other dogmatic +religion, completed the new orientation by supplying the final +criterion of political institutions in the principle of Utility. +Henceforward emphasis was transferred from the right of the individual +to exercise his freedom as he pleased to the expediency of an +undisturbed exercise of freedom to society. + +The change is significant. It is the difference between the universal +and equal citizenship of France, with its five million peasant +proprietors, and the organized inequality of England established +solidly upon class traditions and class institutions; the descent from +hope to resignation, from the fire and passion of an age of illimitable +vistas to the monotonous beat of the factory engine, from Turgot and +Condorcet to the melancholy mathematical creed of Bentham and Ricardo +and James Mill. Mankind has, at least, this superiority over its +philosophers, that great movements spring from the heart and embody a +faith; not the nice adjustments of the hedonistic calculus. So in the +name of the rights of property France abolished in three years a great +mass of property rights which, under the old regime had robbed the +peasant of part of the produce of his labor, and the social +transformation survived a whole world of political changes. In England +the glad tidings of democracy were broken too discreetly to reach the +ears of the hind in the furrow or the shepherd on the hill; {17} there +were political changes without a social transformation. The doctrine +of Utility, though trenchant in the sphere of politics, involved no +considerable interference with the fundamentals of the social fabric. +Its exponents were principally concerned with the removal of political +abuses and legal anomalies. They attacked sinecures and pensions and +the criminal code and the procedure of the law courts. But they +touched only the surface of social institutions. They thought it a +monstrous injustice that the citizen should pay one-tenth of his income +in taxation to an idle Government, but quite reasonable that he should +pay one-fifth of it in rent to an idle landlord. + +The difference, neverthelesss, was one of emphasis and expression, not +of principle. It mattered very little in practice whether private +property and unfettered economic freedom were stated, as in France, to +be natural rights, or whether, as in England, they were merely assumed +once for all to be expedient. In either case they were taken for +granted as the fundamentals upon which social organization was to be +based, and about which no further argument was admissible. Though +Bentham argued that rights were derived from utility, not from nature, +he did not push his analysis so far as to argue that any particular +right was relative to any particular function, and thus endorsed +indiscriminately rights which were not accompanied by service as well +as rights which were. While eschewing, in short, the phraseology of +natural rights, the English Utilitarians retained something not unlike +the substance of them. For they assumed that private property in {18} +land, and the private ownership of capital, were natural institutions, +and gave them, indeed, a new lease of life, by proving to their own +satisfaction that social well-being must result from their continued +exercise. Their negative was as important as their positive teaching. +It was a conductor which diverted the lightning. Behind their +political theory, behind the practical conduct, which as always, +continues to express theory long after it has been discredited in the +world of thought, lay the acceptance of absolute rights to property and +to economic freedom as the unquestioned center of social organization. + +The result of that attitude was momentous. The motive and inspiration +of the Liberal Movement of the eighteenth century had been the attack +on Privilege. But the creed which had exorcised the specter of +agrarian feudalism haunting village and _chateau_ in France, was +impotent to disarm the new ogre of industrialism which was stretching +its limbs in the north of England. When, shorn of its splendors and +illusions, liberalism triumphed in England in 1832, it carried without +criticism into the new world of capitalist industry categories of +private property and freedom of contract which had been forged in the +simpler economic environment of the pre-industrial era. In England +these categories are being bent and twisted till they are no longer +recognizable, and will, in time, be made harmless. In America, where +necessity compelled the crystallization of principles in a +constitution, they have the rigidity of an iron jacket. The +magnificent formulae in which a society of farmers {19} and master +craftsmen enshrined its philosophy of freedom are in danger of becoming +fetters used by an Anglo-Saxon business aristocracy to bind insurgent +movements on the part of an immigrant and semi-servile proletariat. + + + + +{20} + +III + +THE ACQUISITIVE SOCIETY + +This doctrine has been qualified in practice by particular limitations +to avert particular evils and to meet exceptional emergencies. But it +is limited in special cases precisely because its general validity is +regarded as beyond controversy, and, up to the eve of the present war, +it was the working faith of modern economic civilization. What it +implies is, that the foundation of society is found, not in functions, +but in rights; that rights are not deducible from the discharge of +functions, so that the acquisition of wealth and the enjoyment of +property are contingent upon the performances of services, but that the +individual enters the world equipped with rights to the free disposal +of his property and the pursuit of his economic self-interest, and that +these rights are anterior to, and independent of, any service which he +may render. True, the service of society will, in fact, it is assumed, +result from their exercise. But it is not the primary motive and +criterion of industry, but a secondary consequence, which emerges +incidentally through the exercise of rights, a consequence which is +attained, indeed, in practice, but which is attained without being +sought. It is not the end at which economic activity aims, or the +standard by which it is judged, but a by-product, as coal-tar is a +by-product of the {21} manufacture of gas; whether that by-product +appears or not, it is not proposed that the rights themselves should be +abdicated. For they are regarded, not as a conditional trust, but as a +property, which may, indeed, give way to the special exigencies of +extraordinary emergencies, but which resumes its sway when the +emergency is over, and in normal times is above discussion. + +That conception is written large over the history of the nineteenth +century, both in England and in America. The doctrine which it +inherited was that property was held by an absolute right on an +individual basis, and to this fundamental it added another, which can +be traced in principle far back into history, but which grew to its +full stature only after the rise of capitalist industry, that societies +act both unfairly and unwisely when they limit opportunities of +economic enterprise. Hence every attempt to impose obligations as a +condition of the tenure of property or of the exercise of economic +activity has been met by uncompromising resistance. The story of the +struggle between humanitarian sentiment and the theory of property +transmitted from the eighteenth century is familiar. No one has +forgotten the opposition offered in the name of the rights of property +to factory legislation, to housing reform, to interference with the +adulteration of goods, even to the compulsory sanitation of private +houses. "May I not do what I like with my own?" was the answer to the +proposal to require a minimum standard of safety and sanitation from +the owners of mills and houses. Even to {22} this day, while an +English urban landlord can cramp or distort the development of a whole +city by withholding land except at fancy prices, English municipalities +are without adequate powers of compulsory purchase, and must either pay +through the nose or see thousands of their members overcrowded. The +whole body of procedure by which they may acquire land, or indeed new +powers of any kind, has been carefully designed by lawyers to protect +owners of property against the possibility that their private rights +may be subordinated to the public interest, because their rights are +thought to be primary and absolute and public interests secondary and +contingent. + +No one needs to be reminded, again, of the influence of the same +doctrine in the sphere of taxation. Thus the income tax was excused as +a temporary measure, because the normal society was conceived to be one +in which the individual spent his whole income for himself and owed no +obligations to society on account of it. The death duties were +denounced as robbery, because they implied that the right to benefit by +inheritance was conditional upon a social sanction. The Budget of 1909 +created a storm, not because the taxation of land was heavy--in amount +the land-taxes were trifling--but because it was felt to involve the +doctrine that property is not an absolute right, but that it may +properly be accompanied by special obligations, a doctrine which, if +carried to its logical conclusion, would destroy its sanctity by making +ownership no longer absolute but conditional. + +{23} + +Such an implication seems intolerable to an influential body of public +opinion, because it has been accustomed to regard the free disposal of +property and the unlimited exploitation of economic opportunities, as +rights which are absolute and unconditioned. On the whole, until +recently, this opinion had few antagonists who could not be ignored. +As a consequence the maintenance of property rights has not been +seriously threatened even in those cases in which it is evident that no +service is discharged, directly or indirectly, by their exercise. No +one supposes, that the owner of urban land, performs _qua_ owner, any +function. He has a right of private taxation; that is all. But the +private ownership of urban land is as secure to-day as it was a century +ago; and Lord Hugh Cecil, in his interesting little book on +Conservatism, declares that whether private property is mischievous or +not, society cannot interfere with it, because to interfere with it is +theft, and theft is wicked. No one supposes that it is for the public +good that large areas of land should be used for parks and game. But +our country gentlemen are still settled heavily upon their villages and +still slay their thousands. No one can argue that a monopolist is +impelled by "an invisible hand" to serve the public interest. But over +a considerable field of industry competition, as the recent Report on +Trusts shows, has been replaced by combination, and combinations are +allowed the same unfettered freedom as individuals in the exploitation +of economic opportunities. No one really believes that the production +of coal depends upon the payment of {24} mining royalties or that ships +will not go to and fro unless ship-owners can earn fifty per cent. upon +their capital. But coal mines, or rather the coal miner, still pay +royalties, and ship-owners still make fortunes and are made Peers. + +At the very moment when everybody is talking about the importance of +increasing the output of wealth, the last question, apparently, which +it occurs to any statesman to ask is why wealth should be squandered on +futile activities, and in expenditure which is either disproportionate +to service or made for no service at all. So inveterate, indeed, has +become the practice of payment in virtue of property rights, without +even the pretense of any service being rendered, that when, in a +national emergency, it is proposed to extract oil from the ground, the +Government actually proposes that every gallon shall pay a tax to +landowners who never even suspected its existence, and the ingenuous +proprietors are full of pained astonishment at any one questioning +whether the nation is under moral obligation to endow them further. +Such rights are, strictly speaking, privileges. For the definition of +a privilege is a right to which no corresponding function is attached. + +The enjoyment of property and the direction of industry are considered, +in short, to require no social justification, because they are regarded +as rights which stand by their own virtue, not functions to be judged +by the success with which they contribute to a social purpose. To-day +that doctrine, if intellectually discredited, is still the practical +foundation of social {25} organization. How slowly it yields even to +the most insistent demonstration of its inadequacy is shown by the +attitude which the heads of the business world have adopted to the +restrictions imposed on economic activity during the war. The control +of railways, mines and shipping, the distribution of raw materials +through a public department instead of through competing merchants, the +regulation of prices, the attempts to check "profiteering"--the +detailed application of these measures may have been effective or +ineffective, wise or injudicious. It is evident, indeed, that some of +them have been foolish, like the restriction of imports when the world +has five years' destruction to repair, and that others, if sound in +conception, have been questionable in their execution. If they were +attacked on the ground that they obstruct the efficient performance of +function--if the leaders of industry came forward and said generally, +as some, to their honor, have:--"We accept your policy, but we will +improve its execution; we desire payment for service and service only +and will help the state to see that it pays for nothing else"--there +might be controversy as to the facts, but there could be none as to the +principle. + +In reality, however, the gravamen of the charges brought against these +restrictions appears generally to be precisely the opposite. They are +denounced by most of their critics not because they limit the +opportunity of service, but because they diminish the opportunity for +gain, not because they prevent the trader enriching the community, but +because they make it {26} more difficult for him to enrich himself; +not, in short, because they have failed to convert economic activity +into a social function, but because they have come too near succeeding. +If the financial adviser to the Coal Controller may be trusted, the +shareholders in coal mines would appear to have done fairly well during +the war. But the proposal to limit their profits to 1/2 per ton is +described by Lord Gainford as "sheer robbery and confiscation." With +some honorable exceptions, what is demanded is that in the future as in +the past the directors of industry should be free to handle it as an +enterprise conducted for their own convenience or advancement, instead +of being compelled, as they have been partially compelled during the +war, to subordinate it to a social purpose. For to admit that the +criterion of commerce and industry is its success in discharging a +social purpose is at once to turn property and economic activity from +rights which are absolute into rights which are contingent and +derivative, because it is to affirm that they are relative to functions +and that they may justly be revoked when the functions are not +performed. It is, in short, to imply that property and economic +activity exist to promote the ends of society, whereas hitherto society +has been regarded in the world of business as existing to promote them. +To those who hold their position, not as functionaries, but by virtue +of their success in making industry contribute to their own wealth and +social influence, such a reversal of means and ends appears little less +than a revolution. For it means that they must justify before a social +tribunal {27} rights which they have hitherto taken for granted as part +of an order which is above criticism. + +During the greater part of the nineteenth century the significance of +the opposition between the two principles of individual rights and +social functions was masked by the doctrine of the inevitable harmony +between private interests and public good. Competition, it was argued, +was an effective substitute for honesty. To-day that subsidiary +doctrine has fallen to pieces under criticism; few now would profess +adherence to the compound of economic optimism and moral bankruptcy +which led a nineteenth century economist to say: "Greed is held in +check by greed, and the desire for gain sets limits to itself." The +disposition to regard individual rights as the center and pivot of +society is still, however, the most powerful element in political +thought and the practical foundation of industrial organization. The +laborious refutation of the doctrine that private and public interests +are co-incident, and that man's self-love is God's Providence, which +was the excuse of the last century for its worship of economic egotism, +has achieved, in fact, surprisingly small results. Economic egotism is +still worshiped; and it is worshiped because that doctrine was not +really the center of the position. It was an outwork, not the citadel, +and now that the outwork has been captured, the citadel is still to win. + +What gives its special quality and character, its toughness and +cohesion, to the industrial system built up in the last century and a +half, is not its exploded theory of economic harmonies. It is the +doctrine that {28} economic rights are anterior to, and independent of +economic functions, that they stand by their own virtue, and need +adduce no higher credentials. The practical result of it is that +economic rights remain, whether economic functions are performed or +not. They remain to-day in a more menacing form than in the age of +early industrialism. For those who control industry no longer compete +but combine, and the rivalry between property in capital and property +in land has long since ended. The basis of the New Conservatism +appears to be a determination so to organize society, both by political +and economic action, as to make it secure against every attempt to +extinguish payments which are made, not for service, but because the +owners possess a right to extract income without it. Hence the fusion +of the two traditional parties, the proposed "strengthening" of the +second chamber, the return to protection, the swift conversion of rival +industrialists to the advantages of monopoly, and the attempts to buy +off with concessions the more influential section of the working +classes. Revolutions, as a long and bitter experience reveals, are apt +to take their color from the regime which they overthrow. Is it any +wonder that the creed which affirms the absolute rights of property +should sometimes be met with a counter-affirmation of the absolute +rights of labor, less anti-social, indeed, and inhuman, but almost as +dogmatic, almost as intolerant and thoughtless as itself? + + +A society which aimed at making the acquisition of wealth contingent +upon the discharge of social {29} obligations, which sought to +proportion remuneration to service and denied it to those by whom no +service was performed, which inquired first not what men possess but +what they can make or create or achieve, might be called a Functional +Society, because in such a society the main subject of social emphasis +would be the performance of functions. But such a society does not +exist, even as a remote ideal, in the modern world, though something +like it has hung, an unrealized theory, before men's minds in the past. +Modern societies aim at protecting economic rights, while leaving +economic functions, except in moments of abnormal emergency, to fulfil +themselves. The motive which gives color and quality to their public +institutions, to their policy and political thought, is not the attempt +to secure the fulfilment of tasks undertaken for the public service, +but to increase the opportunities open to individuals of attaining the +objects which they conceive to be advantageous to themselves. If asked +the end or criterion of social organization, they would give an answer +reminiscent of the formula the greatest happiness of the greatest +number. But to say that the end of social institutions is happiness, +is to say that they have no common end at all. For happiness is +individual, and to make happiness the object of society is to resolve +society itself into the ambitions of numberless individuals, each +directed towards the attainment of some personal purpose. + +Such societies may be called Acquisitive Societies, because their whole +tendency and interest and preoccupation is to promote the acquisition +of wealth. The {30} appeal of this conception must be powerful, for it +has laid the whole modern world under its spell. Since England first +revealed the possibilities of industrialism, it has gone from strength +to strength, and as industrial civilization invades countries hitherto +remote from it, as Russia and Japan and India and China are drawn into +its orbit, each decade sees a fresh extension of its influence. The +secret of its triumph is obvious. It is an invitation to men to use +the powers with which they have been endowed by nature or society, by +skill or energy or relentless egotism or mere good fortune, without +inquiring whether there is any principle by which their exercise should +be limited. It assumes the social organization which determines the +opportunities which different classes shall in fact possess, and +concentrates attention upon the right of those who possess or can +acquire power to make the fullest use of it for their own +self-advancement. By fixing men's minds, not upon the discharge of +social obligations, which restricts their energy, because it defines +the goal to which it should be directed, but upon the exercise of the +right to pursue their own self-interest, it offers unlimited scope for +the acquisition of riches, and therefore gives free play to one of the +most powerful of human instincts. To the strong it promises unfettered +freedom for the exercise of their strength; to the weak the hope that +they too one day may be strong. Before the eyes of both it suspends a +golden prize, which not all can attain, but for which each may strive, +the enchanting vision of infinite expansion. It assures men that there +are no ends other {31} than their ends, no law other than their +desires, no limit other than that which they think advisable. Thus it +makes the individual the center of his own universe, and dissolves +moral principles into a choice of expediences. And it immensely +simplifies the problems of social life in complex communities. For it +relieves them of the necessity of discriminating between different +types of economic activity and different sources of wealth, between +enterprise and avarice, energy and unscrupulous greed, property which +is legitimate and property which is theft, the just enjoyment of the +fruits of labor and the idle parasitism of birth or fortune, because it +treats all economic activities as standing upon the same level, and +suggests that excess or defect, waste or superfluity, require no +conscious effort of the social will to avert them, but are corrected +almost automatically by the mechanical play of economic forces. + +Under the impulse of such ideas men do not become religious or wise or +artistic; for religion and wisdom and art imply the acceptance of +limitations. But they become powerful and rich. They inherit the +earth and change the face of nature, if they do not possess their own +souls; and they have that appearance of freedom which consists in the +absence of obstacles between opportunities for self-advancement and +those whom birth or wealth or talent or good fortune has placed in a +position to seize them. It is not difficult either for individuals or +for societies to achieve their object, if that object be sufficiently +limited and immediate, and if they are not distracted from its {32} +pursuit by other considerations. The temper which dedicates itself to +the cultivation of opportunities, and leaves obligations to take care +of themselves, is set upon an object which is at once simple and +practicable. The eighteenth century defined it. The twentieth century +has very largely attained it. Or, if it has not attained it, it has at +least grasped the possibilities of its attainment. The national output +of wealth per head of population is estimated to have been +approximately $200 in 1914. Unless mankind chooses to continue the +sacrifice of prosperity to the ambitions and terrors of nationalism, it +is possible that by the year 2000 it may be doubled. + + + + +{33} + +IV + +THE NEMESIS OF INDUSTRIALISM + +Such happiness is not remote from achievement. In the course of +achieving it, however, the world has been confronted by a group of +unexpected consequences, which are the cause of its _malaise_, as the +obstruction of economic opportunity was the cause of social _malaise_ +in the eighteenth century. And these consequences are not, as is often +suggested, accidental mal-adjustments, but flow naturally from its +dominant principle: so that there is a sense in which the cause of its +perplexity is not its failure, but the quality of its success, and its +light itself a kind of darkness. The will to economic power, if it is +sufficiently single-minded, brings riches. But if it is single-minded +it destroys the moral restraints which ought to condition the pursuit +of riches, and therefore also makes the pursuit of riches meaningless. +For what gives meaning to economic activity, as to any other activity +is, as we have said, the purpose to which it is directed. But the +faith upon which our economic civilization reposes, the faith that +riches are not a means but an end, implies that all economic activity +is equally estimable, whether it is subordinated to a social purpose or +not. Hence it divorces gain from service, and justifies rewards for +which no function is performed, or which are out of all proportion to +it. Wealth in modern societies is distributed according to {34} +opportunity; and while opportunity depends partly upon talent and +energy, it depends still more upon birth, social position, access to +education and inherited wealth; in a word, upon property. For talent +and energy can create opportunity. But property need only wait for it. +It is the sleeping partner who draws the dividends which the firm +produces, the residuary legatee who always claims his share in the +estate. + +Because rewards are divorced from services, so that what is prized most +is not riches obtained in return for labor but riches the economic +origin of which, being regarded as sordid, is concealed, two results +follow. The first is the creation of a class of pensioners upon +industry, who levy toll upon its product, but contribute nothing to its +increase, and who are not merely tolerated, but applauded and admired +and protected with assiduous care, as though the secret of prosperity +resided in them. They are admired because in the absence of any +principle of discrimination between incomes which are payment for +functions and incomes which are not, all incomes, merely because they +represent wealth, stand on the same level of appreciation, and are +estimated solely by their magnitude, so that in all societies which +have accepted industrialism there is an upper layer which claims the +enjoyment of social life, while it repudiates its responsibilities. +The _rentier_ and his ways, how familiar they were in England before +the war! A public school and then club life in Oxford and Cambridge, +and then another club in town; London in June, when London is pleasant, +the moors in August, and pheasants in October, Cannes in {35} December +and hunting in February and March; and a whole world of rising +bourgeoisie eager to imitate them, sedulous to make their expensive +watches keep time with this preposterous calendar! + +The second consequence is the degradation of those who labor, but who +do not by their labor command large rewards; that is of the great +majority of mankind. And this degradation follows inevitably from the +refusal of men to give the purpose of industry the first place in their +thought about it. When they do that, when their minds are set upon the +fact that the meaning of industry is the service of man, all who labor +appear to them honorable, because all who labor serve, and the +distinction which separates those who serve from those who merely spend +is so crucial and fundamental as to obliterate all minor distinctions +based on differences of income. But when the criterion of function is +forgotten, the only criterion which remains is that of wealth, and an +Acquisitive Society reverences the possession of wealth, as a +Functional Society would honor, even in the person of the humblest and +most laborious craftsman, the arts of creation. + +So wealth becomes the foundation of public esteem, and the mass of men +who labor, but who do not acquire wealth, are thought to be vulgar and +meaningless and insignificant compared with the few who acquire wealth +by good fortune, or by the skilful use of economic opportunities. They +come to be regarded, not as the ends for which alone it is worth while +to produce wealth at all, but as the instruments of its {36} +acquisition by a world that declines to be soiled by contact with what +is thought to be the dull and sordid business of labor. They are not +happy, for the reward of all but the very mean is not merely money, but +the esteem of their fellow-men, and they know they are not esteemed, as +soldiers, for example, are esteemed, though it is because they give +their lives to making civilization that there is a civilization which +it is worth while for soldiers to defend. They are not esteemed, +because the admiration of society is directed towards those who get, +not towards those who give; and though workmen give much they get +little. And the _rentiers_ whom they support are not happy; for in +discarding the idea of function, which sets a limit to the acquisition +of riches, they have also discarded the principle which alone give +riches their meaning. Hence unless they can persuade themselves that +to be rich is in itself meritorious, they may bask in social +admiration, but they are unable to esteem themselves. For they have +abolished the principle which makes activity significant, and therefore +estimable. They are, indeed, more truly pitiable than some of those +who envy them. For like the spirits in the Inferno, they are punished +by the attainment of their desires. + +A society ruled by these notions is necessarily the victim of an +irrational inequality. To escape such inequality it is necessary to +recognize that there is some principle which ought to limit the gains +of particular classes and particular individuals, because gains drawn +from certain sources or exceeding certain amounts are illegitimate. +But such a limitation implies a {37} standard of discrimination, which +is inconsistent with the assumption that each man has a right to what +he can get, irrespective of any service rendered for it. Thus +privilege, which was to have been exorcised by the gospel of 1789, +returns in a new guise, the creature no longer of unequal legal rights +thwarting the natural exercise of equal powers of hand and brain, but +of unequal powers springing from the exercise of equal rights in a +world where property and inherited wealth and the apparatus of class +institutions have made opportunities unequal. Inequality, again, leads +to the mis-direction of production. For, since the demand of one +income of L50,000 is as powerful a magnet as the demand of 500 incomes +of L100, it diverts energy from the creation of wealth to the +multiplication of luxuries, so that, for example, while one-tenth of +the people of England are overcrowded, a considerable part of them are +engaged, not in supplying that deficiency, but in making rich men's +hotels, luxurious yachts, and motorcars like that used by the Secretary +of State for War, "with an interior inlaid with silver in quartered +mahogany, and upholstered in fawn suede and morocco," which was +recently bought by a suburban capitalist, by way of encouraging useful +industries and rebuking public extravagance with an example of private +economy, for the trifling sum of $14,000. + +Thus part of the goods which are annually produced, and which are +called wealth, is, strictly speaking, waste, because it consists of +articles which, though reckoned as part of the income of the nation, +either should not have been produced until other articles had already +{38} been produced in sufficient abundance, or should not have been +produced at all. And some part of the population is employed in making +goods which no man can make with happiness, or indeed without loss of +self-respect, because he knows that they had much better not be made; +and that his life is wasted in making them. Everybody recognizes that +the army contractor who, in time of war, set several hundred navvies to +dig an artificial lake in his grounds, was not adding to, but +subtracting from, the wealth of the nation. But in time of peace many +hundred thousand workmen, if they are not digging ponds, are doing work +which is equally foolish and wasteful; though, in peace, as in war, +there is important work, which is waiting to be done, and which is +neglected. It is neglected because, while the effective demand of the +mass of men is only too small, there is a small class which wears +several men's clothes, eats several men's dinners, occupies several +families' houses, and lives several men's lives. As long as a minority +has so large an income that part of it, if spent at all, must be spent +on trivialities, so long will part of the human energy and mechanical +equipment of the nation be diverted from serious work, which enriches +it, to making trivialities, which impoverishes it, since they can only +be made at the cost of not making other things. And if the peers and +millionaires who are now preaching the duty of production to miners and +dock laborers desire that more wealth, not more waste, should be +produced, the simplest way in which they can achieve their aim is to +transfer to the public their whole incomes over (say) $5,000 a year, in +order that it may {39} be spent in setting to work, not gardeners, +chauffeurs, domestic servants and shopkeepers in the West End of +London, but builders, mechanics and teachers. + +So to those who clamor, as many now do, "Produce! Produce!" one simple +question may be addressed:--"Produce what?" Food, clothing, +house-room, art, knowledge? By all means! But if the nation is +scantily furnished with these things had it not better stop producing a +good many others which fill shop windows in Regent Street? If it +desires to re-equip its industries with machinery and its railways with +wagons, had it not better refrain from holding exhibitions designed to +encourage rich men to re-equip themselves with motor-cars? What can be +more childish than to urge the necessity that productive power should +be increased, if part of the productive power which exists already is +misapplied? Is not _less_ production of futilities as important as, +indeed a condition of, _more_ production of things of moment? Would +not "Spend less on private luxuries" be as wise a cry as "produce +more"? Yet this result of inequality, again, is a phenomenon which +cannot be prevented, or checked, or even recognized by a society which +excludes the idea of purpose from its social arrangements and +industrial activity. For to recognize it is to admit that there is a +principle superior to the mechanical play of economic forces, which +ought to determine the relative importance of different occupations, +and thus to abandon the view that all riches, however composed, are an +end, and that all economic activity is equally justifiable. + +{40} + +The rejection of the idea of purpose involves another consequence which +every one laments, but which no one can prevent, except by abandoning +the belief that the free exercise of rights is the main interest of +society and the discharge of obligations a secondary and incidental +consequence which may be left to take care of itself. It is that +social life is turned into a scene of fierce antagonisms and that a +considerable part of industry is carried on in the intervals of a +disguised social war. The idea that industrial peace can be secured +merely by the exercise of tact and forbearance is based on the idea +that there is a fundamental identity of interest between the different +groups engaged in it, which is occasionally interrupted by regrettable +misunderstandings. Both the one idea and the other are an illusion. +The disputes which matter are not caused by a misunderstanding of +identity of interests, but by a better understanding of diversity of +interests. Though a formal declaration of war is an episode, the +conditions which issue in a declaration of war are permanent; and what +makes them permanent is the conception of industry which also makes +inequality and functionless incomes permanent. It is the denial that +industry has any end or purpose other than the satisfaction of those +engaged in it. + +That motive produces industrial warfare, not as a regrettable incident, +but as an inevitable result. It produces industrial war, because its +teaching is that each individual or group has a right to what they can +get, and denies that there is any principle, other than the mechanism +of the market, which determines what {41} they ought to get. For, +since the income available for distribution is limited, and since, +therefore, when certain limits have been passed, what one group gains +another group must lose, it is evident that if the relative incomes of +different groups are not to be determined by their functions, there is +no method other than mutual self-assertion which is left to determine +them. Self-interest, indeed, may cause them to refrain from using +their full strength to enforce their claims, and, in so far as this +happens, peace is secured in industry, as men have attempted to secure +it in international affairs, by a balance of power. But the +maintenance of such a peace is contingent upon the estimate of the +parties to it that they have more to lose than to gain by an overt +struggle, and is not the result of their acceptance of any standard of +remuneration as an equitable settlement of their claims. Hence it is +precarious, insincere and short. It is without finality, because there +can be no finality in the mere addition of increments of income, any +more than in the gratification of any other desire for material goods. +When demands are conceded the old struggle recommences upon a new +level, and will always recommence as long as men seek to end it merely +by increasing remuneration, not by finding a principle upon which all +remuneration, whether large or small, should be based. + +Such a principle is offered by the idea of function, because its +application would eliminate the surpluses which are the subject of +contention, and would make it evident that remuneration is based upon +service, {42} not upon chance or privilege or the power to use +opportunities to drive a hard bargain. But the idea of function is +incompatible with the doctrine that every person and organization have +an unlimited right to exploit their economic opportunities as fully as +they please, which is the working faith of modern industry; and, since +it is not accepted, men resign themselves to the settlement of the +issue by force, or propose that the State should supersede the force of +private associations by the use of its force, as though the absence of +a principle could be compensated by a new kind of machinery. Yet all +the time the true cause of industrial warfare is as simple as the true +cause of international warfare. It is that if men recognize no law +superior to their desires, then they must fight when their desires +collide. For though groups or nations which are at issue with each +other may be willing to submit to a principle which is superior to them +both, there is no reason why they should submit to each other. + +Hence the idea, which is popular with rich men, that industrial +disputes would disappear if only the output of wealth were doubled, and +every one were twice as well off, not only is refuted by all practical +experience, but is in its very nature founded upon an illusion. For +the question is one not of amounts but of proportions; and men will +fight to be paid $120 a week, instead of $80, as readily as they will +fight to be paid $20 instead of $16, as long as there is no reason why +they should be paid $80 instead of $120, and as long as other men who +do not work are paid anything {43} at all. If miners demanded higher +wages when every superfluous charge upon coal-getting had been +eliminated, there would be a principle with which to meet their claim, +the principle that one group of workers ought not to encroach upon the +livelihood of others. But as long as mineral owners extract royalties, +and exceptionally productive mines pay thirty per cent. to absentee +shareholders, there is no valid answer to a demand for higher wages. +For if the community pays anything at all to those who do not work, it +can afford to pay more to those who do. The naive complaint, that +workmen are never satisfied, is, therefore, strictly true. It is true, +not only of workmen, but of all classes in a society which conducts its +affairs on the principle that wealth, instead of being proportioned to +function, belongs to those who can get it. They are never satisfied, +nor can they be satisfied. For as long as they make that principle the +guide of their individual lives and of their social order, nothing +short of infinity could bring them satisfaction. + + +So here, again, the prevalent insistence upon rights, and prevalent +neglect of functions, brings men into a vicious circle which they +cannot escape, without escaping from the false philosophy which +dominates them. But it does something more. It makes that philosophy +itself seem plausible and exhilarating, and a rule not only for +industry, in which it had its birth, but for politics and culture and +religion and the whole compass of social life. The possibility that +one aspect of human life may be so exaggerated as to overshadow, {44} +and in time to atrophy, every other, has been made familiar to +Englishmen by the example of "Prussian militarism." Militarism is the +characteristic, not of an army, but of a society. Its essence is not +any particular quality or scale of military preparation, but a state of +mind, which, in its concentration on one particular element in social +life, ends finally by exalting it until it becomes the arbiter of all +the rest. The purpose for which military forces exist is forgotten. +They are thought to stand by their own right and to need no +justification. Instead of being regarded as an instrument which is +necessary in an imperfect world, they are elevated into an object of +superstitious veneration, as though the world would be a poor insipid +place without them, so that political institutions and social +arrangements and intellect and morality and religion are crushed into a +mold made to fit one activity, which in a sane society is a subordinate +activity, like the police, or the maintenance of prisons, or the +cleansing of sewers, but which in a militarist state is a kind of +mystical epitome of society itself. + +Militarism, as Englishmen see plainly enough, is fetich worship. It is +the prostration of men's souls before, and the laceration of their +bodies to appease, an idol. What they do not see is that their +reverence for economic activity and industry and what is called +business is also fetich worship, and that in their devotion to that +idol they torture themselves as needlessly and indulge in the same +meaningless antics as the Prussians did in their worship of militarism. +For what the military tradition and spirit have done for Prussia, {45} +with the result of creating militarism, the commercial tradition and +spirit have done for England, with the result of creating +industrialism. Industrialism is no more a necessary characteristic of +an economically developed society than militarism is a necessary +characteristic of a nation which maintains military forces. It is no +more the result of applying science to industry than militarism is the +result of the application of science to war, and the idea that it is +something inevitable in a community which uses coal and iron and +machinery, so far from being the truth, is itself a product of the +perversion of mind which industrialism produces. Men may use what +mechanical instruments they please and be none the worse for their use. +What kills their souls is when they allow their instruments to use +_them_. The essence of industrialism, in short, is not any particular +method of industry, but a particular estimate of the importance of +industry, which results in it being thought the only thing that is +important at all, so that it is elevated from the subordinate place +which it should occupy among human interests and activities into being +the standard by which all other interests and activities are judged. + +When a Cabinet Minister declares that the greatness of this country +depends upon the volume of its exports, so that France, with exports +comparatively little, and Elizabethan England, which exported next to +nothing, are presumably to be pitied as altogether inferior +civilizations, that is Industrialism. It is the confusion of one minor +department of life with the {46} whole of life. When manufacturers cry +and cut themselves with knives, because it is proposed that boys and +girls of fourteen shall attend school for eight hours a week, and the +President of the Board of Education is so gravely impressed by their +apprehensions, that he at once allows the hours to be reduced to seven, +that is Industrialism. It is fetich worship. When the Government +obtains money for a war, which costs $28,000,000 a day, by closing the +Museums, which cost $80,000 a year, that is Industrialism. It is a +contempt for all interests which do not contribute obviously to +economic activity. When the Press clamors that the one thing needed to +make this island an Arcadia is productivity, and more productivity, and +yet more productivity, that is Industrialism. It is the confusion of +means with ends. + +Men will always confuse means with ends if they are without any clear +conception that it is the ends, not the means, which matter--if they +allow their minds to slip from the fact that it is the social purpose +of industry which gives it meaning and makes it worth while to carry it +on at all. And when they do that, they will turn their whole world +upside down, because they do not see the poles upon which it ought to +move. So when, like England, they are thoroughly industrialized, they +behave like Germany, which was thoroughly militarized. They talk as +though man existed for industry, instead of industry existing for man, +as the Prussians talked of man existing for war. They resent any +activity which is not colored by the predominant interest, because it +seems a rival to it. So they {47} destroy religion and art and +morality, which cannot exist unless they are disinterested; and having +destroyed these, which are the end, for the sake of industry, which is +a means, they make their industry itself what they make their cities, a +desert of unnatural dreariness, which only forgetfulness can make +endurable, and which only excitement can enable them to forget. + +Torn by suspicions and recriminations, avid of power, and oblivious of +duties, desiring peace, but unable to "seek peace and ensue it," +because unwilling to surrender the creed which is the cause of war, to +what can one compare such a society but to the international world, +which also has been called a society and which also is social in +nothing but name? And the comparison is more than a play upon words. +It is an analogy which has its roots in the facts of history. It is +not a chance that the last two centuries, which saw the new growth of a +new system of industry, saw also the growth of the system of +international politics which came to a climax in the period from 1870 +to 1914. Both the one and the other are the expression of the same +spirit and move in obedience to similar laws. The essence of the +former was the repudiation of any authority superior to the individual +reason. It left men free to follow their own interests or ambitions or +appetites, untrammeled by subordination to any common center of +allegiance. The essence of the latter was the repudiation of any +authority superior to the sovereign state, which again was conceived as +a compact self-contained unit--a unit {48} which would lose its very +essence if it lost its independence of other states. Just as the one +emancipated economic activity from a mesh of antiquated traditions, so +the other emancipated nations from arbitrary subordination to alien +races or Governments, and turned them into nationalities with a right +to work out their own destiny. + +Nationalism is, in fact, the counterpart among nations of what +individualism is within them. It has similar origins and tendencies, +similar triumphs and defects. For nationalism, like individualism, +lays its emphasis on the rights of separate units, not on their +subordination to common obligations, though its units are races or +nations, not individual men. Like individualism it appeals to the +self-assertive instincts, to which it promises opportunities of +unlimited expansion. Like individualism it is a force of immense +explosive power, the just claims of which must be conceded before it is +possible to invoke any alternative principle to control its operations. +For one cannot impose a supernational authority upon irritated or +discontented or oppressed nationalities any more than one can +subordinate economic motives to the control of society, until society +has recognized that there is a sphere which they may legitimately +occupy. And, like individualism, if pushed to its logical conclusion, +it is self-destructive. For as nationalism, in its brilliant youth, +begins as a claim that nations, because they are spiritual beings, +shall determine themselves, and passes too often into a claim that they +shall dominate others, so individualism begins by asserting the right +of men to {49} make of their own lives what they can, and ends by +condoning the subjection of the majority of men to the few whom good +fortune or special opportunity or privilege have enabled most +successfully to use their rights. They rose together. It is probable +that, if ever they decline, they will decline together. For life +cannot be cut in compartments. In the long run the world reaps in war +what it sows in peace. And to expect that international rivalry can be +exorcised as long as the industrial order within each nation is such as +to give success to those whose existence is a struggle for +self-aggrandizement is a dream which has not even the merit of being +beautiful. + +So the perversion of nationalism is imperialism, as the perversion of +individualism is industrialism. And the perversion comes, not through +any flaw or vice in human nature, but by the force of the idea, because +the principle is defective and reveals its defects as it reveals its +power. For it asserts that the rights of nations and individuals are +absolute, which is false, instead of asserting that they are absolute +in their own sphere, but that their sphere itself is contingent upon +the part which they play in the community of nations and individuals, +which is true. Thus it constrains them to a career of indefinite +expansion, in which they devour continents and oceans, law, morality +and religion, and last of all their own souls, in an attempt to attain +infinity by the addition to themselves of all that is finite. In the +meantime their rivals, and their subjects, and they themselves are +conscious of the danger of opposing forces, and seek to {50} purchase +security and to avoid a collision by organizing a balance of power. +But the balance, whether in international politics or in industry, is +unstable, because it reposes not on the common recognition of a +principle by which the claims of nations and individuals are limited, +but on an attempt to find an equipoise which may avoid a conflict +without adjuring the assertion of unlimited claims. No such equipoise +can be found, because, in a world where the possibilities of increasing +military or industrial power are illimitable, no such equipoise can +exist. + +Thus, as long as men move on this plane, there is no solution. They +can obtain peace only by surrendering the claim to the unfettered +exercise of their rights, which is the cause of war. What we have been +witnessing, in short, during the past five years, both in international +affairs and in industry, is the breakdown of the organization of +society on the basis of rights divorced from obligations. Sooner or +later the collapse was inevitable, because the basis was too narrow. +For a right is simply a power which is secured by legal sanctions, "a +capacity," as the lawyers define it, "residing in one man, of +controlling, with the assistance of the State, the action of others," +and a right should not be absolute for the same reason that a power +should not be absolute. No doubt it is better that individuals should +have absolute rights than that the State or the Government should have +them; and it was the reaction against the abuses of absolute power by +the State which led in the eighteenth century to the declaration of the +absolute rights of individuals. {51} The most obvious defense against +the assertion of one extreme was the assertion of the other. Because +Governments and the relics of feudalism had encroached upon the +property of individuals it was affirmed that the right of property was +absolute; because they had strangled enterprise, it was affirmed that +every man had a natural right to conduct his business as he pleased. +But, in reality, both the one assertion and the other are false, and, +if applied to practice, must lead to disaster. The State has no +absolute rights; they are limited by its commission. The individual +has no absolute rights; they are relative to the function which he +performs in the community of which he is a member, because, unless they +are so limited, the consequences must be something in the nature of +private war. All rights, in short, are conditional and derivative, +because all power should be conditional and derivative. They are +derived from the end or purpose of the society in which they exist. +They are conditional on being used to contribute to the attainment of +that end, not to thwart it. And this means in practice that, if +society is to be healthy, men must regard themselves not as the owners +of rights, but as trustees for the discharge of functions and the +instruments of a social purpose. + + + + +{52} + +V + +PROPERTY AND CREATIVE WORK + +The application of the principle that society should be organized upon +the basis of functions, is not recondite, but simple and direct. It +offers in the first place, a standard for discriminating between those +types of private property which are legitimate and those which are not. +During the last century and a half, political thought has oscillated +between two conceptions of property, both of which, in their different +ways, are extravagant. On the one hand, the practical foundation of +social organization has been the doctrine that the particular forms of +private property which exist at any moment are a thing sacred and +inviolable, that anything may properly become the object of property +rights, and that, when it does, the title to it is absolute and +unconditioned. The modern industrial system took shape in an age when +this theory of property was triumphant. The American Constitution and +the French Declaration of the Rights of Man both treated property as +one of the fundamental rights which Governments exist to protect. The +English Revolution of 1688, undogmatic and reticent though it was, had +in effect done the same. The great individualists from Locke to +Turgot, Adam Smith and Bentham all repeated, in different language, a +similar conception. Though what gave the Revolution its {53} +diabolical character in the eyes of the English upper classes was its +treatment of property, the dogma of the sanctity of private property +was maintained as tenaciously by French Jacobins as by English Tories; +and the theory that property is an absolute, which is held by many +modern Conservatives, is identical, if only they knew it, with that not +only of the men of 1789, but of the Convention itself. + +On the other hand, the attack has been almost as undiscriminating as +the defense. "Private property" has been the central position against +which the social movement of the last hundred years has directed its +forces. The criticism of it has ranged from an imaginative communism +in the most elementary and personal of necessaries, to prosaic and +partially realized proposals to transfer certain kinds of property from +private to public ownership, or to limit their exploitation by +restrictions imposed by the State. But, however varying in emphasis +and in method, the general note of what may conveniently be called the +Socialist criticism of property is what the word Socialism itself +implies. Its essence is the statement that the economic evils of +society are primarily due to the unregulated operation, under modern +conditions of industrial organization, of the institution of private +property. + +The divergence of opinion is natural, since in most discussions of +property the opposing theorists have usually been discussing different +things. Property is the most ambiguous of categories. It covers a +multitude of rights which have nothing in common except that they are +exercised by persons and enforced by the State. {54} Apart from these +formal characteristics, they vary indefinitely in economic character, +in social effect, and in moral justification. They may be conditional +like the grant of patent rights, or absolute like the ownership of +ground rents, terminable like copyright, or permanent like a freehold, +as comprehensive as sovereignty or as restricted as an easement, as +intimate and personal as the ownership of clothes and books, or as +remote and intangible as shares in a gold mine or rubber plantation. +It is idle, therefore, to present a case for or against private +property without specifying the particular forms of property to which +reference is made, and the journalist who says that "private property +is the foundation of civilization" agrees with Proudhon, who said it +was theft, in this respect at least that, without further definition, +the words of both are meaningless. Arguments which support or demolish +certain kinds of property may have no application to others; +considerations which are conclusive in one stage of economic +organization may be almost irrelevant in the next. The course of +wisdom is neither to attack private property in general nor to defend +it in general; for things are not similar in quality, merely because +they are identical in name. It is to discriminate between the various +concrete embodiments of what, in itself, is, after all, little more +than an abstraction. + +The origin and development of different kinds of proprietary rights is +not material to this discussion. Whatever may have been the historical +process by which they have been established and recognized, the {55} +_rationale_ of private property traditional in England is that which +sees in it the security that each man will reap where he has sown. "If +I despair of enjoying the fruits of labor," said Bentham, repeating +what were in all essentials the arguments of Locke, "I shall only live +from day to day; I shall not undertake labors which will only benefit +my enemies." Property, it is argued, is a moral right, and not merely +a legal right, because it insures that the producer will not be +deprived by violence of the result of his efforts. The period from +which that doctrine was inherited differed from our own in three +obvious, but significant, respects. Property in land and in the simple +capital used in most industries was widely distributed. Before the +rise of capitalist agriculture and capitalist industry, the ownership, +or at any rate the secure and effective occupation, of land and tools +by those who used them, was a condition precedent to effective work in +the field or in the workshop. The forces which threatened property +were the fiscal policy of Governments and in some countries, for +example France, the decaying relics of feudalism. The interference +both of the one and of the other involved the sacrifice of those who +carried on useful labor to those who did not. To resist them was to +protect not only property but industry, which was indissolubly +connected with it. Too often, indeed, resistance was ineffective. +Accustomed to the misery of the rural proprietor in France, Voltaire +remarked with astonishment that in England the peasant may be rich, and +"does not fear to increase the number of his beasts or to cover his +roof with tiles." And {56} the English Parliamentarians and the French +philosophers who made the inviolability of property rights the center +of their political theory, when they defended those who owned, were +incidentally, if sometimes unintentionally, defending those who +labored. They were protecting the yeoman or the master craftsman or +the merchant from seeing the fruits of his toil squandered by the +hangers-on at St. James or the courtly parasites of Versailles. + +In such circumstances the doctrine which found the justification of +private property in the fact that it enabled the industrious man to +reap where he had sown, was not a paradox, but, as far as the mass of +the population was concerned, almost a truism. Property was defended +as the most sacred of rights. But it was defended as a right which was +not only widely exercised, but which was indispensable to the +performance of the active function of providing food and clothing. For +it consisted predominantly of one of two types, land or tools which +were used by the owner for the purpose of production, and personal +possessions which were the necessities or amenities of civilized +existence. The former had its _rationale_ in the fact that the land of +the peasant or the tools of the craftsman were the condition of his +rendering the economic services which society required; the latter +because furniture and clothes are indispensable to a life of decency +and comfort. The proprietary rights--and, of course, they were +numerous--which had their source, not in work, but in predatory force, +were protected from criticism by the wide distribution of some kind +{57} of property among the mass of the population, and in England, at +least, the cruder of them were gradually whittled down. When property +in land and what simple capital existed were generally diffused among +all classes of society, when, in most parts of England, the typical +workman was not a laborer but a peasant or small master, who could +point to the strips which he had plowed or the cloth which he had +woven, when the greater part of the wealth passing at death consisted +of land, household furniture and a stock in trade which was hardly +distinguishable from it, the moral justification of the title to +property was self-evident. It was obviously, what theorists said that +it was, and plain men knew it to be, the labor spent in producing, +acquiring and administering it. + +Such property was not a burden upon society, but a condition of its +health and efficiency, and indeed, of its continued existence. To +protect it was to maintain the organization through which public +necessities were supplied. If, as in Tudor England, the peasant was +evicted from his holding to make room for sheep, or crushed, as in +eighteenth century France, by arbitrary taxation and seigneurial dues, +land went out of cultivation and the whole community was short of food. +If the tools of the carpenter or smith were seized, plows were not +repaired or horses shod. Hence, before the rise of a commercial +civilization, it was the mark of statesmanship, alike in the England of +the Tudors and in the France of Henry IV, to cherish the small +property-owner even to the point of offending the great. Popular +sentiment idealized the {58} yeoman--"the Joseph of the country who +keeps the poor from starving"--not merely because he owned property, +but because he worked on it, denounced that "bringing of the livings of +many into the hands of one," which capitalist societies regard with +equanimity as an inevitable, and, apparently, a laudable result of +economic development, cursed the usurer who took advantage of his +neighbor's necessities to live without labor, was shocked by the +callous indifference to public welfare shown by those who "not having +before their eyes either God or the profit and advantage of the realm, +have enclosed with hedges and dykes towns and hamlets," and was +sufficiently powerful to compel Governments to intervene to prevent the +laying of field to field, and the engrossing of looms--to set limits, +in short, to the scale to which property might grow. + +When Bacon, who commended Henry VII for protecting the tenant right of +the small farmer, and pleaded in the House of Commons for more drastic +land legislation, wrote "Wealth is like muck. It is not good but if it +be spread," he was expressing in an epigram what was the commonplace of +every writer on politics from Fortescue at the end of the fifteenth +century to Harrington in the middle of the seventeenth. The modern +conservative, who is inclined to take _au pied de la lettre_ the +vigorous argument in which Lord Hugh Cecil denounces the doctrine that +the maintenance of proprietary rights ought to be contingent upon the +use to which they are put, may be reminded that Lord Hugh's own theory +is of a kind to make his ancestors turn in their graves. Of the two +members of the {59} family who achieved distinction before the +nineteenth century, the elder advised the Crown to prevent landlords +evicting tenants, and actually proposed to fix a pecuniary maximum to +the property which different classes might possess, while the younger +attacked enclosing in Parliament, and carried legislation compelling +landlords to build cottages, to let them with small holdings, and to +plow up pasture. + +William and Robert Cecil were sagacious and responsible men, and their +view that the protection of property should be accompanied by the +enforcement of obligations upon its owners was shared by most of their +contemporaries. The idea that the institution of private property +involves the right of the owner to use it, or refrain from using it, in +such a way as he may please, and that its principal significance is to +supply him with an income, irrespective of any duties which he may +discharge, would not have been understood by most public men of that +age, and, if understood, would have been repudiated with indignation by +the more reputable among them. They found the meaning of property in +the public purposes to which it contributed, whether they were the +production of food, as among the peasantry, or the management of public +affairs, as among the gentry, and hesitated neither to maintain those +kinds of property which met these obligations nor to repress those uses +of it which appeared likely to conflict with them. Property was to be +an aid to creative work, not an alternative to it. The patentee was +secured protection for a new invention, in order to secure him the +fruits of his own brain, but the monopolist who grew {60} fat on the +industry of others was to be put down. The law of the village bound +the peasant to use his land, not as he himself might find most +profitable, but to grow the corn the village needed. Long after +political changes had made direct interference impracticable, even the +higher ranks of English landowners continued to discharge, however +capriciously and tyrannically, duties which were vaguely felt to be the +contribution which they made to the public service in virtue of their +estates. When as in France, the obligations of ownership were +repudiated almost as completely as they have been by the owner of +to-day, nemesis came in an onslaught upon the position of a _noblesse_ +which had retained its rights and abdicated its functions. Property +reposed, in short, not merely upon convenience, or the appetite for +gain, but on a moral principle. It was protected not only for the sake +of those who owned, but for the sake of those who worked and of those +for whom their work provided. It was protected, because, without +security for property, wealth could not be produced or the business of +society carried on. + + +Whatever the future may contain, the past has shown no more excellent +social order than that in which the mass of the people were the masters +of the holdings which they plowed and of the tools with which they +worked, and could boast, with the English freeholder, that "it is a +quietness to a man's mind to live upon his own and to know his heir +certain." With this conception of property and its practical +expression in social institutions those who urge that society should be +{61} organized on the basis of function have no quarrel. It is in +agreement with their own doctrine, since it justifies property by +reference to the services which it enables its owner to perform. All +that they need ask is that it should be carried to its logical +conclusion. + +For the argument has evidently more than one edge. If it justifies +certain types of property, it condemns others; and in the conditions of +modern industrial civilization, what it justifies is less than what it +condemns. The truth is, indeed, that this theory of property and the +institutions in which it is embodied have survived into an age in which +the whole structure of society is radically different from that in +which it was formulated, and which made it a valid argument, if not for +all, at least for the most common and characteristic kinds of property. +It is not merely that the ownership of any substantial share in the +national wealth is concentrated to-day in the hands of a few hundred +thousand families, and that at the end of an age which began with an +affirmation of the rights of property, proprietary rights are, in fact, +far from being widely distributed. Nor is it merely that what makes +property insecure to-day is not the arbitrary taxation of +unconstitutional monarchies or the privileges of an idle _noblesse_, +but the insatiable expansion and aggregation of property itself, which +menaces with absorption all property less than the greatest, the small +master, the little shopkeeper, the country bank, and has turned the +mass of mankind into a proletariat working under the agents and for the +profit of those who own. + +The characteristic fact, which differentiates most {62} modern property +from that of the pre-industrial age, and which turns against it the +very reasoning by which formerly it was supported, is that in modern +economic conditions ownership is not active, but passive, that to most +of those who own property to-day it is not a means of work but an +instrument for the acquisition of gain or the exercise of power, and +that there is no guarantee that gain bears any relation to service, or +power to responsibility. For property which can be regarded as a +condition of the performance of function, like the tools of the +craftsman, or the holding of the peasant, or the personal possessions +which contribute to a life of health and efficiency, forms an +insignificant proportion, as far as its value is concerned, of the +property rights existing at present. In modern industrial societies +the great mass of property consists, as the annual review of wealth +passing at death reveals, neither of personal acquisitions such as +household furniture, nor of the owner's stock-in-trade, but of rights +of various kinds, such as royalties, ground-rents, and, above all, of +course shares in industrial undertakings which yield an income +irrespective of any personal service rendered by their owners. +Ownership and use are normally divorced. The greater part of modern +property has been attenuated to a pecuniary lien or bond on the product +of industry which carries with it a right to payment, but which is +normally valued precisely because it relieves the owner from any +obligation to perform a positive or constructive function. + +Such property may be called passive property, or property for +acquisition, for exploitation, or for power, {63} to distinguish it +from the property which is actively used by its owner for the conduct +of his profession or the upkeep of his household. To the lawyer the +first is, of course, as fully property as the second. It is +questionable, however, whether economists shall call it "Property" at +all, and not rather, as Mr. Hobson has suggested, "Improperty," since +it is not identical with the rights which secure the owner the produce +of his toil, but is opposite of them. A classification of proprietary +rights based upon this difference would be instructive. If they were +arranged according to the closeness with which they approximate to one +or other of these two extremes, it would be found that they were spread +along a line stretching from property which is obviously the payment +for, and condition of, personal services, to property which is merely a +right to payment from the services rendered by others, in fact a +private tax. The rough order which would emerge, if all details and +qualification were omitted, might be something as follows:-- + +1. Property in payments made for personal services. + +2. Property in personal possessions necessary to health and comfort. + +3. Property in land and tools used by their owners. + +4. Property in copyright and patent rights owned by authors and +inventors. + +5. Property in pure interest, including much agricultural rent. + +6. Property in profits of luck and good fortune: "quasi-rents." + +7. Property in monopoly profits. + +{64} + +8. Property in urban ground rents. + +9. Property in royalties. + +The first four kinds of property obviously accompany, and in some sense +condition, the performance of work. The last four obviously do not. +Pure interest has some affinities with both. It represents a necessary +economic cost, the equivalent of which must be born, whatever the legal +arrangements under which property is held, and is thus unlike the +property represented by profits (other than the equivalent of salaries +and payment for necessary risk), urban ground-rents and royalties. It +relieves the recipient from personal services, and thus resembles them. + +The crucial question for any society is, under which each of these two +broad groups of categories the greater part (measured in value) of the +proprietary rights which it maintains are at any given moment to be +found. If they fall in the first group creative work will be +encouraged and idleness will be depressed; if they fall in the second, +the result will be the reverse. The facts vary widely from age to age +and from country to country. Nor have they ever been fully revealed; +for the lords of the jungle do not hunt by daylight. It is probable, +at least, that in the England of 1550 to 1750, a larger proportion of +the existing property consisted of land and tools used by their owners +than either in contemporary France, where feudal dues absorbed a +considerable proportion of the peasants' income, or than in the England +of 1800 to 1850, where the new capitalist manufacturers made hundreds +per cent. while manual workers were goaded by starvation into +ineffectual {65} revolt. It is probable that in the nineteenth +century, thanks to the Revolution, France and England changed places, +and that in this respect not only Ireland but the British Dominions +resemble the former rather than the latter. The transformation can be +studied best of all in the United States, in parts of which the +population of peasant proprietors and small masters of the early +nineteenth century were replaced in three generations by a propertyless +proletariat and a capitalist plutocracy. The abolition of the economic +privileges of agrarian feudalism, which, under the name of equality, +was the driving force of the French Revolution, and which has taken +place, in one form or another, in all countries touched by its +influence, has been largely counter-balanced since 1800 by the growth +of the inequalities springing from Industrialism. + +In England the general effect of recent economic development has been +to swell proprietary rights which entitle the owners to payment without +work, and to diminish those which can properly be described as +functional. The expansion of the former, and the process by which the +simpler forms of property have been merged in them, are movements the +significance of which it is hardly possible to over-estimate. There +is, of course, a considerable body of property which is still of the +older type. But though working landlords, and capitalists who manage +their own businesses, are still in the aggregate a numerous body, the +organization for which they stand is not that which is most +representative of the modern economic world. The general tendency for +the ownership and administration of {66} property to be separated, the +general refinement of property into a claim on goods produced by an +unknown worker, is as unmistakable as the growth of capitalist industry +and urban civilization themselves. Villages are turned into towns and +property in land changes from the holding worked by a farmer or the +estate administered by a landlord into "rents," which are advertised +and bought and sold like any other investment. Mines are opened and +the rights of the landowner are converted into a tribute for every ton +of coal which is brought to the surface. As joint-stock companies take +the place of the individual enterprise which was typical of the earlier +years of the factory system, organization passes from the employer who +both owns and manages his business, into the hands of salaried +officials, and again the mass of property-owners is swollen by the +multiplication of _rentiers_ who put their wealth at the disposal of +industry, but who have no other connection with it. The change is +taking place in our day most conspicuously, perhaps, through the +displacement in retail trade of the small shopkeeper by the multiple +store, and the substitution in manufacturing industry of combines and +amalgamations for separate businesses conducted by competing employers. +And, of course, it is not only by economic development that such claims +are created. "Out of the eater came forth meat, and out of the strong +came forth sweetness." It is probable that war, which in barbarous +ages used to be blamed as destructive of property, has recently created +more titles to property than almost all other causes put together. + +Infinitely diverse as are these proprietary rights, they {67} have the +common characteristic of being so entirely separated from the actual +objects over which they are exercised, so rarified and generalized, as +to be analogous almost to a form of currency rather than to the +property which is so closely united to its owner as to seem a part of +him. Their isolation from the rough environment of economic life, +where the material objects of which they are the symbol are shaped and +handled, is their charm. It is also their danger. The hold which a +class has upon the future depends on the function which it performs. +What nature demands is work: few working aristocracies, however +tyrannical, have fallen; few functionless aristocracies have survived. +In society, as in the world of organic life, atrophy is but one stage +removed from death. In proportion as the landowner becomes a mere +_rentier_ and industry is conducted, not by the rude energy of the +competing employers who dominated its infancy, but by the salaried +servants of shareholders, the argument for private property which +reposes on the impossibility of finding any organization to supersede +them loses its application, for they are already superseded. + +Whatever may be the justification of these types of property, it cannot +be that which was given for the property of the peasant or the +craftsman. It cannot be that they are necessary in order to secure to +each man the fruits of his own labor. For if a legal right which gives +$200,000 a year to a mineral owner in the North of England and to a +ground landlord in London "secures the fruits of labor" at all, the +fruits are the proprietor's and the labor that of some one else. +Property {68} has no more insidious enemies than those well-meaning +anarchists who, by defending all forms of it as equally valid, involve +the institution in the discredit attaching to its extravagances. In +reality, whatever conclusion may be drawn from the fact, the greater +part of modern property, whether, like mineral rights and urban +ground-rents, it is merely a form of private taxation which the law +allows certain persons to levy on the industry of others, or whether, +like property in capital, it consists of rights to payment for +instruments which the capitalist cannot himself use but puts at the +disposal of those who can, has as its essential feature that it confers +upon its owners income unaccompanied by personal service. In this +respect the ownership of land and the ownership of capital are normally +similar, though from other points of view their differences are +important. To the economist rent and interest are distinguished by the +fact that the latter, though it is often accompanied by surplus +elements which are merged with it in dividends, is the price of an +instrument of production which would not be forthcoming for industry if +the price were not paid, while the former is a differential surplus +which does not affect the supply. To the business community and the +solicitor land and capital are equally investments, between which, +since they possess the common characteristic of yielding income without +labor, it is inequitable to discriminate; and though their significance +as economic categories may be different, their effect as social +institutions is the same. It is to separate property from creative +ability, and to divide society into two classes, of which one has its +{69} primary interest in passive ownership, while the other is mainly +dependent upon active work. + +Hence the real analogy to many kinds of modern property is not the +simple property of the small land-owner or the craftsman, still less +the household goods and dear domestic amenities, which is what the word +suggests to the guileless minds of clerks and shopkeepers, and which +stampede them into displaying the ferocity of terrified sheep when the +cry is raised that "Property" is threatened. It is the feudal dues +which robbed the French peasant of part of his produce till the +Revolution abolished them. How do royalties differ from _quintaines_ +and _lods et ventes_? They are similar in their origin and similar in +being a tax levied on each increment of wealth which labor produces. +How do urban ground-rents differ from the payments which were made to +English sinecurists before the Reform Bill of 1832? They are equally +tribute paid by those who work to those who do not. If the monopoly +profits of the owner of _banalites_, whose tenant must grind corn at +his mill and make wine at his press, were an intolerable oppression, +what is the sanctity attaching to the monopoly profits of the +capitalists, who, as the Report of the Government Committee on trusts +tells us, "in soap, tobacco, wallpaper, salt, cement and in the textile +trades ... are in a position to control output and prices" or, in other +words, can compel the consumer to buy from them, at the figure they +fix, on pain of not buying at all? + +All these rights--royalties, ground-rents, monopoly profits--are +"Property." The criticism most fatal to them is not that of +Socialists. It is contained in the {70} arguments by which property is +usually defended. For if the meaning of the institution is to +encourage industry by securing that the worker shall receive the +produce of his toil, then precisely in proportion as it is important to +preserve the property which a man has in the results of his own +efforts, is it important to abolish that which he has in the results of +the efforts of some one else. The considerations which justify +ownership as a function are those which condemn it as a tax. Property +is not theft, but a good deal of theft becomes property. The owner of +royalties who, when asked why he should be paid L50,000 a year from +minerals which he has neither discovered nor developed nor worked but +only owned, replies "But it's Property!" may feel all the awe which his +language suggests. But in reality he is behaving like the snake which +sinks into its background by pretending that it is the dead branch of a +tree, or the lunatic who tried to catch rabbits by sitting behind a +hedge and making a noise like a turnip. He is practising +protective--and sometimes aggressive--mimicry. His sentiments about +property are those of the simple toiler who fears that what he has sown +another may reap. His claim is to be allowed to continue to reap what +another has sown. + +It is sometimes suggested that the less attractive characteristics of +our industrial civilization, its combination of luxury and squalor, its +class divisions and class warfare, are accidental maladjustments which +are not rooted in the center of its being, but are excrescences which +economic progress itself may in time be expected to correct. That +agreeable optimism will not survive an {71} examination of the +operation of the institution of private property in land and capital in +industrialized communities. In countries where land is widely +distributed, in France or in Ireland, its effect may be to produce a +general diffusion of wealth among a rural middle class who at once work +and own. In countries where the development of industrial organization +has separated the ownership of property and the performance of work, +the normal effect of private property is to transfer to functionless +owners the surplus arising from the more fertile sites, the better +machinery, the more elaborate organization. No clearer +exemplifications of this "law of rent" has been given than the figures +supplied to the Coal Industry Commission by Sir Arthur Lowes Dickenson, +which showed that in a given quarter the costs per ton of producing +coal varied from $3.12 to $12 per ton, and the profits from nil to +$4.12. The distribution in dividends to shareholders of the surplus +accruing from the working of richer and more accessible seams, from +special opportunities and access to markets, from superior machinery, +management and organization, involves the establishment of Privilege as +a national institution, as much as the most arbitrary exactions of a +feudal _seigneur_. It is the foundation of an inequality which is not +accidental or temporary, but necessary and permanent. And on this +inequality is erected the whole apparatus of class institutions, which +make not only the income, but the housing, education, health and +manners, indeed the very physical appearance of different classes of +Englishmen almost as different from each other as though the minority +were {72} alien settlers established amid the rude civilization of a +race of impoverished aborigines. + + +So the justification of private property traditional in England, which +saw in it the security that each man would enjoy the fruits of his own +labor, though largely applicable to the age in which it was formulated, +has undergone the fate of most political theories. It has been refuted +not by the doctrines of rival philosophers, but by the prosaic course +of economic development. As far as the mass of mankind are concerned, +the need which private property other than personal possessions does +still often satisfy, though imperfectly and precariously, is the need +for security. To the small investors, who are the majority of +property-owners, though owning only an insignificant fraction of the +property in existence, its meaning is simple. It is not wealth or +power, or even leisure from work. It is safety. They work hard. They +save a little money for old age, or for sickness, or for their +children. They invest it, and the interest stands between them and all +that they dread most. Their savings are of convenience to industry, +the income from them is convenient to themselves. "Why," they ask, +"should we not reap in old age the advantage of energy and thrift in +youth?" And this hunger for security is so imperious that those who +suffer most from the abuses of property, as well as those who, if they +could profit by them, would be least inclined to do so, will tolerate +and even defend them, for fear lest the knife which trims dead matter +should cut into the quick. They have seen too many men drown to be +{73} critical of dry land, though it be an inhospitable rock. They are +haunted by the nightmare of the future, and, if a burglar broke it, +would welcome a burglar. + +This need for security is fundamental, and almost the gravest +indictment of our civilization is that the mass of mankind are without +it. Property is one way of organizing it. It is quite comprehensible +therefore, that the instrument should be confused with the end, and +that any proposal to modify it should create dismay. In the past, +human beings, roads, bridges and ferries, civil, judicial and clerical +offices, and commissions in the army have all been private property. +Whenever it was proposed to abolish the rights exercised over them, it +was protested that their removal would involve the destruction of an +institution in which thrifty men had invested their savings, and on +which they depended for protection amid the chances of life and for +comfort in old age. In fact, however, property is not the only method +of assuring the future, nor, when it is the way selected, is security +dependent upon the maintenance of all the rights which are at present +normally involved in ownership. In so far as its psychological +foundation is the necessity for securing an income which is stable and +certain, which is forthcoming when its recipient cannot work, and which +can be used to provide for those who cannot provide for themselves, +what is really demanded is not the command over the fluctuating +proceeds of some particular undertaking, which accompanies the +ownership of capital, but the security which is offered by an annuity. +Property is the instrument, security is the object, and when some +alternative way is forthcoming {74} of providing the latter, it does +not appear in practice that any loss of confidence, or freedom or +independence is caused by the absence of the former. + +Hence not only the manual workers, who since the rise of capitalism, +have rarely in England been able to accumulate property sufficient to +act as a guarantee of income when their period of active earning is +past, but also the middle and professional classes, increasingly seek +security to-day, not in investment, but in insurance against sickness +and death, in the purchase of annuities, or in what is in effect the +same thing, the accumulation of part of their salary towards a pension +which is paid when their salary ceases. The professional man may buy +shares in the hope of making a profit on the transaction. But when +what he desires to buy is security, the form which his investment takes +is usually one kind or another of insurance. The teacher, or nurse, or +government servant looks forward to a pension. Women, who fifty years +ago would have been regarded as dependent almost as completely as if +femininity were an incurable disease with which they had been born, and +whose fathers, unless rich men, would have been tormented with anxiety +for fear lest they should not save sufficient to provide for them, now +receive an education, support themselves in professions, and save in +the same way. It is still only in comparatively few cases that this +type of provision is made; almost all wage-earners outside government +employment, and many in it, as well as large numbers of professional +men, have nothing to fall back upon in sickness or old age. But that +does not alter the fact {75} that, when it is made, it meets the need +for security, which, apart, of course, from personal possessions and +household furniture, is the principal meaning of property to by far the +largest element in the population, and that it meets it more completely +and certainly than property itself. + +Nor, indeed, even when property is the instrument used to provide for +the future, is such provision dependent upon the maintenance in its +entirety of the whole body of rights which accompany ownership to-day. +Property is not simple but complex. That of a man who has invested his +savings as an ordinary shareholder comprises at least three rights, the +right to interest, the right to profits, the right to control. In so +far as what is desired is the guarantee for the maintenance of a stable +income, not the acquisition of additional wealth without labor--in so +far as his motive is not gain but security--the need is met by interest +on capital. It has no necessary connection either with the right to +residuary profits or the right to control the management of the +undertaking from which the profits are derived, both of which are +vested to-day in the shareholder. If all that were desired were to use +property as an instrument for purchasing security, the obvious +course--from the point of view of the investor desiring to insure his +future the safest course--would be to assimilate his position as far as +possible to that of a debenture holder or mortgagee, who obtains the +stable income which is his motive for investment, but who neither +incurs the risks nor receives the profits of the speculator. To insist +that the elaborate apparatus of proprietary rights which {76} +distributes dividends of thirty per cent to the shareholders in Coats, +and several thousands a year to the owner of mineral royalties and +ground-rents, and then allows them to transmit the bulk of gains which +they have not earned to descendants who in their turn will thus be +relieved from the necessity of earning, must be maintained for the sake +of the widow and the orphan, the vast majority of whom have neither and +would gladly part with them all for a safe annuity if they had, is, to +say the least of it, extravagantly _mal-a-propos_. It is like pitching +a man into the water because he expresses a wish for a bath, or +presenting a tiger cub to a householder who is plagued with mice, on +the ground that tigers and cats both belong to the genus _felis_. The +tiger hunts for itself not for its masters, and when game is scarce +will hunt them. The classes who own little or no property may +reverence it because it is security. But the classes who own much +prize it for quite different reasons, and laugh in their sleeve at the +innocence which supposes that anything as vulgar as the savings of the +_petite bourgeoisie_ have, except at elections, any interest for them. +They prize it because it is the order which quarters them on the +community and which provides for the maintenance of a leisure class at +the public expense. + +"Possession," said the Egoist, "without obligation to the object +possessed, approaches felicity." Functionless property appears natural +to those who believe that society should be organized for the +acquisition of private wealth, and attacks upon it perverse or +malicious, because the question which they ask of any institution is, +"What does it yield?" And such property yields much {77} to those who +own it. Those, however, who hold that social unity and effective work +are possible only if society is organized and wealth distributed on the +basis of function, will ask of an institution, not, "What dividends +does it pay?" but "What service does it perform?" To them the fact +that much property yields income irrespective of any service which is +performed or obligation which is recognized by its owners will appear +not a quality but a vice. They will see in the social confusion which +it produces, payments disproportionate to service here, and payments +without any service at all there, and dissatisfaction everywhere, a +convincing confirmation of their argument that to build on a foundation +of rights and of rights alone is to build on a quicksand. + +From the portentous exaggeration into an absolute of what once was, and +still might be, a sane and social institution most other social evils +follow the power of those who do not work over those who do, the +alternate subservience and rebelliousness of those who work towards +those who do not, the starving of science and thought and creative +effort for fear that expenditure upon them should impinge on the +comfort of the sluggard and the _faineant_, and the arrangement of +society in most of its subsidiary activities to suit the convenience +not of those who work usefully but of those who spend gaily, so that +the most hideous, desolate and parsimonious places in the country are +those in which the greatest wealth is produced, the Clyde valley, or +the cotton towns of Lancashire, or the mining villages of Scotland and +Wales, and the gayest and most luxurious {78} those in which it is +consumed. From the point of view of social health and economic +efficiency, society should obtain its material equipment at the +cheapest price possible, and after providing for depreciation and +expansion should distribute the whole product to its working members +and their dependents. What happens at present, however, is that its +workers are hired at the cheapest price which the market (as modified +by organization) allows, and that the surplus, somewhat diminished by +taxation, is distributed to the owners of property. Profits may vary +in a given year from a loss to 100 per cent. But wages are fixed at a +level which will enable the marginal firm to continue producing one +year with another; and the surplus, even when due partly to efficient +management, goes neither to managers nor manual workers, but to +shareholders. The meaning of the process becomes startlingly apparent +when, as in Lancashire to-day, large blocks of capital change hands at +a period of abnormal activity. The existing shareholders receive the +equivalent of the capitalized expectation of future profits. The +workers, as workers, do not participate in the immense increment in +value; and when, in the future, they demand an advance in wages, they +will be met by the answer that profits, which before the transaction +would have been reckoned large, yield shareholders after it only a low +rate of interest on their investment. + +The truth is that whereas in earlier ages the protection of property +was normally the protection of work, the relationship between them has +come in the course of the economic development of the last two +centuries to {79} be very nearly reversed. The two elements which +compose civilization are active effort and passive property, the labor +of human things and the tools which human beings use. Of these two +elements those who supply the first maintain and improve it, those who +own the second normally dictate its character, its development and its +administration. Hence, though politically free, the mass of mankind +live in effect under rules imposed to protect the interests of the +small section among them whose primary concern is ownership. From this +subordination of creative activity to passive property, the worker who +depends upon his brains, the organizer, inventor, teacher or doctor +suffers almost as much embarrassment as the craftsman. The real +economic cleavage is not, as is often said, between employers and +employed, but between all who do constructive work, from scientist to +laborer, on the one hand, and all whose main interest is the +preservation of existing proprietary rights upon the other, +irrespective of whether they contribute to constructive work or not. + +If, therefore, under the modern conditions which have concentrated any +substantial share of property in the hands of a small minority of the +population, the world is to be governed for the advantages of those who +own, it is only incidentally and by accident that the results will be +agreeable to those who work. In practice there is a constant collision +between them. Turned into another channel, half the wealth distributed +in dividends to functionless shareholders, could secure every child a +good education up to 18, could re-endow English Universities, and +(since more efficient production is {80} important) could equip English +industries for more efficient production. Half the ingenuity now +applied to the protection of property could have made most industrial +diseases as rare as smallpox, and most English cities into places of +health and even of beauty. What stands in the way is the doctrine that +the rights of property are absolute, irrespective of any social +function which its owners may perform. So the laws which are most +stringently enforced are still the laws which protect property, though +the protection of property is no longer likely to be equivalent to the +protection of work, and the interests which govern industry and +predominate in public affairs are proprietary interests. A mill-owner +may poison or mangle a generation of operatives; but his brother +magistrates will let him off with a caution or a nominal fine to poison +and mangle the next. For he is an owner of property. A landowner may +draw rents from slums in which young children die at the rate of 200 +per 1000; but he will be none the less welcome in polite society. For +property has no obligations and therefore can do no wrong. Urban land +may be held from the market on the outskirts of cities in which human +beings are living three to a room, and rural land may be used for sport +when villagers are leaving it to overcrowd them still more. No public +authority intervenes, for both are property. To those who believe that +institutions which repudiate all moral significance must sooner or +later collapse, a society which confuses the protection of property +with the preservation of its functionless perversions will appear as +precarious as that which has left the memorials of its {81} tasteless +frivolity and more tasteless ostentation in the gardens of Versailles. + +Do men love peace? They will see the greatest enemy of social unity in +rights which involve no obligation to co-operate for the service of +society. Do they value equality? Property rights which dispense their +owners from the common human necessity of labor make inequality an +institution permeating every corner of society, from the distribution +of material wealth to the training of intellect itself. Do they desire +greater industrial efficiency? There is no more fatal obstacle to +efficiency than the revelation that idleness has the same privileges as +industry, and that for every additional blow with the pick or hammer an +additional profit will be distributed among shareholders who wield +neither. + +Indeed, functionless property is the greatest enemy of legitimate +property itself. It is the parasite which kills the organism that +produced it. Bad money drives out good, and, as the history of the +last two hundred years shows, when property for acquisition or power +and property for service or for use jostle each other freely in the +market, without restrictions such as some legal systems have imposed on +alienation and inheritance, the latter tends normally to be absorbed by +the former, because it has less resisting power. Thus functionless +property grows, and as it grows it undermines the creative energy which +produced property and which in earlier ages it protected. It cannot +unite men, for what unites them is the bond of service to a common +purpose, and that bond it repudiates, since its very {82} essence is +the maintenance of rights irrespective of service. It cannot create; +it can only spend, so that the number of scientists, inventors, artists +or men of letters who have sprung in the course of the last century +from hereditary riches can be numbered on one hand. It values neither +culture nor beauty, but only the power which belongs to wealth and the +ostentation which is the symbol of it. + +So those who dread these qualities, energy and thought and the creative +spirit--and they are many--will not discriminate, as we have tried to +discriminate, between different types and kinds of property, in order +that they may preserve those which are legitimate and abolish those +which are not. They will endeavor to preserve all private property, +even in its most degenerate forms. And those who value those things +will try to promote them by relieving property of its perversions, and +thus enabling it to return to its true nature. They will not desire to +establish any visionary communism, for they will realize that the free +disposal of a sufficiency of personal possessions is the condition of a +healthy and self-respecting life, and will seek to distribute more +widely the property rights which make them to-day the privilege of a +minority. But they will refuse to submit to the naive philosophy which +would treat all proprietary rights as equal in sanctity merely because +they are identical in name. They will distinguish sharply between +property which is used by its owner for the conduct of his profession +or the upkeep of his household, and property which is merely a claim on +wealth produced by another's labor. They will insist that {83} +property is moral and healthy only when it is used as a condition not +of idleness but of activity, and when it involves the discharge of +definite personal obligations. They will endeavor, in short, to base +it upon the principle of function. + + + + +{84} + +VI + +THE FUNCTIONAL SOCIETY + +The application to property and industry of the principle of function +is compatible with several different types of social organization, and +is as unlikely as more important revelations to be the secret of those +who cry "Lo here!" and "Lo there!" The essential thing is that men +should fix their minds upon the idea of purpose, and give that idea +pre-eminence over all subsidiary issues. If, as is patent, the purpose +of industry is to provide the material foundation of a good social +life, then any measure which makes that provision more effective, so +long as it does not conflict with some still more important purpose, is +wise, and any institution which thwarts or encumbers it is foolish. It +is foolish, for example, to cripple education, as it is crippled in +England for the sake of industry; for one of the uses of industry is to +provide the wealth which may make possible better education. It is +foolish to maintain property rights for which no service is performed, +for payment without service is waste; and if it is true, as +statisticians affirm, that, even were income equally divided, income +per head would be small, then it is all the more foolish, for sailors +in a boat have no room for first-class passengers, and it is all the +more important that none of the small national income should be +misapplied. It is foolish to leave the direction of industry {85} in +the hands of servants of private property-owners who themselves know +nothing about it but its balance sheets, because this is to divert it +from the performance of service to the acquisition of gain, and to +subordinate those who do creative work to those who do not. + +The course of wisdom in the affairs of industry is, after all, what it +is in any other department of organized life. It is to consider the +end for which economic activity is carried on and then to adapt +economic organization to it. It is to pay for service and for service +only, and when capital is hired to make sure that it is hired at the +cheapest possible price. It is to place the responsibility for +organizing industry on the shoulders of those who work and use, not of +those who own, because production is the business of the producer and +the proper person to see that he discharges his business is the +consumer for whom, and not for the owner of property, it ought to be +carried on. Above all it is to insist that all industries shall be +conducted in complete publicity as to costs and profits, because +publicity ought to be the antiseptic both of economic and political +abuses, and no man can have confidence in his neighbor unless both work +in the light. + +As far as property is concerned, such a policy would possess two edges. +On the one hand, it would aim at abolishing those forms of property in +which ownership is divorced from obligations. On the other hand, it +would seek to encourage those forms of economic organization under +which the worker, whether owner or not, is free to carry on his work +without sharing its control or its profits with the mere _rentier_. +Thus, if in certain {86} spheres it involved an extension of public +ownership, it would in others foster an extension of private property. +For it is not private ownership, but private ownership divorced from +work, which is corrupting to the principle of industry; and the idea of +some socialists that private property in land or capital is necessarily +mischievous is a piece of scholastic pedantry as absurd as that of +those conservatives who would invest all property with some kind of +mysterious sanctity. It all depends what sort of property it is and +for what purpose it is used. Provided that the State retains its +eminent domain, and controls alienation, as it does under the Homestead +laws of the Dominions, with sufficient stringency to prevent the +creation of a class of functionless property-owners, there is no +inconsistency between encouraging simultaneously a multiplication of +peasant farmers and small masters who own their own farms or shops, and +the abolition of private ownership in those industries, unfortunately +to-day the most conspicuous, in which the private owner is an absentee +shareholder. + +Indeed, the second reform would help the first. In so far as the +community tolerates functionless property it makes difficult, if not +impossible, the restoration of the small master in agriculture or in +industry, who cannot easily hold his own in a world dominated by great +estates or capitalist finance. In so far as it abolishes those kinds +of property which are merely parasitic, it facilitates the restoration +of the small property-owner in those kinds of industry for which small +ownership is adapted. A socialistic policy towards the former is not +{87} antagonistic to the "distributive state," but, in modern economic +conditions, a necessary preliminary to it, and if by "Property" is +meant the personal possessions which the word suggests to nine-tenths +of the population, the object of socialists is not to undermine +property but to protect and increase it. The boundary between large +scale and small scale production will always be uncertain and +fluctuating, depending, as it does, on technical conditions which +cannot be foreseen: a cheapening of electrical power, for example, +might result in the decentralization of manufactures, as steam resulted +in their concentration. The fundamental issue, however, is not between +different scales of ownership, but between ownership of different +kinds, not between the large farmer or master and the small, but +between property which is used for work and property which yields +income without it. The Irish landlord was abolished, not because he +owned a large scale, but because he was an owner and nothing more; if, +and when English land-ownership has been equally attenuated, as in +towns it already has been, it will deserve to meet the same fate. Once +the issue of the character of ownership has been settled, the question +of the size of the economic unit can be left to settle itself. + +The first step, then, towards the organization of economic life for the +performance of function is to abolish those types of private property +in return for which no function is performed. The man who lives by +owning without working is necessarily supported by the industry of some +one else, and is, therefore, too expensive a luxury to be encouraged. +Though he deserves to be {88} treated with the leniency which ought to +be, and usually is not, shown to those who have been brought up from +infancy to any other disreputable trade, indulgence to individuals must +not condone the institution of which both they and their neighbors are +the victims. Judged by this standard, certain kinds of property are +obviously anti-social. The rights in virtue of which the owner of the +surface is entitled to levy a tax, called a royalty, on every ton of +coal which the miner brings to the surface, to levy another tax, called +a way-leave, on every ton of coal transported under the surface of his +land though its amenity and value may be quite unaffected, to distort, +if he pleases, the development of a whole district by refusing access +to the minerals except upon his own terms, and to cause some 3,500 to +4,000 million tons to be wasted in barriers between different +properties, while he in the meantime contributes to a chorus of +lamentation over the wickedness of the miners in not producing more +tons of coal for the public and incidentally more private taxes for +himself--all this adds an agreeable touch of humor to the drab quality +of our industrial civilization for which mineral owners deserve perhaps +some recognition, though not the $400,000 odd a year which is paid to +each of the four leading players, or the $24,000,000 a year which is +distributed among the crowd. + +The alchemy by which a gentleman who has never seen a coal mine +distills the contents of that place of gloom into elegant chambers in +London and a place in the country is not the monopoly of royalty +owners. A similar feat of prestidigitation is performed by the {89} +owner of urban ground-rents. In rural districts some landlords, +perhaps many landlords, are partners in the hazardous and difficult +business of agriculture, and, though they may often exercise a power +which is socially excessive, the position which they hold and the +income which they receive are, in part at last, a return for the +functions which they perform. The ownership of urban land has been +refined till of that crude ore only the pure gold is left. It is the +perfect sinecure, for the only function it involves is that of +collecting its profits, and in an age when the struggle of Liberalism +against sinecures was still sufficiently recent to stir some chords of +memory, the last and greatest of liberal thinkers drew the obvious +deduction. "The reasons which form the justification ... of property +in land," wrote Mill in 1848, "are valid only in so far as the +proprietor of land is its improver.... In no sound theory of private +property was it ever contemplated that the proprietor of land should be +merely a sinecurist quartered on it." Urban ground-rents and royalties +are, in fact, as the Prime Minister in his unregenerate days suggested, +a tax which some persons are permitted by the law to levy upon the +industry of others. They differ from public taxation only in that +their amount increases in proportion not to the nation's need of +revenue but to its need of the coal and space on which they are levied, +that their growth inures to private gain not to public benefit, and +that if the proceeds are wasted on frivolous expenditure no one has any +right to complain, because the arrangement by which Lord Smith spends +wealth produced by Mr. Brown on objects which do no good to either is +part {90} of the system which, under the name of private property, Mr. +Brown as well as Lord Smith have learned to regard as essential to the +higher welfare of mankind. + +But if we accept the principle of function we shall ask what is the +_purpose_ of this arrangement, and for what end the inhabitants of, for +example, London pay $64,000,000 a year to their ground landlords. And +if we find that it is for no purpose and no end, but that these things +are like the horseshoes and nails which the City of London presents to +the Crown on account of land in the Parish of St. Clement Danes, then +we shall not deal harshly with a quaint historical survival, but +neither shall we allow it to distract us from the business of the +present, as though there had been history but there were not history +any longer. We shall close these channels through which wealth leaks +away by resuming the ownership of minerals and of urban land, as some +communities in the British Dominions and on the Continent of Europe +have resumed it already. We shall secure that such large accumulations +as remain change hands at least once in every generation, by increasing +our taxes on inheritance till what passes to the heir is little more +than personal possessions, not the right to a tribute from industry +which, though qualified by death-duties, is what the son of a rich man +inherits to-day. We shall treat mineral owners and land-owners, in +short, as Plato would have treated the poets, whom in their ability to +make something out of nothing and to bewitch mankind with words they a +little resemble, and crown them with flowers and usher them politely +out of the State. + + + + +{91} + +VII + +INDUSTRY AS A PROFESSION + +Rights without functions are like the shades in Homer which drank blood +but scattered trembling at the voice of a man. To extinguish royalties +and urban ground-rents is merely to explode a superstition. It needs +as little--and as much--resolution as to put one's hand through any +other ghost. In all industries except the diminishing number in which +the capitalist is himself the manager, property in capital is almost +equally passive. Almost, but not quite. For, though the majority of +its owners do not themselves exercise any positive function, they +appoint those who do. It is true, of course, that the question of how +capital is to be owned is distinct from the question of how it is to be +administered, and that the former can be settled without prejudice to +the latter. To infer, because shareholders own capital which is +indispensable to industry, that therefore industry is dependent upon +the maintenance of capital in the hands of shareholders, to write, with +some economists, as though, if private property in capital were further +attenuated or abolished altogether, the constructive energy of the +managers who may own capital or may not, but rarely, in the more +important industries, own more than a small fraction of it, must +necessarily be impaired, is to be guilty of a robust _non-sequitur_ and +to ignore the most obvious facts of {92} contemporary industry. The +less the mere capitalist talks about the necessity for the consumer of +an efficient organization of industry, the better; for, whatever the +future of industry may be, an efficient organization is likely to have +no room for _him_. But though shareholders do not govern, they reign, +at least to the extent of saying once a year "_le roy le veult_." If +their rights are pared down or extinguished, the necessity for some +organ to exercise them will still remain. And the question of the +ownership of capital has this much in common with the question of +industrial organization, that the problem of the constitution under +which industry is to be conducted is common to both. + +That constitution must be sought by considering how industry can be +organized to express most perfectly the principle of purpose. The +application to industry of the principle of purpose is simple, however +difficult it may be to give effect to it. It is to turn it into a +Profession. A Profession may be defined most simply as a trade which +is organized, incompletely, no doubt, but genuinely, for the +performance of function. It is not simply a collection of individuals +who get a living for themselves by the same kind of work. Nor is it +merely a group which is organized exclusively for the economic +protection of its members, though that is normally among its purposes. +It is a body of men who carry on their work in accordance with rules +designed to enforce certain standards both for the better protection of +its members and for the better service of the public. The standards +which it maintains may be high or low: all professions have some rules +which protect the interests {93} of the community and others which are +an imposition on it. Its essence is that it assumes certain +responsibilities for the competence of its members or the quality of +its wares, and that it deliberately prohibits certain kinds of conduct +on the ground that, though they may be profitable to the individual, +they are calculated to bring into disrepute the organization to which +he belongs. While some of its rules are trade union regulations +designed primarily to prevent the economic standards of the profession +being lowered by unscrupulous competition, others have as their main +object to secure that no member of the profession shall have any but a +purely professional interest in his work, by excluding the incentive of +speculative profit. + +The conception implied in the words "unprofessional conduct" is, +therefore, the exact opposite of the theory and practice which assume +that the service of the public is best secured by the unrestricted +pursuit on the part of rival traders of their pecuniary self-interest, +within such limits as the law allows. It is significant that at the +time when the professional classes had deified free competition as the +arbiter of commerce and industry, they did not dream of applying it to +the occupations in which they themselves were primarily interested, but +maintained, and indeed, elaborated machinery through which a +professional conscience might find expression. The rules themselves +may sometimes appear to the layman arbitrary and ill-conceived. But +their object is clear. It is to impose on the profession itself the +obligation of maintaining the quality of the service, and to prevent +its common purpose being frustrated through {94} the undue influence of +the motive of pecuniary gain upon the necessities or cupidity of the +individual. + +The difference between industry as it exists to-day and a profession +is, then, simple and unmistakable. The essence of the former is that +its only criterion is the financial return which it offers to its +shareholders. The essence of the latter, is that, though men enter it +for the sake of livelihood, the measure of their success is the service +which they perform, not the gains which they amass. They may, as in +the case of a successful doctor, grow rich; but the meaning of their +profession, both for themselves and for the public, is not that they +make money but that they make health, or safety, or knowledge, or good +government or good law. They depend on it for their income, but they +do not consider that any conduct which increases their income is on +that account good. And while a boot-manufacturer who retires with half +a million is counted to have achieved success, whether the boots which +he made were of leather or brown paper, a civil servant who did the +same would be impeached. + +So, if they are doctors, they recognize that there are certain kinds of +conduct which cannot be practised, however large the fee offered for +them, because they are unprofessional; if scholars and teachers, that +it is wrong to make money by deliberately deceiving the public, as is +done by makers of patent medicines, however much the public may clamor +to be deceived; if judges or public servants, that they must not +increase their incomes by selling justice for money; if soldiers, that +the service comes first, and their private inclinations, {95} even the +reasonable preference of life to death, second. Every country has its +traitors, every army its deserters, and every profession its blacklegs. +To idealize the professional spirit would be very absurd; it has its +sordid side, and, if it is to be fostered in industry, safeguards will +be needed to check its excesses. But there is all the difference +between maintaining a standard which is occasionally abandoned, and +affirming as the central truth of existence that there is no standard +to maintain. The meaning of a profession is that it makes the traitors +the exception, not as they are in industry, the rule. It makes them +the exception by upholding as the criterion of success the end for +which the profession, whatever it may be, is carried on, and +subordinating the inclination, appetites and ambitions of individuals +to the rules of an organization which has as its object to promote the +performance of function. + + +There is no sharp line between the professions and the industries. A +hundred years ago the trade of teaching, which to-day is on the whole +an honorable public service, was rather a vulgar speculation upon +public credulity; if Mr. Squeers was a caricature, the Oxford of Gibbon +and Adam Smith was a solid port-fed reality; no local authority could +have performed one-tenth of the duties which are carried out by a +modern municipal corporation every day, because there was no body of +public servants to perform them, and such as there were took bribes. +It is conceivable, at least, that some branches of medicine might have +developed on the lines of industrial capitalism, with hospitals as +factories, {96} doctors hired at competitive wages as their "hands," +large dividends paid to shareholders by catering for the rich, and the +poor, who do not offer a profitable market, supplied with an inferior +service or with no service at all. + +The idea that there is some mysterious difference between making +munitions of war and firing them, between building schools and teaching +in them when built, between providing food and providing health, which +makes it at once inevitable and laudable that the former should be +carried on with a single eye to pecuniary gain, while the latter are +conducted by professional men who expect to be paid for service but who +neither watch for windfalls nor raise their fees merely because there +are more sick to be cured, more children to be taught, or more enemies +to be resisted, is an illusion only less astonishing than that the +leaders of industry should welcome the insult as an honor and wear +their humiliation as a kind of halo. The work of making boots or +building a house is in itself no more degrading than that of curing the +sick or teaching the ignorant. It is as necessary and therefore as +honorable. It should be at least equally bound by rules which have as +their object to maintain the standards of professional service. It +should be at least equally free from the vulgar subordination of moral +standards to financial interests. + +If industry is to be organized as a profession, two changes are +requisite, one negative and one positive. The first, is that it should +cease to be conducted by the agents of property-owners for the +advantage of property-owners, {97} and should be carried on, instead, +for the service of the public. The second, is that, subject to +rigorous public supervision, the responsibility for the maintenance of +the service should rest upon the shoulders of those, from organizer and +scientist to laborer, by whom, in effect, the work is conducted. + +The first change is necessary because the conduct of industry for the +public advantage is impossible as long as the ultimate authority over +its management is vested in those whose only connection with it, and +interest in it, is the pursuit of gain. As industry is at present +organized, its profits and its control belong by law to that element in +it which has least to do with its success. Under the joint-stock +organization which has become normal in all the more important +industries except agriculture, it is managed by the salaried agents of +those by whom the property is owned. It is successful if it returns +large sums to shareholders, and unsuccessful if it does not. If an +opportunity presents itself to increase dividends by practices which +deteriorate the service or degrade the workers, the officials who +administer industry act strictly within their duty if they seize it, +for they are the servants of their employers, and their obligation to +their employers is to provide dividends not to provide service. But +the owners of the property are, _qua_ property-owners functionless, not +in the sense, of course, that the tools of which they are proprietors +are not useful, but in the sense that since work and ownership are +increasingly separated, the efficient use of the tools is not dependent +on the maintenance of the proprietary rights exercised over them. {98} +Of course there are many managing directors who both own capital and +administer the business. But it is none the less the case that most +shareholders in most large industries are normally shareholders and +nothing more. + +Nor is their economic interest identical, as is sometimes assumed, with +that of the general public. A society is rich when material goods, +including capital, are cheap, and human beings dear: indeed the word +"riches" has no other meaning. The interest of those who own the +property used in industry, though not, of course, of the managers who +administer industry and who themselves are servants, and often very +ill-paid servants at that, is that their capital should be dear and +human beings cheap. Hence, if the industry is such as to yield a +considerable return, or if one unit in the industry, owing to some +special advantage, produces more cheaply than its neighbors, while +selling at the same price, or if a revival of trade raises prices, or +if supplies are controlled by one of the combines which are now the +rule in many of the more important industries, the resulting surplus +normally passes neither to the managers, nor to the other employees, +nor to the public, but to the shareholders. Such an arrangement is +preposterous in the literal sense of being the reverse of that which +would be established by considerations of equity and common sense, and +gives rise (among other things) to what is called "the struggle between +labor and capital." The phrase is apposite, since it is as absurd as +the relations of which it is intended to be a description. To deplore +"ill-feeling" or to advocate {99} "harmony" between "labor and capital" +is as rational as to lament the bitterness between carpenters and +hammers or to promote a mission for restoring amity between mankind and +its boots. The only significance of these _cliches_ is that their +repetition tends to muffle their inanity, even to the point of +persuading sensible men that capital "employs" labor, much as our pagan +ancestors imagined that the other pieces of wood and iron, which they +deified in their day, sent their crops and won their battles. When men +have gone so far as to talk as though their idols have come to life, it +is time that some one broke them. Labor consists of persons, capital +of things. The only use of things is to be applied to the service of +persons. The business of persons is to see that they are there to use, +and that no more than need be is paid for using them. + +Thus the application to industry of the principle of function involves +an alteration of proprietary rights, because those rights do not +contribute, as they now are, to the end which industry exists to serve. +What gives unity to any activity, what alone can reconcile the +conflicting claims of the different groups engaged in it, is the +purpose for which it is carried on. If men have no common goal it is +no wonder that they should fall out by the way, nor are they likely to +be reconciled by a redistribution of their provisions. If they are not +content both to be servants, one or other must be master, and it is +idle to suppose that mastership can be held in a state of suspense +between the two. There can be a division of functions between +different grades of workers, or between worker and consumer, and each +can {100} have in his own sphere the authority needed to enable him to +fill it. But there cannot be a division of functions between the +worker and the owner who is owner and nothing else, for what function +does such an owner perform? The provision of capital? Then pay him +the sum needed to secure the use of his capital, but neither pay him +more nor admit him to a position of authority over production for which +merely as an owner he is not qualified. For this reason, while an +equilibrium between worker and manager is possible, because both are +workers, that which it is sought to establish between worker and owner +is not. It is like the proposal of the Germans to negotiate with +Belgium from Brussels. Their proposals may be excellent: but it is not +evident why they are where they are, or how, since they do not +contribute to production, they come to be putting forward proposals at +all. As long as they are in territory where they have no business to +be, their excellence as individuals will be overlooked in annoyance at +the system which puts them where they are. + +It is fortunate indeed, if nothing worse than this happens. For one +way of solving the problem of the conflict of rights in industry is not +to base rights on functions, as we propose, but to base them on force. +It is to re-establish in some veiled and decorous form the institution +of slavery, by making labor compulsory. In nearly all countries a +concerted refusal to work has been made at one time or another a +criminal offense. There are to-day parts of the world in which +European capitalists, unchecked by any public opinion or authority +{101} independent of themselves, are free to impose almost what terms +they please upon workmen of ignorant and helpless races. In those +districts of America where capitalism still retains its primitive +lawlessness, the same result appears to be produced upon immigrant +workmen by the threat of violence. + +In such circumstances the conflict of rights which finds expression in +industrial warfare does not arise, because the rights of one party have +been extinguished. The simplicity of the remedy is so attractive that +it is not surprising that the Governments of industrial nations should +coquet from time to time with the policy of compulsory arbitration. +After all, it is pleaded, it is only analogous to the action of a +supernational authority which should use its common force to prevent +the outbreak of war. In reality, compulsory arbitration is the +opposite of any policy which such an authority could pursue either with +justice or with hope of success. For it takes for granted the +stability of existing relationships and intervenes to adjust incidental +disputes upon the assumption that their equity is recognized and their +permanence desired. In industry, however, the equity of existing +relationships is precisely the point at issue. A League of Nations +which adjusted between a subject race and its oppressors, between Slavs +and Magyars, or the inhabitants of what was once Prussian Poland and +the Prussian Government, on the assumption that the subordination of +Slavs to Magyars and Poles to Prussians was part of an unchangeable +order, would rightly be resisted by all those who think liberty more +precious than peace. A State which, in the {102} name of peace, should +make the concerted cessation of work a legal offense would be guilty of +a similar betrayal of freedom. It would be solving the conflict of +rights between those who own and those who work by abolishing the +rights of those who work. + + +So here again, unless we are prepared to re-establish some form of +forced labor, we reach an impasse. But it is an impasse only in so +long as we regard the proprietary rights of those who own the capital +used in industry as absolute and an end in themselves. If, instead of +assuming that all property, merely because it is property, is equally +sacred, we ask what is the _purpose_ for which capital is used, what is +its _function_, we shall realize that it is not an end but a means to +an end, and that its function is to serve and assist (as the economists +tell us) the labor of human beings, not the function of human beings to +serve those who happen to own it. And from this truth two consequences +follow. The first is that since capital is a thing, which ought to be +used to help industry as a man may use a bicycle to get more quickly to +his work, it ought, when it is employed, to be employed on the cheapest +terms possible. The second is that those who own it should no more +control production than a man who lets a house controls the meals which +shall be cooked in the kitchen, or the man who lets a boat the speed at +which the rowers shall pull. In other words, capital should always be +got at cost price, which means, unless the State finds it wise, as it +very well may, to own the capital used in certain industries, it should +be paid the lowest interest {103} for which it can be obtained, but +should carry no right either to residuary dividends or to the control +of industry. + +There are, in theory, five ways by which the control of industry by the +agents of private property-owners can be terminated. They may be +expropriated without compensation. They may voluntarily surrender it. +They may be frozen out by action on the part of the working +_personnel_, which itself undertakes such functions, if any, as they +have performed, and makes them superfluous by conducting production +without their assistance. Their proprietary interest may be limited or +attenuated to such a degree that they become mere _rentiers_, who are +guaranteed a fixed payment analogous to that of the debenture-holder, +but who receive no profits and bear no responsibility for the +organization of industry. They may be bought out. The first +alternative is exemplified by the historical confiscations of the past, +such as, for instance, by the seizure of ecclesiastical property by the +ruling classes of England, Scotland and most other Protestant states. +The second has rarely, if ever, been tried--the nearest approach to it, +perhaps, was the famous abdication of August 4th, 1789. The third is +the method apparently contemplated by the building guilds which are now +in process of formation in Great Britain. The fourth method of +treating the capitalist is followed by the co-operative movement. It +is also that proposed by the committee of employers and trade-unionists +in the building industry over which Mr. Foster presided, and which +proposed that employers should be paid a fixed salary, and a fixed rate +of {104} interest on their capital, but that all surplus profits should +be pooled and administered by a central body representing employers and +workers. The fifth has repeatedly been practised by municipalities, +and somewhat less often by national governments. + +Which of these alternative methods of removing industry from the +control of the property-owner is adopted is a matter of expediency to +be decided in each particular case. "Nationalization," therefore, +which is sometimes advanced as the only method of extinguishing +proprietary rights, is merely one species of a considerable genus. It +can be used, of course, to produce the desired result. But there are +some industries, at any rate, in which nationalization is not necessary +in order to bring it about, and since it is at best a cumbrous process, +when other methods are possible, other methods should be used. +Nationalization is a means to an end, not an end in itself. Properly +conceived its object is not to establish state management of industry, +but to remove the dead hand of private ownership, when the private +owner has ceased to perform any positive function. It is unfortunate, +therefore, that the abolition of obstructive property rights, which is +indispensable, should have been identified with a single formula, which +may be applied with advantage in the special circumstances of some +industries, but need not necessarily be applied in all. Ownership is +not a right, but a bundle of rights, and it is possible to strip them +off piecemeal as well as to strike them off simultaneously. The +ownership of capital involves, as we have said, three main claims; the +right to interest as the price of capital, the right to {105} profits, +and the right to control, in virtue of which managers and workmen are +the servants of shareholders. These rights in their fullest degree are +not the invariable accompaniment of ownership, nor need they +necessarily co-exist. The ingenuity of financiers long ago devised +methods of grading stock in such a way that the ownership of some +carries full control, while that of others does not, that some bear all +the risk and are entitled to all the profits, while others are limited +in respect to both. All are property, but not all carry proprietary +rights of the same degree. + +As long as the private ownership of industrial capital remains, the +object of reformers should be to attenuate its influence by insisting +that it shall be paid not more than a rate of interest fixed in +advance, and that it should carry with it no right of control. In such +circumstances the position of the ordinary shareholder would +approximate to that of the owner of debentures; the property in the +industry would be converted into a mortgage on its profits, while the +control of its administration and all profits in excess of the minimum +would remain to be vested elsewhere. So, of course, would the risks. +But risks are of two kinds, those of the individual business and those +of the industry. The former are much heavier than the latter, for +though a coal mine is a speculative investment, coal mining is not, and +as long as each business is managed as a separate unit, the payments +made to shareholders must cover both. If the ownership of capital in +each industry were unified, which does not mean centralized, those +risks which are incidental to individual competition would be {106} +eliminated, and the credit of each unit would be that of the whole. + +Such a change in the character of ownership would have three +advantages. It would abolish the government of industry by property. +It would end the payment of profits to functionless shareholders by +turning them into creditors paid a fixed rate of interest. It would +lay the only possible foundations for industrial peace by making it +possible to convert industry into a profession carried on by all grades +of workers for the service of the public, not for the gain of those who +own capital. The organization which it would produce will be +described, of course, as impracticable. It is interesting, therefore, +to find it is that which experience has led practical men to suggest as +a remedy for the disorders of one of the most important of national +industries, that of building. The question before the Committee of +employers and workmen, which issued last August a Report upon the +Building Trade, was "Scientific Management and the Reduction of +Costs."[1] These are not phrases which suggest an economic revolution; +but it is something little short of a revolution that the signatories +of the report propose. For, as soon as they came to grips with the +problem, they found that it was impossible to handle it effectively +without reconstituting the general fabric of industrial relationships +which is its setting. Why is the service supplied by the industry +ineffective? Partly because the workers do not give their full +energies to the performance of their part in production. {107} Why do +they not give their best energies? Because of "the fear of +unemployment, the disinclination of the operatives to make unlimited +profit for private employers, the lack of interest evinced by +operatives owing to their non-participation in control, inefficiency +both managerial and operative." How are these psychological obstacles +to efficiency to be counteracted? By increased supervision and +speeding up, by the allurements of a premium bonus system, or the other +devices by which men who are too ingenious to have imagination or moral +insight would bully or cajole poor human nature into doing what--if +only the systems they invent would let it!--it desires to do, simple +duties and honest work? Not at all. By turning the building of houses +into what teaching now is, and Mr. Squeers thought it could never be, +an honorable profession. + +"We believe," they write, "that the great task of our Industrial +Council is to develop an entirely new system of industrial control by +the members of the industry itself--the actual producers, whether by +hand or brain, and to bring them into co-operation with the State as +the central representative of the community whom they are organized to +serve." Instead of unlimited profits, so "indispensable as an +incentive to efficiency," the employer is to be paid a salary for his +services as manager, and a rate of interest on his capital which is to +be both fixed and (unless he fails to earn it through his own +inefficiency) guaranteed; anything in excess of it, any "profits" in +fact, which in other industries are distributed as dividends to +shareholders, he is to {108} surrender to a central fund to be +administered by employers and workmen for the benefit of the industry +as a whole. Instead of the financial standing of each firm being +treated as an inscrutable mystery to the public, with the result that +it is sometimes a mystery to itself, there is to be a system of public +costing and audit, on the basis of which the industry will assume a +collective liability for those firms which are shown to be competently +managed. Instead of the workers being dismissed in slack times to +struggle along as best they can, they are to be maintained from a fund +raised by a levy on employers and administered by the trade unions. +There is to be publicity as to costs and profits, open dealing and +honest work and mutual helpfulness, instead of the competition which +the nineteenth century regarded as an efficient substitute for them. +"Capital" is not to "employ labor." Labor, which includes managerial +labor, is to employ capital; and to employ it at the cheapest rate at +which, in the circumstances of the trade, it can be got. If it employs +it so successfully that there is a surplus when it has been fairly paid +for its own services, then that surplus is not to be divided among +shareholders, for, when they have been paid interest, they have been +paid their due; it is to be used to equip the industry to provide still +more effective service in the future. + +So here we have the majority of a body of practical men, who care +nothing for socialist theories, proposing to establish "organized +Public Service in the Building Industry," recommending, in short, that +their industry shall be turned into a profession. And they do it, it +{109} will be observed, by just that functional organization, just that +conversion of full proprietary rights into a mortgage secured (as far +as efficient firms are concerned) on the industry as a whole, just that +transference of the control of production from the owner of capital to +those whose business is production, which we saw is necessary if +industry is to be organized for the performance of service, not for the +pecuniary advantage of those who hold proprietary rights. Their Report +is of the first importance as offering a policy for attenuating private +property in capital in the important group of industries in which +private ownership, in one form or another, is likely for some +considerable time to continue, and a valuable service would be rendered +by any one who would work out in detail the application of its +principle to other trades. + +Not, of course, that this is the only way, or in highly capitalized +industries the most feasible way, in which the change can be brought +about. Had the movement against the control of production by property +taken place before the rise of limited companies, in which ownership is +separated from management, the transition to the organization of +industry as a profession might also have taken place, as the employers +and workmen in the building trade propose that it should, by limiting +the rights of private ownership without abolishing it. But that is not +what has actually happened, and therefore the proposals of the building +trade are not of universal application. It is possible to retain +private ownership in building and in industries like building, {110} +while changing its character, precisely because in building the +employer is normally not merely an owner, but something else as well. +He is a manager; that is, he is a workman. And because he is a +workman, whose interests, and still more whose professional spirit as a +workman may often outweigh his interests and merely financial spirit as +an owner, he can form part of the productive organization of the +industry, after his rights as an owner have been trimmed and limited. + +But that dual position is abnormal, and in the highly organized +industries is becoming more abnormal every year. In coal, in cotton, +in ship-building, in many branches of engineering the owner of capital +is not, as he is in building, an organizer or manager. His connection +with the industry and interest in it is purely financial. He is an +owner and nothing more. And because his interest is merely financial, +so that his concern is dividends and production only as a means to +dividends, he cannot be worked into an organization of industry which +vests administration in a body representing all grades of producers, or +producers and consumers together, for he has no purpose in common with +them; so that while joint councils between workers and managers may +succeed, joint councils between workers and owners or agents of owners, +like most of the so-called Whitley Councils, will not, because the +necessity for the mere owner is itself one of the points in dispute. +The master builder, who owns the capital used, can be included, not +_qua_ capitalist, but _qua_ builder, if he surrenders some of the +rights of ownership, as the Building Industry Committee proposed that +he should. But {111} if the shareholder in a colliery or a shipyard +abdicates the control and unlimited profits to which, _qua_ capitalist, +he is at present entitled, he abdicates everything that makes him what +he is, and has no other standing in the industry. He cannot share, +like the master builder, in its management, because he has no +qualifications which would enable him to do so. His object is profit; +and if industry is to become, as employers and workers in the building +trade propose, an "organized public service," then its subordination to +the shareholder whose object is profit, is, as they clearly see, +precisely what must be eliminated. The master builders propose to give +it up. They can do so because they have their place in the industry in +virtue of their function as workmen. But if the shareholder gave it +up, he would have no place at all. + +Hence in coal mining, where ownership and management are sharply +separated, the owners will not admit the bare possibility of any system +in which the control of the administration of the mines is shared +between the management and the miners. "I am authorized to state on +behalf of the Mining Association," Lord Gainford, the chief witness on +behalf of the mine-owners, informed the Coal Commission, "that if the +owners are not to be left complete executive control they will decline +to accept the responsibility for carrying on the industry."[2] So the +mine-owners blow away in a sentence the whole body of plausible +make-believe which rests on the idea that, while private ownership +remains {112} unaltered, industrial harmony can be produced by the +magic formula of joint control. And they are right. The +representatives of workmen and shareholders, in mining and in other +industries, can meet and negotiate and discuss. But joint +administration of the shareholders' property by a body representing +shareholders and workmen is impossible, because there is no purpose in +common between them. For the only purpose which could unite all +persons engaged in industry, and overrule their particular and +divergent interests, is the provision of service. And the object of +shareholders, the whole significance and _metier_ of industry to them, +is not the provision of service but the provision of dividends. + + +In industries where management is divorced from ownership, as in most +of the highly organized trades it is to-day, there is no obvious +halfway house, therefore, between the retention of the present system +and the complete extrusion of the capitalist from the control of +production. The change in the character of ownership, which is +necessary in order that coal or textiles and ship-building may be +organized as professions for the service of the public, cannot easily +spring from within. The stroke needed to liberate them from the +control of the property-owner must come from without. In theory it +might be struck by action on the part of organized workers, who would +abolish residuary profits and the right of control by the mere +procedure of refusing to work as long as they were maintained, on the +historical analogy offered by peasants who have destroyed {113} +predatory property in the past by declining to pay its dues and admit +its government, in which case Parliament would intervene only to +register the community's assent to the _fait accompli_. In practice, +however, the conditions of modern industry being what they are, that +course, apart from its other disadvantages, is so unlikely to be +attempted, or, if attempted, to succeed, that it can be neglected. The +alternative to it is that the change in the character of property +should be affected by legislation in virtue of which the rights of +ownership in an industry are bought out simultaneously. + +In either case, though the procedure is different, the result of the +change, once it is accomplished, is the same. Private property in +capital, in the sense of the right to profits and control, is +abolished. What remains of it is, at most, a mortgage in favor of the +previous proprietors, a dead leaf which is preserved, though the sap of +industry no longer feeds it, as long as it is not thought worth while +to strike it off. And since the capital needed to maintain and equip a +modern industry could not be provided by any one group of workers, even +were it desirable on other grounds that they should step completely +into the position of the present owners, the complex of rights which +constitutes ownership remains to be shared between them and whatever +organ may act on behalf of the general community. The former, for +example, may be the heir of the present owners as far as the control of +the routine and administration of industry is concerned: the latter may +succeed to their right to dispose of residuary profits. The elements +composing property, have, in fact, to be {114} disentangled: and the +fact that to-day, under the common name of ownership, several different +powers are vested in identical hands, must not be allowed to obscure +the probability that, once private property in capital has been +abolished, it may be expedient to re-allocate those powers in detail as +well as to transfer them _en bloc_. + +The essence of a profession is, as we have suggested, that its members +organize themselves for the performance of function. It is essential +therefore, if industry is to be professionalized, that the abolition of +functionless property should not be interpreted to imply a continuance +under public ownership of the absence of responsibility on the part of +the _personnel_ of industry, which is the normal accompaniment of +private ownership working through the wage-system. It is the more +important to emphasize that point, because such an implication has +sometimes been conveyed in the past by some of those who have presented +the case for some such change in the character of ownership as has been +urged above. The name consecrated by custom to the transformation of +property by public and external action is nationalization. But +nationalization is a word which is neither very felicitous nor free +from ambiguity. Properly used, it means merely ownership by a body +representing the nation. But it has come in practice to be used as +equivalent to a particular method of administration, under which +officials employed by the State step into the position of the present +directors of industry, and exercise all the power which they exercised. +So those who desire to maintain the system under which industry is +carried on, not as a profession {115} serving the public, but for the +advantage of shareholders, attack nationalization on the ground that +state management is necessarily inefficient, and tremble with +apprehension whenever they post a letter in a letter-box; and those who +desire to change it reply that state services are efficient and praise +God whenever they use a telephone; as though either private or public +administration had certain peculiar and unalterable characteristics, +instead of depending for its quality, like an army or railway company +or school, and all other undertakings, public and private alike, not on +whether those who conduct it are private officials or state officials, +but on whether they are properly trained for their work and can command +the good will and confidence of their subordinates. + +The arguments on both sides are ingenious, but in reality nearly all of +them are beside the point. The merits of nationalization do not stand +or fall with the efficiency or inefficiency of existing state +departments as administrators of industry. For nationalization, which +means public ownership, is compatible with several different types of +management. The constitution of the industry may be "unitary," as is +(for example) that of the post-office. Or it may be "federal," as was +that designed by Mr. Justice Sankey for the Coal Industry. +Administration may be centralized or decentralized. The authorities to +whom it is intrusted may be composed of representatives of the +consumers, or of representatives of professional associations, or of +state officials, or of all three in several different proportions. +Executive work may be placed in the hands of civil {116} servants, +trained, recruited and promoted as in the existing state departments, +or a new service may be created with a procedure and standards of its +own. It may be subject to Treasury control, or it may be financially +autonomous. The problem is, in fact, of a familiar, though difficult, +order. It is one of constitution-making. + +It is commonly assumed by controversialists that the organization and +management of a nationalized industry must, for some undefined reason, +be similar to that of the post-office. One might as reasonably suggest +that the pattern exemplar of private enterprise must be the Steel +Corporation or the Imperial Tobacco Company. The administrative +systems obtaining in a society which has nationalized its foundation +industries will, in fact, be as various as in one that resigns them to +private ownership; and to discuss their relative advantages without +defining what particular type of each is the subject of reference is +to-day as unhelpful as to approach a modern political problem in terms +of the Aristotelian classification of constitutions. The highly +abstract dialectics as to "enterprise," "initiative," "bureaucracy," +"red tape," "democratic control," "state management," which fill the +press of countries occupied with industrial problems, really belong to +the dark ages of economic thought. The first task of the student, +whatever his personal conclusions, is, it may be suggested, to +contribute what he can to the restoration of sanity by insisting that +instead of the argument being conducted with the counters of a highly +inflated and rapidly depreciating verbal currency, the exact situation, +{117} in so far as is possible, shall be stated as it is; uncertainties +(of which there are many) shall be treated as uncertain, and the +precise meaning of alternative proposals shall be strictly defined. +Not the least of the merits of Mr. Justice Sankey's report was that, by +stating in great detail the type of organization which he recommended +for the Coal Industry, he imparted a new precision and reality into the +whole discussion. Whether his conclusions are accepted or not, it is +from the basis of clearly defined proposals such as his that the future +discussion of these problems must proceed. It may not find a solution. +It will at least do something to create the temper in which alone a +reasonable solution can be sought. + +Nationalization, then, is not an end, but a means to an end, and when +the question of ownership has been settled the question of +administration remains for solution. As a means it is likely to be +indispensable in those industries in which the rights of private +proprietors cannot easily be modified without the action of the State, +just as the purchase of land by county councils is a necessary step to +the establishment of small holders, when landowners will not +voluntarily part with their property for the purpose. But the object +in purchasing land is to establish small holders, not to set up farms +administered by state officials; and the object of nationalizing mining +or railways or the manufacture of steel should not be to establish any +particular form of state management, but to release those who do +constructive work from the control of those whose sole interest is +pecuniary gain, in order that they may be free to {118} apply their +energies to the true purpose of industry, which is the provision of +service, not the provision of dividends. When the transference of +property has taken place, it will probably be found that the necessary +provision for the government of industry will involve not merely the +freedom of the producers to produce, but the creation of machinery +through which the consumer, for whom he produces, can express his +wishes and criticize the way in which they are met, as at present he +normally cannot. But that is the second stage in the process of +reorganizing industry for the performance of function, not the first. +The first is to free it from subordination to the pecuniary interests +of the owner of property, because they are the magnetic pole which sets +all the compasses wrong, and which causes industry, however swiftly it +may progress, to progress in the wrong direction. + +Nor does this change in the character of property involve a breach with +the existing order so sharp as to be impracticable. The phraseology of +political controversy continues to reproduce the conventional +antitheses of the early nineteenth century; "private enterprise" and +"public ownership" are still contrasted with each other as light with +darkness or darkness with light. But, in reality, behind the formal +shell of the traditional legal system the elements of a new body of +relationship have already been prepared, and find piece-meal +application through policies devised, not by socialists, but by men who +repeat the formulae of individualism, at the very moment when they are +undermining it. The Esch-Cummins Act in America, the {119} Act +establishing a Ministry of Transport in England, Sir Arthur Duckham's +scheme for the organization of the coal mines, the proposals with +regard to the coal industry of the British Government itself, appear to +have the common characteristic of retaining private ownership in name, +while attenuating it in fact, by placing its operators under the +supervision, accompanied sometimes by a financial guarantee, of a +public authority. Schemes of this general character appear, indeed, to +be the first instinctive reaction produced by the discovery that +private enterprise is no longer functioning effectively; it is probable +that they possess certain merits of a technical order analogous to +those associated with the amalgamation of competing firms into a single +combination. It is questionable, however, whether the compromise which +they represent is permanently tenable. What, after all, it may be +asked, are the advantages of private ownership when it has been pared +down to the point which policies of this order propose? May not the +"owner" whose rights they are designed to protect not unreasonably +reply to their authors, "Thank you for nothing"? Individual enterprise +has its merits: so also, perhaps, has public ownership. But, by the +time these schemes have done with it, not much remains of "the simple +and obvious system of natural liberty," while their inventors are +precluded from appealing to the motives which are emphasized by +advocates of nationalization. It is one thing to be an entrepreneur +with a world of adventure and unlimited profits--if they can be +achieved--before one. It is quite another to be a director of a +railway company or coal {120} corporation with a minimum rate of profit +guaranteed by the State, and a maximum rate of profit which cannot be +exceeded. Hybrids are apt to be sterile. It may be questioned +whether, in drawing the teeth of private capitalism, this type of +compromise does not draw out most of its virtues as well. + +So, when a certain stage of economic development has been reached, +private ownership, by the admission of its defenders, can no longer be +tolerated in the only form in which it is free to display the +characteristic, and quite genuine, advantages for the sake of which it +used to be defended. And, as step by step it is whittled down by tacit +concessions to the practical necessity of protecting the consumer, or +eliminating waste, or meeting the claims of the workers, public +ownership becomes, not only on social grounds, but for reasons of +economic efficiency, the alternative to a type of private ownership +which appears to carry with it few rights of ownership and to be +singularly devoid of privacy. Inevitably and unfortunately the change +must be gradual. But it should be continuous. When, as in the last +few years, the State has acquired the ownership of great masses of +industrial capital, it should retain it, instead of surrendering it to +private capitalists, who protest at once that it will be managed so +inefficiently that it will not pay and managed so efficiently that it +will undersell them. When estates are being broken up and sold, as +they are at present, public bodies should enter the market and acquire +them. Most important of all, the ridiculous barrier, inherited from an +age in which municipal corporations were corrupt oligarchies, which +{121} at present prevents England's Local Authorities from acquiring +property in land and industrial capital, except for purposes specified +by Act of Parliament, should be abolished, and they should be free to +undertake such services as the citizens may desire. The objection to +public ownership, in so far as it is intelligent, is in reality largely +an objection to over-centralization. But the remedy for +over-centralization, is not the maintenance of functionless property in +private hands, but the decentralized ownership of public property, and +when Birmingham and Manchester and Leeds are the little republics which +they should be, there is no reason to anticipate that they will tremble +at a whisper from Whitehall. + +These things should be done steadily and continuously quite apart from +the special cases like that of the mines and railways, where the +private ownership of capital is stated by the experts to have been +responsible for intolerable waste, or the manufacture of ornaments +[Transcriber's note: armaments?] and alcoholic liquor, which are +politically and socially too dangerous to be left in private hands. +They should be done not in order to establish a single form of +bureaucratic management, but in order to release the industry from the +domination of proprietary interests, which, whatever the form of +management, are not merely troublesome in detail but vicious in +principle, because they divert it from the performance of function to +the acquisition of gain. If at the same time private ownership is +shaken, as recently it has been, by action on the part of particular +groups of workers, so much the better. There are more ways of killing +a cat than {122} drowning it in cream, and it is all the more likely to +choose the cream if they are explained to it. But the two methods are +complementary, not alternative, and the attempt to found rival schools +on an imaginary incompatibility between them is a bad case of the +_odium sociologicum_ which afflicts reformers. + + + +[1] Reprinted in _The Industrial Council for the Building Industry_. + +[2] _Coal Industry Commission, Minutes of Evidence_, Vol. I, p. 2506. + + + + +{123} + +VIII + +THE "VICIOUS CIRCLE" + +What form of management should replace the administration of industry +by the agents of shareholders? What is most likely to hold it to its +main purpose, and to be least at the mercy of predatory interests and +functionless supernumeraries, and of the alternations of sullen +dissatisfaction and spasmodic revolt which at present distract it? +Whatever the system upon which industry is administered, one thing is +certain. Its economic processes and results must be public, because +only if they are public can it be known whether the service of industry +is vigilant, effective and honorable, whether its purpose is being +realized and its function carried out. The defense of secrecy in +business resembles the defense of adulteration on the ground that it is +a legitimate weapon of competition; indeed it has even less +justification than that famous doctrine, for the condition of effective +competition is publicity, and one motive for secrecy is to prevent it. + +Those who conduct industry at the present time and who are most +emphatic that, as the Duke of Wellington said of the unreformed House +of Commons, they "have never read or heard of any measure up to the +present moment which can in any degree satisfy the mind" that the +method of conducting it can in any way be improved, are also those +apparently who, with some {124} honorable exceptions, are most +reluctant that the full facts about it should be known. And it is +crucial that they should be known. It is crucial not only because, in +the present ignorance of the real economic situation, all industrial +disagreements tend inevitably to be battles in the dark, in which +"ignorant armies clash by night," but because, unless there is complete +publicity as to profits and costs, it is impossible to form any +judgment either of the reasonableness of the prices which are charged +or of the claims to remuneration of the different parties engaged in +production. For balance sheets, with their opportunities for +concealing profits, give no clear light upon the first, and no light at +all upon the second. And so, when the facts come out, the public is +aghast at revelations which show that industry is conducted with +bewildering financial extravagance. If the full facts had been +published, as they should have been, quarter by quarter, these +revelations would probably not have been made at all, because publicity +itself would have been an antiseptic and there would have been nothing +sensational to reveal. + +The events of the last few years are a lesson which should need no +repetition. The Government, surprised at the price charged for making +shells at a time when its soldiers were ordered by Headquarters not to +fire more than a few rounds per day, whatever the need for retaliation, +because there were not more than a few to fire, establishes a costing +department to analyze the estimates submitted by manufacturers and to +compare them, item by item, with the costs in its own factories. It +finds that, through the mere pooling of knowledge, {125} "some of the +reductions made in the price of shells and similar munitions," as the +Chartered Accountant employed by the Department tells us, "have been as +high as 50% of the original price." The household consumer grumbles at +the price of coal. For once in a way, amid a storm of indignation from +influential persons engaged in the industry, the facts are published. +And what do they show? That, after 2/6 has been added to the already +high price of coal because the poorer mines are alleged not to be +paying their way, 21% of the output examined by the Commission was +produced at a profit of 1/- to 3/- per ton, 32% at a profit of 3/- to +5/-, 13% at a profit of 5/- to 7/-, and 14% at a profit of 7/- per ton +and over, while the profits of distributors in London alone amount in +the aggregate to over $3,200,000, and the co-operative movement, which +aims not at profit, but at service, distributes household coal at a +cost of from 2/- to 4/- less per ton than is charged by the coal +trade![1] + +"But these are exceptions." They may be. It is possible that in the +industries, in which, as the recent Committee on Trusts has told us, +"powerful Combinations or Consolidations of one kind or another are in +a position effectively to control output and prices," not only costs +are cut to the bare minimum but profits are inconsiderable. But then +why insist on this humiliating tradition of secrecy with regard to +them, when every one who uses their products, and every one who renders +honest service to production, stands to gain by publicity? If industry +is to become a profession, whatever its {126} management, the first of +its professional rules should be, as Sir John Mann told the Coal +Commission, that "all cards should be placed on the table." If it were +the duty of a Public Department to publish quarterly exact returns as +to costs of production and profits in all the firms throughout an +industry, the gain in mere productive efficiency, which should appeal +to our enthusiasts for output, would be considerable; for the +organization whose costs were least would become the standard with +which all other types of organization would be compared. The gain in +_morale_, which is also, absurd though it may seem, a condition of +efficiency, would be incalculable. For industry would be conducted in +the light of day. Its costs, necessary or unnecessary, the +distribution of the return to it, reasonable or capricious, would be a +matter of common knowledge. It would be held to its purpose by the +mere impossibility of persuading those who make its products or those +who consume them to acquiesce, as they acquiesce now, in expenditure +which is meaningless because it has contributed nothing to the service +which the industry exists to perform. + +The organization of industry as a profession does not involve only the +abolition of functionless property, and the maintenance of publicity as +the indispensable condition of a standard of professional honor. It +implies also that those who perform its work should undertake that its +work is performed effectively. It means that they should not merely be +held to the service of the public by fear of personal inconvenience or +penalties, but that they should treat the discharge of professional +{127} responsibilities as an obligation attaching not only to a small +_elite_ of intellectuals, managers or "bosses," who perform the +technical work of "business management," but as implied by the mere +entry into the industry and as resting on the corporate consent and +initiative of the rank and file of workers. It is precisely, indeed, +in the degree to which that obligation is interpreted as attaching to +all workers, and not merely to a select class, that the difference +between the existing industrial order, collectivism and the +organization of industry as a profession resides. The first involves +the utilization of human beings for the purpose of private gain; the +second their utilization for the purpose of public service; the third +the association in the service of the public of their professional +pride, solidarity and organization. + +The difference in administrative machinery between the second and third +might not be considerable. Both involve the drastic limitation or +transference to the public of the proprietary rights of the existing +owners of industrial capital. Both would necessitate machinery for +bringing the opinion of the consumers to bear upon the service supplied +them by the industry. The difference consists in the manner in which +the obligations of the producer to the public are conceived. He may +either be the executant of orders transmitted to him by its agents; or +he may, through his organization, himself take a positive part in +determining what those orders should be. In the former case he is +responsible for his own work, but not for anything else. If he hews +his stint of coal, it is no business of his whether the pit is a {128} +failure; if he puts in the normal number of rivets, he disclaims all +further interest in the price or the sea-worthiness of the ship. In +the latter his function embraces something more than the performance of +the specialized piece of work allotted to him. It includes also a +responsibility for the success of the undertaking as a whole. And +since responsibility is impossible without power, his position would +involve at least so much power as is needed to secure that he can +affect in practice the conduct of the industry. It is this collective +liability for the maintenance of a certain quality of service which is, +indeed, the distinguishing feature of a profession. It is compatible +with several different kinds of government, or indeed, when the unit of +production is not a group, but an individual, with hardly any +government at all. What it does involve is that the individual, merely +by entering the profession should have committed himself to certain +obligations in respect of its conduct, and that the professional +organization, whatever it may be, should have sufficient power to +enable it to maintain them. + +The demand for the participation of the workers in the control of +industry is usually advanced in the name of the producer, as a plea for +economic freedom or industrial democracy. "Political freedom," writes +the Final Report of the United States Commission of Industrial +Relations, which was presented in 1916, "can exist only where there is +industrial freedom.... There are now within the body of our Republic +industrial communities which are virtually Principalities, oppressive +to those dependent upon them for a livelihood {129} and a dreadful +menace to the peace and welfare of the nation." The vanity of +Englishmen may soften the shadows and heighten the lights. But the +concentration of authority is too deeply rooted in the very essence of +Capitalism for differences in the degree of the arbitrariness with +which it is exercised to be other than trivial. The control of a large +works does, in fact, confer a kind of private jurisdiction in matters +concerning the life and livelihood of the workers, which, as the United +States' Commission suggests, may properly be described as "industrial +feudalism." It is not easy to understand how the traditional liberties +of Englishmen are compatible with an organization of industry which, +except in so far as it has been qualified by law or trade unionism, +permits populations almost as large as those of some famous cities of +the past to be controlled in their rising up and lying down, in their +work, economic opportunities, and social life by the decisions of a +Committee of half-a-dozen Directors. + +The most conservative thinkers recognize that the present organization +of industry is intolerable in the sacrifice of liberty which it entails +upon the producer. But each effort which he makes to emancipate +himself is met by a protest that if the existing system is incompatible +with freedom, it at least secures efficient service, and that efficient +service is threatened by movements which aim at placing a greater +measure of industrial control in the hands of the workers. The attempt +to drive a wedge between the producer and the consumer is obviously the +cue of all the interests which are conscious that by themselves they +are unable to hold back {130} the flood. It is natural, therefore, +that during the last few months they should have concentrated their +efforts upon representing that every advance in the demands and in the +power of any particular group of workers is a new imposition upon the +general body of the public. Eminent persons, who are not obviously +producing more than they consume, explain to the working classes that +unless they produce more they must consume less. Highly syndicated +combinations warn the public against the menace of predatory +syndicalism. The owners of mines and minerals, in their new role as +protectors of the poor, lament the "selfishness" of the miners, as +though nothing but pure philanthropy had hitherto caused profits and +royalties to be reluctantly accepted by themselves. + +The assumption upon which this body of argument rests is simple. It is +that the existing organization of industry is the safeguard of +productive efficiency, and that from every attempt to alter it the +workers themselves lose more as consumers than they can gain as +producers. The world has been drained of its wealth and demands +abundance of goods. The workers demand a larger income, greater +leisure, and a more secure and dignified status. These two demands, it +is argued, are contradictory. For how can the consumer be supplied +with cheap goods, if, as a worker, he insists on higher wages and +shorter hours? And how can the worker secure these conditions, if as a +consumer, he demands cheap goods? So industry, it is thought, moves in +a vicious circle of shorter hours and higher wages and less production, +which in time must mean {131} longer hours and lower wages; and every +one receives less, because every one demands more. + +The picture is plausible, but it is fallacious. It is fallacious not +merely in its crude assumption that a rise in wages necessarily +involves an increase in costs, but for another and more fundamental +reason. In reality the cause of economic confusion is not that the +demands of producer and consumer meet in blunt opposition; for, if they +did, their incompatibility, when they were incompatible, would be +obvious, and neither could deny his responsibility to the other, +however much he might seek to evade it. It is that they do not, but +that, as industry is organized to-day, what the worker foregoes the +general body of consumers does not necessarily gain, and what the +consumer pays the general body of workers does not necessarily receive. +If the circle is vicious, its vice is not that it is closed, but that +it is always half open, so that part of production leaks away in +consumption which adds nothing to productive energies, and that the +producer, because he knows this, does not fully use even the productive +energy which he commands. + +It is the consciousness of this leak which sets every one at cross +purposes. No conceivable system of industrial organization can secure +industrial peace, if by "peace" is meant a complete absence of +disagreement. What could be secured would be that disagreements should +not flare up into a beacon of class warfare. If every member of a +group puts something into a common pool on condition of taking +something out, they may still quarrel about the size of the shares, as +children quarrel {132} over cake; but if the total is known and the +claims admitted, that is all they can quarrel about, and, since they +all stand on the same footing, any one who holds out for more than his +fellows must show some good reason why he should get it. But in +industry the claims are not all admitted, for those who put nothing in +demand to take something out; both the total to be divided and the +proportion in which the division takes place are sedulously concealed; +and those who preside over the distribution of the pool and control +what is paid out of it have a direct interest in securing as large a +share as possible for themselves and in allotting as small a share as +possible to others. If one contributor takes less, so far from it +being evident that the gain will go to some one who has put something +in and has as good a right as himself, it may go to some one who has +put in nothing and has no right at all. If another claims more, he may +secure it, without plundering a fellow-worker, at the expense of a +sleeping partner who is believed to plunder both. In practice, since +there is no clear principle determining what they ought to take, both +take all that they can get. + +In such circumstances denunciations of the producer for exploiting the +consumer miss the mark. They are inevitably regarded as an economic +version of the military device used by armies which advance behind a +screen of women and children, and then protest at the brutality of the +enemy in shooting non-combatants. They are interpreted as evidence, +not that a section of the producers are exploiting the remainder, but +that a minority of property-owners, which is in opposition to {133} +both, can use its economic power to make efforts directed against those +who consume much and produce little rebound on those who consume little +and produce much. And the grievance, of which the Press makes so much, +that some workers may be taking too large a share compared with others, +is masked by the much greater grievance, of which it says nothing +whatever, that some idlers take any share at all. The abolition of +payments which are made without any corresponding economic service is +thus one of the indispensable conditions both of economic efficiency +and industrial peace, because their existence prevents different +classes of workers from restraining each other, by uniting them all +against the common enemy. Either the principle of industry is that of +function, in which case slack work is only less immoral than no work at +all; or it is that of grab, in which case there is no morality in the +matter. But it cannot be both. And it is useless either for +property-owners or for Governments to lament the mote in the eye of the +trade unions as long as, by insisting on the maintenance of +functionless property, they decline to remove the beam in their own. + +The truth is that only workers can prevent the abuse of power by +workers, because only workers are recognized as possessing any title to +have their claims considered. And the first step to preventing the +exploitation of the consumer by the producer is simple. It is to turn +all men into producers, and thus to remove the temptation for +particular groups of workers to force their claims at the expense of +the public, by removing the valid excuse that such gains as they may +get are {134} taken from those who at present have no right to them, +because they are disproportionate to service or obtained for no service +at all. Indeed, if work were the only title to payment, the danger of +the community being exploited by highly organized groups of producers +would largely disappear. For, when no payments were made to +non-producers, there would be no debatable ground for which to +struggle, and it would become evident that if any one group of +producers took more, another must put up with less. + +Under such conditions a body of workers who used their strong strategic +position to extort extravagant terms for themselves at the expense of +their fellow-workers might properly be described as exploiting the +community. But at present such a statement is meaningless. It is +meaningless because before the community can be exploited the community +must exist, and its existence in the sphere of economics is to-day not +a fact but only an aspiration. The procedure by which, whenever any +section of workers advance demands which are regarded as inconvenient +by their masters, they are denounced as a band of anarchists who are +preying on the public may be a convenient weapon in an emergency, but, +once it is submitted to analysis, it is logically self-destructive. It +has been applied within recent years, to the postmen, to the engineers, +to the policemen, to the miners and to the railway men, a population +with their dependents, of some eight million persons; and in the case +of the last two the whole body of organized labor made common cause +with those of whose exorbitant demands it was alleged to be the victim. +But when these {135} workers and their sympathizers are deducted, what +is "the community" which remains? It is a naive arithmetic which +produces a total by subtracting one by one all the items which compose +it; and the art which discovers the public interest by eliminating the +interests of successive sections of the public smacks of the +rhetorician rather than of the statesman. + +The truth is that at present it is idle to seek to resist the demands +of any group of workers by appeals to "the interests of society," +because to-day, as long as the economic plane alone is considered, +there is not one society but two, which dwell together in uneasy +juxtaposition, like Sinbad and the Old Man of the Sea, but which in +spirit, in ideals, and in economic interest, are worlds asunder. There +is the society of those who live by labor, whatever their craft or +profession, and the society of those who live on it. All the latter +cannot command the sacrifices or the loyalty which are due to the +former, for they have no title which will bear inspection. The +instinct to ignore that tragic division instead of ending it is +amiable, and sometimes generous. But it is a sentimentality which is +like the morbid optimism of the consumptive who dares not admit even to +himself the virulence of his disease. As long as the division exists, +the general body of workers, while it may suffer from the struggles of +any one group within it, nevertheless supports them by its sympathy, +because all are interested in the results of the contest carried on by +each. Different sections of workers will exercise mutual restraint +only when the termination of the {136} struggle leaves them face to +face with each other, and not as now, with the common enemy. The ideal +of a united society in which no one group uses its power to encroach +upon the standards of another is, in short, unattainable, except +through the preliminary abolition of functionless property. + +Those to whom a leisure class is part of an immutable order without +which civilization is inconceivable, dare not admit, even to +themselves, that the world is poorer, not richer, because of its +existence. So, when, as now it is important that productive energy +should be fully used, they stamp and cry, and write to _The Times_ +about the necessity for increased production, though all the time they +themselves, their way of life and expenditure, and their very existence +as a leisure class, are among the causes why production is not +increased. In all their economic plans they make one reservation, +that, however necessitous the world may be, it shall still support +them. But men who work do not make that reservation, nor is there any +reason why they should; and appeals to them to produce more wealth +because the public needs it usually fall upon deaf ears, even when such +appeals are not involved in the ignorance and misapprehensions which +often characterize them. + +For the workman is not the servant of the consumer, for whose sake +greater production is demanded, but of shareholders, whose primary aim +is dividends, and to whom all production, however futile or frivolous, +so long as it yields dividends, is the same. It is useless to urge +that he should produce more wealth for the {137} community, unless at +the same time he is assured that it is the community which will benefit +in proportion as more wealth is produced. If every unnecessary charge +upon coal-getting had been eliminated, it would be reasonable that the +miners should set a much needed example by refusing to extort better +terms for themselves at the expense of the public. But there is no +reason why they should work for lower wages or longer hours as long as +those who are to-day responsible for the management of the industry +conduct it with "the extravagance and waste" stigmatized by the most +eminent official witness before the Coal Commission, or why the +consumer should grumble at the rapacity of the miner as long as he +allows himself to be mulcted by swollen profits, the costs of an +ineffective organization, and unnecessary payments to superfluous +middlemen. + +If to-day the miner or any other workman produces more, he has no +guarantee that the result will be lower prices rather than higher +dividends and larger royalties, any more than, as a workman, he can +determine the quality of the wares which his employer supplies to +customers, or the price at which they are sold. Nor, as long as he is +directly the servant of a profit-making company, and only indirectly +the servant of the community, can any such guarantee be offered him. +It can be offered only in so far as he stands in an immediate and +direct relation to the public for whom industry is carried on, so that, +when all costs have been met, any surplus will pass to it, and not to +private individuals. It will be accepted only in so far as the workers +in each industry are not merely servants executing orders, but {138} +themselves have a collective responsibility for the character of the +service, and can use their organizations not merely to protect +themselves against exploitation, but to make positive contributions to +the administration and development of their industry. + + + +[1] _Coal Industry Commission, Minutes of Evidence_, pp. 9261-9. + + + + +{139} + +IX + +THE CONDITION OF EFFICIENCY + +Thus it is not only for the sake of the producers, on whom the old +industrial order weighed most heavily, that a new industrial order is +needed. It is needed for the sake of the consumers, because the +ability on which the old industrial order prided itself most and which +is flaunted most as an argument against change, the ability to serve +them effectively, is itself visibly breaking down. It is breaking down +at what was always its most vulnerable point, the control of the human +beings whom, with characteristic indifference to all but their economic +significance, it distilled for its own purposes into an abstraction +called "Labor." The first symptom of its collapse is what the first +symptom of economic collapses has usually been in the past--the failure +of customary stimuli to evoke their customary response in human effort. + +Till that failure is recognized and industry reorganized so that new +stimuli may have free play, the collapse will not correct itself, but, +doubtless with spasmodic revivals and flickerings of energy, will +continue and accelerate. The cause of it is simple. It is that those +whose business it is to direct economic activity are increasingly +incapable of directing the men upon whom economic activity depends. +The fault is not that of individuals, but of a system, of Industrialism +itself. {140} During the greater part of the nineteenth century +industry was driven by two forces, hunger and fear, and the employer +commanded them both. He could grant or withhold employment as he +pleased. If men revolted against his terms he could dismiss them, and +if they were dismissed what confronted them was starvation or the +workhouse. Authority was centralized; its instruments were passive; +the one thing which they dreaded was unemployment. And since they +could neither prevent its occurrence nor do more than a little to +mitigate its horrors when it occurred, they submitted to a discipline +which they could not resist, and industry pursued its course through +their passive acquiescence in a power which could crush them +individually if they attempted to oppose it. + +That system might be lauded as efficient or denounced as inhuman. But, +at least, as its admirers were never tired of pointing out, it worked. +And, like the Prussian State, which alike in its virtues and +deficiencies it not a little resembled, as long as it worked it +survived denunciations of its methods, as a strong man will throw off a +disease. But to-day it is ceasing to have even the qualities of its +defects. It is ceasing to be efficient. It no longer secures the +ever-increasing output of wealth which it offered in its golden prime, +and which enabled it to silence criticism by an imposing spectacle of +material success. Though it still works, it works unevenly, amid +constant friction and jolts and stoppages, without the confidence of +the public and without full confidence even in itself, a tyrant who +must intrigue and cajole where formerly he commanded, a gaoler who, if +not yet {141} deprived of whip, dare only administer moderate +chastisement, and who, though he still protests that he alone can keep +the treadmill moving and get the corn ground, is compelled to surrender +so much of his authority as to make it questionable whether he is worth +his keep. For the instruments through which Capitalism exercised +discipline are one by one being taken from it. It cannot pay what +wages it likes or work what hours it likes. In well-organized +industries the power of arbitrary dismissal, the very center of its +authority, is being shaken, because men will no longer tolerate a +system which makes their livelihood dependent on the caprices of an +individual. In all industries alike the time is not far distant when +the dread of starvation can no longer be used to cow dissatisfied +workers into submission, because the public will no longer allow +involuntary unemployment to result in starvation. + +And if Capitalism is losing its control of men's bodies, still more has +it lost its command of their minds. The product of a civilization +which regarded "the poor" as instruments, at worst of the luxuries, at +best of the virtues, of the rich, its psychological foundation fifty +years ago was an ignorance in the mass of mankind which led them to +reverence as wisdom the very follies of their masters, and an almost +animal incapacity for responsibility. Education and experience have +destroyed the passivity which was the condition of the perpetuation of +industrial government in the hands of an oligarchy of private +capitalists. The workman of to-day has as little belief in the +intellectual superiority of many of those who direct industry as he has +in the morality of {142} the system. It appears to him to be not only +oppressive, but wasteful, unintelligent and inefficient. In the light +of his own experience in the factory and the mine, he regards the claim +of the capitalist to be the self-appointed guardian of public interests +as a piece of sanctimonious hypocrisy. For he sees every day that +efficiency is sacrificed to shortsighted financial interests; and while +as a man he is outraged by the inhumanity of the industrial order, as a +professional who knows the difference between good work and bad he has +a growing contempt at once for its misplaced parsimony and its +misplaced extravagance, for the whole apparatus of adulteration, +advertisement and quackery which seems inseparable from the pursuit of +profit as the main standard of industrial success. + +So Capitalism no longer secures strenuous work by fear, for it is +ceasing to be formidable. And it cannot secure it by respect, for it +has ceased to be respected. And the very victories by which it seeks +to reassert its waning prestige are more disastrous than defeats. +Employers may congratulate themselves that they have maintained intact +their right to freedom of management, or opposed successfully a demand +for public ownership, or broken a movement for higher wages and shorter +hours. But what is success in a trade dispute or in a political +struggle is often a defeat in the workshop: the workmen may have lost, +but it does not follow that their employers, still less that the +public, which is principally composed of workmen, have won. For the +object of industry is to produce goods, and to produce them at the +lowest cost in human effort. {143} But there is no alchemy which will +secure efficient production from the resentment or distrust of men who +feel contempt for the order under which they work. It is a commonplace +that credit is the foundation of industry. But credit is a matter of +psychology, and the workman has his psychology as well as the +capitalist. If confidence is necessary to the investment of capital, +confidence is not less necessary to the effective performance of labor +by men whose sole livelihood depends upon it. If they are not yet +strong enough to impose their will, they are strong enough to resist +when their masters would impose theirs. They may work rather than +strike. But they will work to escape dismissal, not for the greater +glory of a system in which they do not believe; and, if they are +dismissed, those who take their place will do the same. + +That this is one cause of a low output has been stated both by +employers and workers in the building industry, and by the +representatives of the miners before the Coal Commission. It was +reiterated with impressive emphasis by Mr. Justice Sankey. Nor is it +seriously contested by employers themselves. What else, indeed, do +their repeated denunciations of "restriction of output" mean except +that they have failed to organize industry so as to secure the +efficient service which it is their special function to provide? Nor +is it appropriate to the situation to indulge in full-blooded +denunciations of the "selfishness" of the working classes. "To draw an +indictment against a whole nation" is a procedure which is as +impossible in industry as it is in politics. Institutions must be +adapted to human nature, not {144} human nature to institutions. If +the effect of the industrial system is such that a large and increasing +number of ordinary men and women find that it offers them no adequate +motive for economic effort, it is mere pedantry to denounce men and +women instead of amending the system. + +Thus the time has come when absolutism in industry may still win its +battles, but loses the campaign, and loses it on the very ground of +economic efficiency which was of its own selection. In the period of +transition, while economic activity is distracted by the struggle +between those who have the name and habit of power, but no longer the +full reality of it, and those who are daily winning more of the reality +of power but are not yet its recognized repositories, it is the +consumer who suffers. He has neither the service of docile obedience, +nor the service of intelligent co-operation. For slavery will work--as +long as the slaves will let it; and freedom will work when men have +learned to be free; but what will not work is a combination of the two. +So the public goes short of coal not only because of the technical +deficiencies of the system under which it is raised and distributed, +but because the system itself has lost its driving force--because the +coal owners can no longer persuade the miners into producing more +dividends for them and more royalties for the owners of minerals, while +the public cannot appeal to them to put their whole power into serving +itself, because it has chosen that they should be the servants, not of +itself, but of shareholders. + +And, this dilemma is not, as some suppose, temporary, {145} the +aftermath of war, or peculiar to the coal industry, as though the +miners alone were the children of sin which in the last few months they +have been described to be. It is permanent; it has spread far; and, as +sleeping spirits are stirred into life by education and one industry +after another develops a strong corporate consciousness, it will spread +further. Nor will it be resolved by lamentations or menaces or +denunciations of leaders whose only significance is that they say +openly what plain men feel privately. For the matter at bottom is one +of psychology. What has happened is that the motives on which the +industrial system relied for several generations to secure efficiency, +secure it no longer. And it is as impossible to restore them, to +revive by mere exhortation the complex of hopes and fears and ignorance +and patient credulity and passive acquiescence, which together made +men, fifty years ago, plastic instruments in the hands of +industrialism, as to restore innocence to any others of those who have +eaten of the tree of knowledge. + +The ideal of some intelligent and respectable business men, the +restoration of the golden sixties, when workmen were docile and +confiding, and trade unions were still half illegal, and foreign +competition meant English competition in foreign countries, and prices +were rising a little and not rising too much, is the one Utopia which +can never be realized. The King may walk naked as long as his +courtiers protest that he is clad; but when a child or a fool has +broken the spell a tailor is more important than all their admiration. +If the public, which suffers from the slackening of economic activity, +{146} desires to end its _malaise_, it will not laud as admirable and +all-sufficient the operation of motives which are plainly ceasing to +move. It will seek to liberate new motives and to enlist them in its +service. It will endeavor to find an alternative to incentives which +were always degrading, to those who used them as much as to those upon +whom they were used, and which now are adequate incentives no longer. +And the alternative to the discipline which Capitalism exercised +through its instruments of unemployment and starvation is the +self-discipline of responsibility and professional pride. + +So the demand which aims at stronger organization, fuller +responsibility, larger powers for the sake of the producer as a +condition of economic liberty, the demand for freedom, is not +antithetic to the demand for more effective work and increased output +which is being made in the interests of the consumer. It is +complementary to it, as the insistence by a body of professional men, +whether doctors or university teachers, on the maintenance of their +professional independence and dignity against attempts to cheapen the +service is not hostile to an efficient service, but, in the long run, a +condition of it. The course of wisdom for the consumer would be to +hasten, so far as he can, the transition. For, as at present +conducted, industry is working against the grain. It is compassing sea +and land in its efforts to overcome, by ingenious financial and +technical expedients, obstacles which should never have existed. It is +trying to produce its results by conquering professional feeling +instead of using it. It is carrying not only its inevitable economic +burdens, but an ever increasing {147} load of ill will and skepticism. +It has in fact "shot the bird which caused the wind to blow" and goes +about its business with the corpse round its neck. Compared with that +psychological incubus, the technical deficiencies of industry, serious +though they often are, are a bagatelle, and the business men who preach +the gospel of production without offering any plan for dealing with +what is now the central fact in the economic situation, resemble a +Christian apologist who should avoid disturbing the equanimity of his +audience by carefully omitting all reference either to the fall of man +or the scheme of salvation. If it is desired to increase the output of +wealth, it is not a paradox, but the statement of an elementary +economic truism to say that active and constructive co-operation on the +part of the rank and file of workers would do more to contribute to +that result than the discovery of a new coal-field or a generation of +scientific invention. + + +The first condition of enlisting on the side of constructive work the +professional feeling which is now apathetic, or even hostile to it, is +to secure that when it is given its results accrue to the public, not +to the owner of property in capital, in land, or in other resources. +For this reason the attenuation of the rights at present involved in +the private ownership of industrial capital, or their complete +abolition, is not the demand of idealogues, but an indispensable +element in a policy of economic efficiency, since it is the condition +of the most effective functioning of the human beings upon whom, +though, like other truisms, it is often forgotten, {148} economic +efficiency ultimately depends. But it is only one element. +Co-operation may range from mere acquiescence to a vigilant and zealous +initiative. The criterion of an effective system of administration is +that it should succeed in enlisting in the conduct of industry the +latent forces of professional pride to which the present industrial +order makes little appeal, and which, indeed, Capitalism, in its war +upon trade union organization, endeavored for many years to stamp out +altogether. + +Nor does the efficacy of such an appeal repose upon the assumption of +that "change in human nature," which is the triumphant _reductio ad +absurdum_ advanced by those who are least satisfied with the working of +human nature as it is. What it does involve is that certain elementary +facts should be taken into account, instead of, as at present, being +ignored. That all work is distasteful and that "every man desires to +secure the largest income with the least effort" may be as axiomatic as +it is assumed to be. But in practice it makes all the difference to +the attitude of the individual whether the collective sentiment of the +group to which he belongs is on the side of effort or against it, and +what standard of effort it sets. That, as employers complain, the +public opinion of considerable groups of workers is against an +intensification of effort as long as part of its result is increased +dividends for shareholders, is no doubt, as far as mere efficiency is +concerned, the gravest indictment of the existing industrial order. +But, even when public ownership has taken the place of private +capitalism, its ability to command {149} effective service will depend +ultimately upon its success in securing not merely that professional +feeling is no longer an opposing force, but that it is actively +enlisted upon the side of maintaining the highest possible standard of +efficiency which can reasonably be demanded. + +To put the matter concretely, while the existing ownership of mines is +a positive inducement to inefficient work, public ownership +administered by a bureaucracy, if it would remove the technical +deficiencies emphasized by Sir Richard Redmayne as inseparable from the +separate administration of 3,000 pits by 1,500 different companies, +would be only too likely to miss a capital advantage which a different +type of administration would secure. It would lose both the assistance +to be derived from the technical knowledge of practical men who know by +daily experience the points at which the details of administration can +be improved, and the stimulus to efficiency springing from the +corporate pride of a profession which is responsible for maintaining +and improving the character of its service. Professional spirit is a +force like gravitation, which in itself is neither good nor bad, but +which the engineer uses, when he can, to do his work for him. If it is +foolish to idealize it, it is equally shortsighted to neglect it. In +what are described _par excellence_ as "the services" it has always +been recognized that _esprit de corps_ is the foundation of efficiency, +and all means, some wise and some mischievous, are used to encourage +it: in practice, indeed, the power upon which the country relied as its +main safeguard in an emergency was the professional zeal of the navy +and nothing else. Nor is {150} that spirit peculiar to the professions +which are concerned with war. It is a matter of common training, +common responsibilities, and common dangers. In all cases where +difficult and disagreeable work is to be done, the force which elicits +it is normally not merely money, but the public opinion and tradition +of the little society in which the individual moves, and in the esteem +of which he finds that which men value in success. + +To ignore that most powerful of stimuli as it is ignored to-day, and +then to lament that the efforts which it produces are not forthcoming, +is the climax of perversity. To aim at eliminating from industry the +growth and action of corporate feeling, for fear lest an organized body +of producers should exploit the public, is a plausible policy. But it +is short-sighted. It is "to pour away the baby with the bath," and to +lower the quality of the service in an attempt to safeguard it. A wise +system of administration would recognize that professional solidarity +can do much of its work for it more effectively than it can do it +itself, because the spirit of his profession is part of the individual +and not a force outside him, and would make it its object to enlist +that temper in the public service. It is only by that policy, indeed, +that the elaboration of cumbrous regulations to prevent men doing what +they should not, with the incidental result of sometimes preventing +them from doing what they should--it is only by that policy that what +is mechanical and obstructive in bureaucracy can be averted. For +industry cannot run without laws. It must either control itself by +professional standards, or it must be controlled by officials who are +not of the {151} craft and who, however zealous and well-meaning, can +hardly have the feel of it in their fingers. Public control and +criticism are indispensable. But they should not be too detailed, or +they defeat themselves. It would be better that, once fair standards +have been established, the professional organization should check +offenses against prices and quality than that it should be necessary +for the State to do so. The alternative to minute external supervision +is supervision from within by men who become imbued with the public +obligations of their trade in the very process of learning it. It is, +in short, professional in industry. + +For this reason collectivism by itself is too simple a solution. Its +failure is likely to be that of other rationalist systems. + + "Dann hat er die Theile in seiner Hand, + Fehlt leider! nur das geistige Band." + +If industrial reorganization is to be a living reality, and not merely +a plan upon paper, its aim must be to secure not only that industry is +carried on for the service of the public, but that it shall be carried +on with the active co-operation of the organizations of producers. But +co-operation involves responsibility, and responsibility involves +power. It is idle to expect that men will give their best to any +system which they do not trust, or that they will trust any system in +the control of which they do not share. Their ability to carry +professional obligations depends upon the power which they possess to +remove the obstacles which prevent those obligations from being +discharged, and upon their willingness, when they possess the power, to +use it. + +{152} + +Two causes appear to have hampered the committees which were +established in connection with coal mines during the war to increase +the output of coal. One was the reluctance of some of them to +discharge the invidious task of imposing penalties for absenteeism on +their fellow-workmen. The other was the exclusion of faults of +management from the control of many committees. In some cases all went +well till they demanded that, if the miners were penalized for +absenteeism which was due to them, the management should be penalized +similarly when men who desired to work were sent home because, as a +result of defective organization, there was no work for them to do. +Their demand was resisted as "interference with the management," and +the attempt to enforce regularity of attendance broke down. Nor, to +take another example from the same industry, is it to be expected that +the weight of the miners' organization will be thrown on to the side of +greater production, if it has no power to insist on the removal of the +defects of equipment and organization, the shortage of trams, rails, +tubs and timber, the "creaming" of the pits by the working of easily +got coal to their future detriment, their wasteful layout caused by the +vagaries of separate ownership, by which at present the output is +reduced. + +The public cannot have it both ways. If it allows workmen to be +treated as "hands" it cannot claim the service of their wills and their +brains. If it desires them to show the zeal of skilled professionals, +it must secure that they have sufficient power to allow of their +discharging professional responsibilities. In order that workmen may +abolish any restrictions on output which {153} may be imposed by them, +they must be able to insist on the abolition of the restrictions, more +mischievous because more effective, which, as the Committee on Trusts +has recently told us, are imposed by organizations of employers. In +order that the miners' leaders, instead of merely bargaining as to +wages, hours and working conditions, may be able to appeal to their +members to increase the supply of coal, they must be in a position to +secure the removal of the causes of low output which are due to the +deficiencies of the management, and which are to-day a far more serious +obstacle than any reluctance on the part of the miner. If the workmen +in the building trade are to take combined action to accelerate +production, they must as a body be consulted as to the purpose to which +their energy is to be applied, and must not be expected to build +fashionable houses, when what are required are six-roomed cottages to +house families which are at present living with three persons to a room. + +It is deplorable, indeed, that any human beings should consent to +degrade themselves by producing the articles which a considerable +number of workmen turn out to-day, boots which are partly brown paper, +and furniture which is not fit to use. The revenge of outraged +humanity is certain, though it is not always obvious; and the penalty +paid by the consumer for tolerating an organization of industry which, +in the name of efficiency, destroyed the responsibility of the workman, +is that the service with which he is provided is not even efficient. +He has always paid it, though he has not seen it, in quality. To-day +he is beginning to {154} realize that he is likely to pay it in +quantity as well. If the public is to get efficient service, it can +get it only from human beings, with the initiative and caprices of +human beings. It will get it, in short, in so far as it treats +industry as a responsible profession. + +The collective responsibility of the workers for the maintenance of the +standards of their profession is, then, the alternative to the +discipline which Capitalism exercised in the past, and which is now +breaking down. It involves a fundamental change in the position both +of employers and of trade unions. As long as the direction of industry +is in the hands of property-owners or their agents, who are concerned +to extract from it the maximum profit for themselves, a trade union is +necessarily a defensive organization. Absorbed, on the one hand, in +the struggle to resist the downward thrust of Capitalism upon the +workers' standard of life, and denounced, on the other, if it presumes, +to "interfere with management," even when management is most obviously +inefficient, it is an opposition which never becomes a government and +which has neither the will nor the power to assume responsibility for +the quality of the service offered to the consumer. If the abolition +of functionless property transferred the control of production to +bodies representing those who perform constructive work and those who +consume the goods produced, the relation of the worker to the public +would no longer be indirect but immediate, and associations which are +now purely defensive would be in a position not merely to criticize and +oppose but to advise, to initiate and to enforce upon their own members +the obligations of the craft. + +{155} + +It is obvious that in such circumstances the service offered the +consumer, however carefully safeguarded by his representation on the +authorities controlling each industry, would depend primarily upon the +success of professional organizations in finding a substitute for the +discipline exercised to-day by the agents of property-owners. It would +be necessary for them to maintain by their own action the zeal, +efficiency and professional pride which, when the barbarous weapons of +the nineteenth century have been discarded, would be the only guarantee +of a high level of production. Nor, once this new function has been +made possible for professional organizations, is there any extravagance +in expecting them to perform it with reasonable competence. How far +economic motives are balked to-day and could be strengthened by a +different type of industrial organization, to what extent, and under +what conditions, it is possible to enlist in the services of industry +motives which are not purely economic, can be ascertained only after a +study of the psychology of work which has not yet been made. Such a +study, to be of value, must start by abandoning the conventional +assumptions, popularized by economic textbooks and accepted as +self-evident by practical men, that the motives to effort are simple +and constant in character, like the pressure of steam in a boiler, that +they are identical throughout all ranges of economic activity, from the +stock exchange to the shunting of wagons or laying of bricks, and that +they can be elicited and strengthened only by directly economic +incentives. In so far as motives in industry have been considered +hitherto, it has usually been done {156} by writers who, like most +exponents of scientific management, have started by assuming that the +categories of business psychology could be offered with equal success +to all classes of workers and to all types of productive work. Those +categories appear to be derived from a simplified analysis of the +mental processes of the company promoter, financier or investor, and +their validity as an interpretation of the motives and habits which +determine the attitude to his work of the bricklayer, the miner, the +dock laborer or the engineer, is precisely the point in question. + +Clearly there are certain types of industry to which they are only +partially relevant. It can hardly be assumed, for example, that the +degree of skill and energy brought to his work by a surgeon, a +scientific investigator, a teacher, a medical officer of health, an +Indian civil servant and a peasant proprietor are capable of being +expressed precisely and to the same degree in terms of the economic +advantage which those different occupations offer. Obviously those who +pursue them are influenced to some considerable, though uncertain, +extent by economic incentives. Obviously, again, the precise character +of each process or step in the exercise of their respective avocations, +the performance of an operation, the carrying out of a piece of +investigation, the selection of a particular type of educational +method, the preparation of a report, the decision of a case or the care +of live stock, is not immediately dependent upon an exact calculation +of pecuniary gain or loss. What appears to be the case is that in +certain walks of life, while the occupation is chosen after a +consideration of {157} its economic advantages, and while economic +reasons exact the minimum degree of activity needed to avert dismissal +from it or "failure," the actual level of energy or proficiency +displayed depend largely upon conditions of a different order. Among +them are the character of the training received before and after +entering the occupation, the customary standard of effort demanded by +the public opinion of one's fellows, the desire for the esteem of the +small circle in which the individual moves and to be recognized as +having "made good" and not to have "failed," interest in one's work, +ranging from devotion to a determination to "do justice" to it, the +pride of the craftsman, the "tradition of the service." + +It would be foolish to suggest that any considerable body of men are +uninfluenced by economic considerations. But to represent them as +amenable to such incentives only is to give a quite unreal and bookish +picture of the actual conditions under which the work of the world is +carried on. How large a part such considerations play varies from one +occupation to another, according to the character of the work which it +does and the manner in which it is organized. In what is called _par +excellence_ industry, calculations of pecuniary gain and loss are more +powerful than in most of the so-called professions, though even in +industry they are more constantly present to the minds of the business +men who "direct" it, than to those of the managers and technicians, +most of whom are paid fixed salaries, or to the rank and file of +wage-workers. In the professions of teaching and medicine, in many +branches of the {158} public service, the necessary qualities are +secured, without the intervention of the capitalist employer, partly by +pecuniary incentives, partly by training and education, partly by the +acceptance on the part of those entering them of the traditional +obligations of their profession as part of the normal framework of +their working lives. But this difference is not constant and +unalterable. It springs from the manner in which different types of +occupation are organized, on the training which they offer, and the +_morale_ which they cultivate among their members. The psychology of a +vocation can in fact be changed; new motives can be elicited, provided +steps are taken to allow them free expression. It is as feasible to +turn building into an organized profession, with a relatively high code +of public honor, as it was to do the same for medicine or teaching. + +The truth is that we ought radically to revise the presuppositions as +to human motives on which current presentations of economic theory are +ordinarily founded and in terms of which the discussion of economic +question is usually carried on. The assumption that the stimulus of +imminent personal want is either the only spur, or a sufficient spur, +to productive effort is a relic of a crude psychology which has little +warrant either in past history or in present experience. It derives +what plausibility it possesses from a confusion between work in the +sense of the lowest _quantum_ of activity needed to escape actual +starvation, and the work which is given, irrespective of the fact that +elementary wants may already have been satisfied, through the natural +disposition of ordinary men to maintain, and of extraordinary {159} men +to improve upon, the level of exertion accepted as reasonable by the +public opinion of the group of which they are members. It is the old +difference, forgotten by society as often as it is learned, between the +labor of the free man and that of the slave. Economic fear may secure +the minimum effort needed to escape economic penalties. What, however, +has made progress possible in the past, and what, it may be suggested, +matters to the world to-day, is not the bare minimum which is required +to avoid actual want, but the capacity of men to bring to bear upon +their tasks a degree of energy, which, while it can be stimulated by +economic incentives, yields results far in excess of any which are +necessary merely to avoid the extremes of hunger or destitution. + +That capacity is a matter of training, tradition and habit, at least as +much as of pecuniary stimulus, and the ability of a professional +association representing the public opinion of a group of workers to +raise it is, therefore, considerable. Once industry has been liberated +from its subservience to the interests of the functionless +property-owner, it is in this sphere that trade unions may be expected +increasingly to find their function. Its importance both for the +general interests of the community and for the special interests of +particular groups of workers can hardly be exaggerated. Technical +knowledge and managerial skill are likely to be available as readily +for a committee appointed by the workers in an industry as for a +committee appointed, as now, by the shareholders. But it is more and +more evident to-day that the crux of the economic situation is not +{160} the technical deficiencies of industrial organization, but the +growing inability of those who direct industry to command the active +good will of the _personnel_. Their co-operation is promised by the +conversion of industry into a profession serving the public, and +promised, as far as can be judged, by that alone. + +Nor is the assumption of the new and often disagreeable obligations of +internal discipline and public responsibility one which trade unionism +can afford, once the change is accomplished, to shirk, however alien +they may be to its present traditions. For ultimately, if by slow +degrees, power follows the ability to wield it; authority goes with +function. The workers cannot have it both ways. They must choose +whether to assume the responsibility for industrial discipline and +become free, or to repudiate it and continue to be serfs. If, +organized as professional bodies, they can provide a more effective +service than that which is now, with increasing difficulty, extorted by +the agents of capital, they will have made good their hold upon the +future. If they cannot, they will remain among the less calculable +instruments of production which many of them are to-day. The instinct +of mankind warns it against accepting at their face value spiritual +demands which cannot justify themselves by practical achievements. And +the road along which the organized workers, like any other class, must +climb to power, starts from the provision of a more effective economic +service than their masters, as their grip upon industry becomes +increasingly vacillating and uncertain, are able to supply. + + + + +{161} + +X + +THE POSITION OF THE BRAIN WORKER + +The conversion of industry into a profession will involve at least as +great a change in the position of the management as in that of the +manual workers. As each industry is organized for the performance of +function, the employer will cease to be a profit maker and become what, +in so far as he holds his position by a reputable title, he already is, +one workman among others. In some industries, where the manager is a +capitalist as well, the alteration may take place through such a +limitation of his interest as a capitalist as it has been proposed by +employers and workers to introduce into the building industry. In +others, where the whole work of administration rests on the shoulders +of salaried managers, it has already in part been carried out. The +economic conditions of this change have, indeed, been prepared by the +separation of ownership from management, and by the growth of an +intellectual proletariat to whom the scientific and managerial work of +industry is increasingly intrusted. The concentration of businesses, +the elaboration of organization, and the developments springing from +the application of science to industry have resulted in the +multiplication of a body of industrial brain workers who make the old +classifications into "employers and workmen," which is still current in +common speech, an absurdly {162} misleading description of the +industrial system as it exists to-day. + +To complete the transformation all that is needed is that this new +class of officials, who fifty years ago were almost unknown, should +recognize that they, like the manual workers, are the victims of the +domination of property, and that both professional pride and economic +interest require that they should throw in their lot with the rest of +those who are engaged in constructive work. Their position to-day is +often, indeed, very far from being a happy one. Many of them, like +some mine managers, are miserably paid. Their tenure of their posts is +sometimes highly insecure. Their opportunities for promotion may be +few, and distributed with a singular capriciousness. They see the +prizes of industry awarded by favoritism, or by the nepotism which +results in the head of a business unloading upon it a family of sons +whom it would be economical to pay to keep out of it, and which, +indignantly denounced on the rare occasions on which it occurs in the +public service, is so much the rule in private industry that no one +even questions its propriety. During the war they have found that, +while the organized workers have secured advances, their own salaries +have often remained almost stationary, because they have been too +genteel to take part in trade unionism, and that to-day they are +sometimes paid less than the men for whose work they are supposed to be +responsible. Regarded by the workmen as the hangers-on of the masters, +and by their employers as one section among the rest of the "hands," +they have the odium of capitalism without its power or its profits. + +{163} + +From the conversion of industry into a profession those who at present +do its intellectual work have as much to gain as the manual workers. +For the principle of function, for which we have pleaded as the basis +of industrial organization, supplies the only intelligible standard by +which the powers and duties of the different groups engaged in industry +can be determined. At the present time no such standard exists. The +social order of the pre-industrial era, of which faint traces have +survived in the forms of academic organization, was marked by a careful +grading of the successive stages in the progress from apprentice to +master, each of which was distinguished by clearly defined rights and +duties, varying from grade to grade and together forming a hierarchy of +functions. The industrial system which developed in the course of the +nineteenth century did not admit any principle of organization other +than the convenience of the individual, who by enterprise, skill, good +fortune, unscrupulous energy or mere nepotism, happened at any moment +to be in a position to wield economic authority. His powers were what +he could exercise; his rights were what at any time he could assert. +The Lancashire mill-owner of the fifties was, like the Cyclops, a law +unto himself. Hence, since subordination and discipline are +indispensable in any complex undertaking, the subordination which +emerged in industry was that of servant to master, and the discipline +such as economic strength could impose upon economic weakness. + +The alternative to the allocation of power by the struggle of +individuals for self-aggrandizement is its {164} allocation according +to function, that each group in the complex process of production +should wield so much authority as, and no more authority than, is +needed to enable it to perform the special duties for which it is +responsible. An organization of industry based on this principle does +not imply the merging of specialized economic functions in an +undifferentiated industrial democracy, or the obliteration of the brain +workers beneath the sheer mass of artisans and laborers. But it is +incompatible with the unlimited exercise of economic power by any class +or individual. It would have as its fundamental rule that the only +powers which a man can exercise are those conferred upon him in virtue +of his office. There would be subordination. But it would be +profoundly different from that which exists to-day. For it would not +be the subordination of one man to another, but of all men to the +purpose for which industry is carried on. There would be authority. +But it would not be the authority of the individual who imposes rules +in virtue of his economic power for the attainment of his economic +advantage. It would be the authority springing from the necessity of +combining different duties to attain a common end. There would be +discipline. But it would be the discipline involved in pursuing that +end, not the discipline enforced upon one man for the convenience or +profit of another. Under such an organization of industry the brain +worker might expect, as never before, to come to his own. He would be +estimated and promoted by his capacity, not by his means. He would be +less likely than at present to find doors closed to him because of +poverty. His {165} judges would be his colleagues, not an owner of +property intent on dividends. He would not suffer from the perversion +of values which rates the talent and energy by which wealth is created +lower than the possession of property, which is at best their pensioner +and at worst the spend-thrift of what intelligence has produced. In a +society organized for the encouragement of creative activity those who +are esteemed most highly will be those who create, as in a world +organized for enjoyment they are those who own. + +Such considerations are too general and abstract to carry conviction. +Greater concreteness may be given them by comparing the present +position of mine-managers with that which they would occupy were effect +given to Mr. Justice Sankey's scheme for the nationalization of the +Coal Industry. A body of technicians who are weighing the probable +effects of such a reorganization will naturally consider them in +relation both to their own professional prospects and to the efficiency +of the service of which they are the working heads. They will properly +take into account questions of salaries, pensions, security of status +and promotion. At the same time they will wish to be satisfied as to +points which, though not less important, are less easily defined. +Under which system, private or public ownership, will they have most +personal discretion or authority over the conduct of matters within +their professional competence? Under which will they have the best +guarantees that their special knowledge will carry due weight, and +that, when handling matters of art, they will not be overridden or +obstructed by amateurs? + +{166} + +As far as the specific case of the Coal Industry is concerned the +question of security and salaries need hardly be discussed. The +greatest admirer of the present system would not argue that security of +status is among the advantages which it offers to its employees. It is +notorious that in some districts, at least, managers are liable to be +dismissed, however professionally competent they may be, if they +express in public views which are not approved by the directors of +their company. Indeed, the criticism which is normally made on the +public services, and made not wholly without reason, is that the +security which they offer is excessive. On the question of salaries +rather more than one-half of the colliery companies of Great Britain +themselves supplied figures to the Coal Industry Commission.[1] If +their returns may be trusted, it would appear that mine-managers are +paid, as a class, salaries the parsimony of which is the more +surprising in view of the emphasis laid, and quite properly laid, by +the mine-owners on the managers' responsibilities. The service of the +State does not normally offer, and ought not to offer, financial prizes +comparable with those of private industry. But it is improbable, had +the mines been its property during {167} the last ten years, that more +than one-half the managers would have been in receipt of salaries of +under L301 per year, and of less than L500 in 1919, by which time +prices had more than doubled, and the aggregate profits of the +mine-owners (of which the greater part was, however, taken by the State +in taxation) had amounted in five years to L160,000,000. It would be +misleading to suggest that the salaries paid to mine-managers are +typical of private industry, nor need it be denied that the probable +effect of turning an industry into a public service would be to reduce +the size of the largest prizes at present offered. What is to be +expected is that the lower and medium salaries would be raised, and the +largest somewhat diminished. It is hardly to be denied, at any rate, +that the majority of brain workers in industry have nothing to fear on +financial grounds from such a change as is proposed by Mr. Justice +Sankey. Under the normal organization of industry, profits, it cannot +be too often insisted, do not go to them but to shareholders. There +does not appear to be any reason to suppose that the salaries of +managers in the mines making more than 5/- profit a ton were any larger +than those making under 3/-. + +The financial aspect of the change is not, however, the only point +which a group of managers or technicians have to consider. They have +also to weigh its effect on their professional status. Will they have +as much freedom, initiative and authority in the service of the +community as under private ownership? How that question is answered +depends upon the form given to the administrative system through which +a public service is {168} conducted. It is possible to conceive an +arrangement under which the life of a mine-manager would be made a +burden to him by perpetual recalcitrance on the part of the men at the +pit for which he is responsible. It is possible to conceive one under +which he would be hampered to the point of paralysis by irritating +interference from a bureaucracy at headquarters. In the past some +managers of "co-operative workshops" suffered, it would seem, from the +former: many officers of Employment Exchanges are the victims, unless +common rumor is misleading, of the latter. It is quite legitimate, +indeed it is indispensable, that these dangers should be emphasized. +The problem of reorganizing industry is, as has been said above, a +problem of constitution making. It is likely to be handled +successfully only if the defects to which different types of +constitutional machinery are likely to be liable are pointed out in +advance. Once, however, these dangers are realized, to devise +precautions against them appears to be a comparatively simple matter. +If Mr. Justice Sankey's proposals be taken as a concrete example of the +position which would be occupied by the managers in a nationalized +industry, it will be seen that they do not involve either of the two +dangers which are pointed out above. The manager will, it is true, +work with a Local Mining Council or pit committee, which is to "meet +fortnightly, or oftener if need be, to advise the manager on all +questions concerning the direction and safety of the mine," and "if the +manager refuses to take the advice of the Local Mining Council on any +question concerning the safety and health of the mine, such question +shall be referred to {169} the District Mining Council." It is true +also that, once such a Local Mining Council is formally established, +the manager will find it necessary to win its confidence, to lead by +persuasion, not by mere driving, to establish, in short, the same +relationships of comradeship and good will as ought to exist between +the colleagues in any common undertaking. But in all this there is +nothing to undermine his authority, unless "authority" be understood to +mean an arbitrary power which no man is fit to exercise, and which few +men, in their sober moments, would claim. The manager will be +appointed by, and responsible to, not the men whose work he supervises, +but the District Mining Council, which controls all the pits in a +district, and on that council he will be represented. Nor will he be +at the mercy of a distant "clerkocracy," overwhelming him with +circulars and overriding his expert knowledge with impracticable +mandates devised in London. The very kernel of the schemes advanced +both by Justice Sankey and by the Miners' Federation is decentralized +administration within the framework of a national system. There is no +question of "managing the industry from Whitehall." The +characteristics of different coal-fields vary so widely that reliance +on local knowledge and experience are essential, and it is to local +knowledge and experience that it is proposed to intrust the +administration of the industry. The constitution which is recommended +is, in short, not "Unitary" but "Federal." There will be a division of +functions and power between central authorities and district +authorities. The former will lay down general rules as to those +matters which must necessarily {170} be dealt with on a national basis. +The latter will administer the industry within their own districts, +and, as long as they comply with those rules and provide their quota of +coal, will possess local autonomy and will follow the method of working +the pits which they think best suited to local conditions. + +Thus interpreted, public ownership does not appear to confront the +brain worker with the danger of unintelligent interference with his +special technique, of which he is, quite naturally, apprehensive. It +offers him, indeed, far larger opportunities of professional +development than are open to all but a favored few to-day, when the +considerations of productive efficiency, which it is his special +_metier_ to promote, are liable to be overridden by short-sighted +financial interests operating through the pressure of a Board of +Directors who desire to show an immediate profit to their shareholders, +and who, to obtain it, will "cream" the pit, or work it in a way other +than considerations of technical efficiency would dictate. And the +interest of the community in securing that the manager's professional +skill is liberated for the service of the public, is as great as his +own. For the economic developments of the last thirty years have made +the managerial and technical _personnel_ of industry the repositories +of public responsibilities of quite incalculable importance, which, +with the best will in the world, they can hardly at present discharge. +The most salient characteristic of modern industrial organization is +that production is carried on under the general direction of business +men, who do not themselves necessarily know anything of productive +processes. "Business" {171} and "industry" tend to an increasing +extent to form two compartments, which, though united within the same +economic system, employ different types of _personnel_, evoke different +qualities and recognize different standards of efficiency and +workmanship. The technical and managerial staff of industry is, of +course, as amenable as other men to economic incentives. But their +special work is production, not finance; and, provided they are not +smarting under a sense of economic injustice, they want, like most +workmen, to "see the job done properly." The business men who +ultimately control industry are concerned with the promotion and +capitalization of companies, with competitive selling and the +advertisement of wares, the control of markets, the securing of special +advantages, and the arrangement of pools, combines and monopolies. +They are preoccupied, in fact, with financial results, and are +interested in the actual making of goods only in so far as financial +results accrue from it. + + +The change in organization which has, to a considerable degree, +specialized the spheres of business and management is comparable in its +importance to that which separated business and labor a century and a +half ago. It is specially momentous for the consumer. As long as the +functions of manager, technician and capitalist were combined, as in +the classical era of the factory system, in the single person of "the +employer," it was not unreasonable to assume that profits and +productive efficiency ran similarly together. In such circumstances +the ingenuity with which economists proved {172} that, in obedience to +"the law of substitution," he would choose the most economical process, +machine, or type of organization, wore a certain plausibility. True, +the employer might, even so, adulterate his goods or exploit the labor +of a helpless class of workers. But as long as the person directing +industry was himself primarily a manager, he could hardly have the +training, ability or time, even if he had the inclination, to +concentrate special attention on financial gains unconnected with, or +opposed to, progress in the arts of production, and there was some +justification for the conventional picture which represented "the +manufacturer" as the guardian of the interests of the consumer. With +the drawing apart of the financial and technical departments of +industry--with the separation of "business" from "production"--the link +which bound profits to productive efficiency is tending to be snapped. +There are more ways than formerly of securing the former without +achieving the latter; and when it is pleaded that the interests of the +captain of industry stimulate the adoption of the most "economical" +methods and thus secure industrial progress, it is necessary to ask +"economical for whom"? Though the organization of industry which is +most efficient, in the sense of offering the consumer the best service +at the lowest real cost, may be that which is most profitable to the +firm, it is also true that profits are constantly made in ways which +have nothing to do with efficient production, and which sometimes, +indeed, impede it. + +The manner in which "business" may find that the methods which pay +itself best are those which a truly {173} scientific "management" would +condemn may be illustrated by three examples. In the first place, the +whole mass of profits which are obtained by the adroit capitalization +of a new business, or the reconstruction of one which already exists, +have hardly any connection with production at all. When, for instance, +a Lancashire cotton mill capitalized at L100,000 is bought by a London +syndicate which re-floats it with a capital of L500,000--not at all an +extravagant case--what exactly has happened? In many cases the +equipment of the mill for production remains, after the process, what +it was before it. It is, however, valued at a different figure, +because it is anticipated that the product of the mill will sell at a +price which will pay a reasonable profit not only upon the lower, but +upon the higher, capitalization. If the apparent state of the market +and prospects of the industry are such that the public can be induced +to believe this, the promoters of the reconstruction find it worth +while to recapitalize the mill on the new basis. They make their +profit not as manufacturers, but as financiers. They do not in any way +add to the productive efficiency of the firm, but they acquire shares +which will entitle them to an increased return. Normally, if the +market is favorable, they part with the greater number of them as soon +as they are acquired. But, whether they do so or not, what has +occurred is a process by which the business element in industry obtains +the right to a larger share of the product, without in any way +increasing the efficiency of the service which is offered to the +consumer. + +Other examples of the manner in which the control of {174} production +by "business" cuts across the line of economic progress are the wastes +of competitive industry and the profits of monopoly. It is well known +that the price paid by the consumer includes marketing costs, which to +a varying, but to a large, extent are expenses not of supplying the +goods, but of supplying them under conditions involving the expenses of +advertisement and competitive distribution. For the individual firm +such expenses, which enable it to absorb part of a rival's trade, may +be an economy: to the consumer of milk or coal--to take two flagrant +instances--they are pure loss. Nor, as is sometimes assumed, are such +wastes confined to distribution. Technical reasons are stated by +railway managers to make desirable a unification of railway +administration and by mining experts of mines. But, up to the war, +business considerations maintained the expensive system under which +each railway company was operated as a separate system, and still +prevent collieries, even collieries in the same district, from being +administered as parts of a single organization. Pits are drowned out +by water, because companies cannot agree to apportion between them the +costs of a common drainage system; materials are bought, and products +sold, separately, because collieries will not combine; small coal is +left in to the amount of millions of tons because the most economical +and technically efficient working of the seams is not necessarily that +which yields the largest profit to the business men who control +production. In this instance the wide differences in economic strength +which exist between different mines discourage the unification which is +economically desirable; naturally the {175} directors of a company +which owns "a good thing" do not desire to merge interests with a +company working coal that is poor in quality or expensive to mine. +When, as increasingly happens in other industries, competitive wastes, +or some of them, are eliminated by combination, there is a genuine +advance in technical efficiency, which must be set to the credit of +business motives. In that event, however, the divergence between +business interests and those of the consumers is merely pushed one +stage further forward; it arises, of course, over the question of +prices. If any one is disposed to think that this picture of the +economic waste which accompanies the domination of production by +business interests is overdrawn, he may be invited to consider the +criticisms upon the system passed by the "efficiency engineers," who +are increasingly being called upon to advise as to industrial +organization and equipment. "The higher officers of the corporation," +writes Mr. H. L. Gantt of a Public Utility Company established in +America during the war, "have all without exception been men of the +'business' type of mind, who have made their success through +financiering, buying, selling, etc.... As a matter of fact it is well +known that our industrial system has not measured up as we had +expected.... _The reason for its falling short is undoubtedly that the +men directing it had been trained in a business system operated for +profits, and did not understand one operated solely for production_. +This is no criticism of the men as individuals; they simply did not +know the job, and, what is worse, they did not know that they did not +know it." + +{176} + +In so far, then, as "Business" and "Management" are separated, the +latter being employed under the direction of the former, it cannot be +assumed that the direction of industry is in the hands of persons whose +primary concern is productive efficiency. That a considerable degree +of efficiency will result incidentally from the pursuit of business +profits is not, of course, denied. What seems to be true, however, is +that the main interest of those directing an industry which has reached +this stage of development is given to financial strategy and the +control of markets, because the gains which these activities offer are +normally so much larger than those accruing from the mere improvement +of the processes of production. It is evident, however, that it is +precisely that improvement which is the main interest of the consumer. +He may tolerate large profits as long as they are thought to be the +symbol of efficient production. But what he is concerned with is the +supply of goods, not the value of shares, and when profits appear to be +made, not by efficient production, but by skilful financiering or +shrewd commercial tactics, they no longer appear meritorious. If, in +disgust at what he has learned to call "profiteering," the consumer +seeks an alternative to a system under which product is controlled by +"Business," he can hardly find it except by making an ally of the +managerial and technical _personnel_ of industry. They organize the +service which he requires; they are relatively little implicated, +either by material interest or by psychological bias, in the financial +methods which he distrusts; they often find the control of their +professions by business men who are {177} primarily financiers +irritating in the obstruction which it offers to technical efficiency, +as well as sharp and close-fisted in the treatment of salaries. Both +on public and professional grounds they belong to a group which ought +to take the initiative in promoting a partnership between the producers +and the public. They can offer the community the scientific knowledge +and specialized ability which is the most important condition of +progress in the arts of production. It can offer them a more secure +and dignified status, larger opportunities for the exercise of their +special talents, and the consciousness that they are giving the best of +their work and their lives, not to enriching a handful of uninspiring, +if innocuous, shareholders, but to the service of the great body of +their fellow-countrymen. If the last advantage be dismissed as a +phrase--if medical officers of health, directors of education, +directors of the co-operative wholesale be assumed to be quite +uninfluenced by any consciousness of social service--the first two, at +any rate, remain. And they are considerable. + +It is this gradual disengagement of managerial technique from financial +interests which would appear the probable line along which "the +employer" of the future will develop. The substitution throughout +industry of fixed salaries for fluctuating profits would, in itself, +deprive his position of half the humiliating atmosphere of predatory +enterprise which embarrasses to-day any man of honor who finds himself, +when he has been paid for his services, in possession of a surplus for +which there is no assignable reason. Nor, once large incomes from +profits have been extinguished, need his salary be large, {178} as +incomes are reckoned to-day. It is said that among the barbarians, +where wealth is still measured by cattle, great chiefs are described as +hundred-cow men. The manager of a great enterprise who is paid +$400,000 a year, might similarly be described as a hundred-family man, +since he receives the income of a hundred families. It is true that +special talent is worth any price, and that a payment of $400,000 a +year to the head of a business with a turnover of millions is +economically a bagatelle. But economic considerations are not the only +considerations. There is also "the point of honor." And the truth is +that these hundred-family salaries are ungentlemanly. + +When really important issues are at stake every one realizes that no +decent man can stand out for his price. A general does not haggle with +his government for the precise pecuniary equivalent of his contribution +to victory. A sentry who gives the alarm to a sleeping battalion does +not spend next day collecting the capital value of the lives he has +saved; he is paid 1/- a day and is lucky if he gets it. The commander +of a ship does not cram himself and his belongings into the boats and +leave the crew to scramble out of the wreck as best they can; by the +tradition of the service he is the last man to leave. There is no +reason why the public should insult manufacturers and men of business +by treating them as though they were more thick-skinned than generals +and more extravagant than privates. To say that they are worth a good +deal more than even the exorbitant salaries which a few of them get is +often true. But it is beside the point. No one has any business to +{179} expect to be paid "what he is worth," for what he is worth is a +matter between his own soul and God. What he has a right to demand, +and what it concerns his fellow-men to see that he gets, is enough to +enable him to perform his work. When industry is organized on a basis +of function, that, and no more than that, is what he will be paid. To +do the managers of industry justice, this whining for more money is a +vice to which they (as distinct from their shareholders) are not +particularly prone. There is no reason why they should be. If a man +has important work, and enough leisure and income to enable him to do +it properly, he is in possession of as much happiness as is good for +any of the children of Adam. + + + +[1] The Coal Mines Department supplied the following figures to the +Coal Industry Commission (Vol. III, App. 66). They relate to 57 per +cent. of the collieries of the United Kingdom. + + Salary, including bonus and Number of Managers + value of house and coal 1913 1919 + + L100 or less ............................... 4 2 + L101 to L200 ............................... 134 3 + L201 to L300 ............................... 280 29 + L301 to L400 ............................... 161 251 + L401 to L500 ............................... 321 213 + L501 to L600 ............................... 57 146 + L601 and over .............................. 50 152 + + + + +{180} + +XI + +PORRO UNUM NECESSARIUM + +So the organization of society on the basis of function, instead of on +that of rights, implies three things. It means, first, that +proprietary rights shall be maintained when they are accompanied by the +performance of service and abolished when they are not. It means, +second, that the producers shall stand in a direct relation to the +community for whom production is carried on, so that their +responsibility to it may be obvious and unmistakable, not lost, as at +present, through their immediate subordination to shareholders whose +interest is not service but gain. It means, in the third place, that +the obligation for the maintenance of the service shall rest upon the +professional organization of those who perform it, and that, subject to +the supervision and criticism of the consumer, those organizations +shall exercise so much voice in the government of industry as may be +needed to secure that the obligation is discharged. It is obvious, +indeed, that no change of system or machinery can avert those causes of +social _malaise_ which consist in the egotism, greed, or +quarrelsomeness of human nature. What it can do is to create an +environment in which those are not the qualities which are encouraged. +It cannot secure that men live up to their principles. What it can do +is to establish their social order upon principles to which, if they +please, they can {181} live up and not live down. It cannot control +their actions. It can offer them an end on which to fix their minds. +And, as their minds are, so, in the long run and with exceptions, their +practical activity will be. + +The first condition of the right organization of industry is, then, the +intellectual conversion which, in their distrust of principles, +Englishmen are disposed to place last or to omit altogether. It is +that emphasis should be transferred from the opportunities which it +offers individuals to the social functions which it performs; that they +should be clear as to its end and should judge it by reference to that +end, not by incidental consequences which are foreign to it, however +brilliant or alluring those consequences may be. What gives its +meaning to any activity which is not purely automatic is its purpose. +It is because the purpose of industry, which is the conquest of nature +for the service of man, is neither adequately expressed in its +organization nor present to the minds of those engaged in it, because +it is not regarded as a function but as an opportunity for personal +gain or advancement or display, that the economic life of modern +societies is in a perpetual state of morbid irritation. If the +conditions which produce that unnatural tension are to be removed, it +can only be effected by the growth of a habit of mind which will +approach questions of economic organization from the standpoint of the +purpose which it exists to serve, and which will apply to it something +of the spirit expressed by Bacon when he said that the work of man +ought to be carried on "for the glory of God and the relief of men's +estate." + +{182} + +Viewed from that angle issues which are insoluble when treated on the +basis of rights may be found more susceptible of reasonable treatment. +For a purpose, is, in the first place a principle of limitation. It +determines the end for which, and therefore the limits within which, an +activity is to be carried on. It divided what is worth doing from what +is not, and settles the scale upon which what is worth doing ought to +be done. It is in the second place, a principle of unity, because it +supplies a common end to which efforts can be directed, and submits +interests, which would otherwise conflict, to the judgment of an +over-ruling object. It is, in the third place, a principle of +apportionment or distribution. It assigns to the different parties of +groups engaged in a common undertaking the place which they are to +occupy in carrying it out. Thus it establishes order, not upon chance +or power, but upon a principle, and bases remuneration not upon what +men can with good fortune snatch for themselves nor upon what, if +unlucky, they can be induced to accept, but upon what is appropriate to +their function, no more and no less, so that those who perform no +function receive no payment, and those who contribute to the common end +receive honourable payment for honourable service. + + Frate, la nostra volonta quieta + Virtu di carita, che fa volerne + Sol quel ch'avemo, e d'altro non ci asseta. + Si disiassimo esse piu superne, + Foran discordi li nostri disiri + Dal voler di colui che qui ne cerne. + * * * * * + +{183} + + Anzi e formale ad esto beato esse + Tenersi dentro alla divina vogli, + Per ch'una fansi nostre vogli e stesse. + * * * * * + Chiaro mi fu allor com' ogni dove + In Cielo e paradiso, e si la grazia + Del sommo ben d'un modo non vi piove. + +The famous lines in which Piccarda explains to Dante the order of +Paradise are a description of a complex and multiform society which is +united by overmastering devotion to a common end. By that end all +stations are assigned and all activities are valued. The parts derive +their quality from their place in the system, and are so permeated by +the unity which they express that they themselves are glad to be +forgotten, as the ribs of an arch carry the eye from the floor from +which they spring to the vault in which they meet and interlace. + +Such a combination of unity and diversity is possible only to a society +which subordinates its activities to the principle of purpose. For +what that principle offers is not merely a standard for determining the +relations of different classes and groups of producers, but a scale of +moral values. Above all, it assigns to economic activity itself its +proper place as the servant, not the master, of society. The burden of +our civilization is not merely, as many suppose, that the product of +industry is ill-distributed, or its conduct tyrannical, or its +operation interrupted by embittered disagreements. It is that industry +itself has come to hold a position of exclusive predominance among +human interests, which no single interest, and least of all the +provision of the {184} material means of existence, is fit to occupy. +Like a hypochondriac who is so absorbed in the processes of his own +digestion that he goes to his grave before he has begun to live, +industrialized communities neglect the very objects for which it is +worth while to acquire riches in their feverish preoccupation with the +means by which riches can be acquired. + +That obsession by economic issues is as local and transitory as it is +repulsive and disturbing. To future generations it will appear as +pitiable as the obsession of the seventeenth century by religious +quarrels appears to-day; indeed, it is less rational, since the object +with which it is concerned is less important. And it is a poison which +inflames every wound and turns each trivial scratch into a malignant +ulcer. Society will not solve the particular problems of industry +which afflict it, until that poison is expelled, and it has learned to +see industry itself in the right perspective. If it is to do that, it +must rearrange its scale of values. It must regard economic interests +as one element in life, not as the whole of life. It must persuade its +members to renounce the opportunity of gains which accrue without any +corresponding service, because the struggle for them keeps the whole +community in a fever. It must so organize industry that the +instrumental character of economic activity is emphasized by its +subordination to the social purpose for which it is carried on. + + + + +{185} + +INDEX + + + Abolition of private ownership, 147 + Absenteeism, 152 + Absolute rights, 50-51 + Absolutism in industry, 144 + Acquisitive societies, 29-32 + Administration, 115-116 + Allocation of power, 163-164 + American Constitution, 18-19, 52 + Annuities, 74 + Arbitration, compulsory, 101 + + Bacon, quoted, 58, 181 + Bentham, 16, 52, 55 + Brain workers, position of the, 161-171 + British Coal Industry, reorganization of, 166-171 + Building Guilds, 103 + Building Trade Report, 106-110 + Bureaucracy, 116, 149 + + Capitalism, and production, 173-176; downward thrust of, 154; + in America, 101; losing control, 141-142, 148 + Cecil, Lord Hugh, 23, 58 + Cecil, Robert, 59 + Cecil, William, 59 + Church and State, 10-13 + Coal Industry Commission, 71, 126, 137, 143; report of, 166-167 + Coal Mines Committees, 152 + Combinations, 125, 130 + Committee on Trusts, 153 + Competition, 27 + Compulsory arbitration, 101 + Confiscations, 103 + Conservatism, the New, 28 + Consumer, exploitation of the, 133-134 + Co-operative Movement and cost of coal, 125 + + Dante, quoted, 182-183 + Death Duties, 22 + Democratic control, 116 + Dickenson, Sir Arthur Lowes, 71 + Directorate control, 129 + Duckham, Sir Arthur, 119 + Duke of Wellington, quoted, 123 + + Economic confusion, cause of, 131-132 + Economic discontent, increase of, 5 + Economic egotism, 27, + Economic expansion, 9 + Efficiency, the condition of, 139-160; through _Esprit de Corps_, 149-150 + Employer, waning power of the, 140 + England, and natural right, 15-16; and France contrasted, 16-17; + Industrialism in, 44-47; Liberal Movement in, 18; + over-crowding of population in, 37; proprietary rights in, + 64 _et seq._ + English landlordism, 22-23 + Englishmen, characteristics of, 1-3; vanity of, 129 + English Revolution of 1688, 52 + Esch-Cummins Act, 118 + Expediency, rule of, 16 + + Feudalism, 18 + Fixed salaries, 177-178 + Forced labor, 102 + France, social and industrial conditions in, 16-17; + Feudalism in, 18; Revolution in, 15, 65, 69 + French Revolution, 15, 65, 69 + Function, definition of, 8; as a basis for remuneration, 41-42; + as a basis of social reorganization, 180; Function and Freedom, 7 + Functional Society, 29, 84-90 + Functionless property-owners, 79, 86; abolishment of, 87-88; + an expensive luxury, 87 + + Gainford, Lord, quoted, 26, 111 + Gantt, H. L., 175 + Government control in war time, 25-26 + Ground-rents, 89-90, 91 + + Hobson, Mr., 63 + "Hundred-Family Man," 178 + + Imperial Tobacco Company, 116 + Incomes, 41 + Income Tax, 22 + Income without service, 68 + Individualism, 48-49 + Individual rights, 9 + Individual rights _vs._ social functions, 27 + Industrial problems, 7 + Industrial reorganization, 151, 155 + Industrial revolution, 9 + Industrial societies, 9 + Industrial warfare, cause of, and remedy for, 40-42 + Industrialism, 18; a poison, 184; compared to Militarism, 44-46; + exaggerated estimate of its importance, 45-46; failure of present + system, 139-141; nemesis of, 33-51; spread of, 30; tendency of, + 31-32 + Industry, and a profession, 94, 97; as a profession, 91 _et seq._, + 125-126; deficiencies of, 147; definition of, 6; how private + control of may be terminated, 103-104; and the advantages of such + a change, 106; Building Trades' Plan for, 108, 111; motives in, + 155-159; nationalization of, 104, 114-118; present organization + of intolerable, 129; purpose of, 8, 46, 181; right organization + of, 6-7; the means not the end, 46-47 + Inheritance taxes, 90 + Insurance, 74 + + Joint control, 111-112 + Joint-stock companies, 66 + Joint-stock organizations, 97 + + Labor, absolute rights of, 28; and capital, 98-100, 108; compulsory, + 100; control of breaking down, 139 _et seq._; degradation of, 35; + forced, 102 + League of Nations, 101 + Liberal Movement, 18 + Locke, 14, 52, 55 + + Management divorced from ownership, 112-113 + Mann, Sir John, 126 + Militarism, 44-45 + Mill, quoted, 89 + Mine managers, position of, 162, 166-168 + Mining royalties, 23-24, 88 + + Nationalism, 48-49 + Nationalization, 114, 117; of the Coal Industry, 115, 165, 168-169 + Natural right in France, 15; in England, 15-16; doctrine of, 21 + + Officials, position under the present economic system, 162 + Old industrial order a failure, 139; its effect on the consumer, 144 + Organization, for public service instead of private gains, 127 + Over-centralization, 121 + Ownership, a new system of, 112-114 + + Pensioners, 34 + Poverty a symptom of social disorder, 5 + Private enterprise and public ownership, 118-120 + Private ownership, 120; abolition of, 147; of industrial capital, + 105-106 + Private rights and public welfare, 14-15 + Privileges, 24 + Producer, obligation of the, 127-128; responsibility of, 128 + Production, increased, 5; large scale and small scale, 87; + misdirection of, 37-39; why not increased, 136 + Productivity, 4, 46 + Professional Spirit, the, 149-150 + Profits, and production, 173-176; division of, 133 + Proletariat, 19, 65 + Property, absolute rights of, 52, 80; and creative work, 52 _et seq._; + classification of, 63, 64; complexity of, 75; functionless, 76-77, 81; + in land, 56-60; in rights and royalties, 62; minority ownership + of, 79; most ambiguous of categories, 53-54; passive ownership of, + 62; private, 70-72; protection of, 78-70; rights, 50-51; security in, + 72-73; socialist fallacy regarding, 86 + Proudhon, 54 + Publicity of costs and profits, 85, 123-124, 126, 132 + + Redmayne, Sir Richard, 149 + Reformation the, 10-13; effect on society, 12-14 + Reform Bill of 1832, 69 + Religion, 10; changes in, 11-12 + Report of the United States Industrial Commission, 1916, 128-129 + Riches, meaning of, 98 + Rights of Man, French Declaration of, the, 16, 52 + Rights, and Functions, 8-19; doctrine of, 21 _et seq._, 43-44; without + functions, 61 + Rights of the shareholder, 75 + Royalties, 23-24, 62 + Royalties, and property, 70; from coal mining properties, 88; a tax + upon the industry of others, 89 + + Sankey, Justice, 115, 117, 143, 165, 167, 168, 169 + Security of income, 73-75 + Service as a basis of remuneration, 25, 41-42, 85, 133 + Shareholders, 91-92 + Shells, cost of making, 124-125 + Smith, Adam, 15, 52, 95 + Social inequality, 36-37 + Social reorganizations, schemes for, 5 + Social war, 40 + Socialism, 53 + Society, duality of modern, 135 + Society, functional organization of, 52 + State management, 116, 117 + Steel Corporation, 116 + Supervision from within, 151 + Syndicalism, 130 + + Taxation, 22 + Trusts, Report on, 23 + + United States, transformation in, 65 + Utilitarians, the English, 17 + Utility, 16-17 + + "Vicious Circle," the, 43, 123-138 + Voltaire, quoted, 55 + + Wages and costs, 131 + Wages and profits, 78 + Wealth, acquisition of, 20 _et seq._; as foundation for public esteem, + 35-36; distribution of on basis of function, 77; fallacy of increased, + 42-45; how to increase output of, 147; inequality of, 37-38; + limitation of, 36-37; output of, 37-38; production and consumption + of--a contrast, 77-78; waste of, 37-39 + Whitley Councils, 110 + Women self-supporting, 74 + Worker and Spender, 77-78 + Workers, collective responsibility of, 154 + Workers' control, 128 + Workmen, as "hands," 152; present independence of, 145-146; + responsibility of destroyed, 153-154; servants of shareholders, + 136-137; treatment of, 152-153 + + + + + + + + + +End of the Project Gutenberg EBook of The Acquisitive Society, by R. 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