"The great monopoly in this country is the money monopoly. So long as that exists, our old variety and freedom and individual energy of development are out of the question. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men who, even if their action be honest and intended for the public interest, are necessarily concentrated upon the great undertakings in which their own money is involved, and who necessarily by every reason of their own limitations, chill and check and destroy genuine economic freedom. This is the greatest question of all, and to this statesmen must address themselves with an earnest determination to serve the long future and the true liberties of men." (My italics.)

Undoubtedly this is a great question; the establishment of a political control over credit will mean a political and financial revolution. For it will establish the power of the government over our whole economic system and will lead rapidly to a common political and economic organization of all classes of capitalists for the control of the government, to a compromise between the group of capitalists that now rules the business world and that far larger group which is bound to rule the government. The financial magnates have seen this truth, and, as Mr. Paul Warburg said to the American Association (New Orleans, Nov. 21, 1911), "Wall Street, like many an absolute ruler in recent years, finds it more conducive to safety and contentment to forego some of its prerogatives ... and to turn an oligarchy into a constitutional democratic federation [i.e. a federation composed of capitalists]."

Mr. Roosevelt has announced a policy with regard to monopolies that foreshadows even more distinctly than anything Mr. Woodrow Wilson has said the solution of the differences between large and small capitalists. He urges that a government commission should undertake "supervision, regulation, and control of these great corporations" even to the point of controlling "monopoly prices" and that this control should "indirectly or directly extend to dealing with all questions connected with their treatment of their employees, including the wages, the hours of labor, and the like."[34]

This policy is in entire accord with the declarations of Andrew Carnegie, Daniel Guggenheim, Judge Gary, Samuel Untermeyer, Attorney-General Wickersham, and others of the large capitalists or those who stand close to them. It is in equal accord with the declarations of La Follette's Weekly and the leading "Insurgent" writers.

It is true that the private monopolies, as Mr. Bryan pointed out (New York Times, Nov. 19, 1911), "will soon be in national politics more actively than now, for they will feel it necessary to control Colonel Roosevelt's suggested commission, and to do that they must control the election of those who appoint the commission."

But the private monopolies will soon be more actively in politics no matter what remedy is offered, even government ownership. The small capitalist investors, shippers, and consumers of trust products can only protect themselves by securing control of the government, or at least sharing it on equal terms with the large capitalists.

The reason that Mr. Roosevelt's proposal was hailed with equal enthusiasm by the more far-sighted capitalists, whether radical or conservative, small or large, was that they have an approximately equal hope of controlling the government, or sharing in its control. The unbiased observer can well conclude that they are likely to divide this control between them—and, indeed, that the complete victory of either party is economically and politically unthinkable. Already banks, railways, industrial "trusts," mining and lumber interests, are being forced to follow a policy satisfactory to small capitalist investors, borrowers, customers, furnishers of raw material, and taxpayers—while small capitalist competitors are being forced to abandon their effort to use the government to restore competition and destroy the "trusts."

In the reorganization of capitalism, the non-capitalists, the wage and salary earning class are not to be consulted. Taken together with those among the professional and salaried class who are small investors or expect to become independent producers, the small capitalists constitute a majority of the electorate (though not of the population), or at least hold the political balance of power. It is capitalist interests alone that really count in present-day politics, and it is for capitalists alone that government control would be instituted.

Viewed in this light the statements of Mr. Woodrow Wilson that "business is no longer in any proper sense a private matter," or that "our program, from which we cannot be turned aside, is, that we are going to take possession of the control of our own economic life," and the similar statements of Mr. Roosevelt, are not so Socialistic as they seem. What their use by the leading "conservative-progressive" statesmen of both parties means is that a partnership of capital and government is at hand.

FOOTNOTES:

[31] Lincoln Steffens in Everybody's Magazine, beginning September, 1910.

[32] McClure's Magazine, 1911.

[33] Governor Woodrow Wilson, Speech of April 13, 1911.

[34] The Outlook, Nov. 18, 1911.



CHAPTER III

THE POLITICS OF THE NEW CAPITALISM

We are told that the political issue as viewed by American radicals is, "Shall property rule, or shall the people rule?" and that the radicals may be forced entirely over to the Socialist position, as the Republicans were forced to the position of the Abolitionists when Lincoln signed the Emancipation Proclamation. Mr. Ray Stannard Baker notes also that capital is continually the aggressor, as were the slaveholders, and that the conflict is likely to grow more and more acute, since "no one imagines that these powerful men of money will give up their advantage lightly" any more than the old slaveholders did.

Another "insurgent" publicist (Mr. William Allen White) says that the aim of radicalism in the United States is "the regulation and control of capital" and that the American people have made up their minds that "capital, the product of the many, is to be operated fundamentally for the benefit of the many." It is one of those upheavals, he believes, which come along once in a century or so, dethrone privilege, organize the world along different lines, take the persons "at the apex of the human pyramid" from their high seats and "iron out the pyramid into a plane."[35]

If the aim of the "progressives" is the overthrow of "the rule of property" as Mr. Baker claims—if, in the words of Mr. White again, "America is joining the world movement towards equal opportunity for all men in our modern civilization," then indeed the greatest political and economic struggle of history, the final conflict between capitalism and Socialism, is at hand.

But when we ask along what lines this great war for a better society is to be waged, and by what methods, we are told that the parties to the conflict are separated, not by practical economic interests, but by "ideas" and "ideals," and that the chief means by which this social revolution is to be accomplished are direct legislation and the recall and their use to extend government ownership or control so as gradually to close one door after another upon the operations of capital until its power for harm is annihilated, i.e. democracy and collectivism. In other words, the militant phrases used by Socialists in earnest are adopted by radicals as convenient and popular battle cries in their campaign for "State Socialism," as to banking, railroads, mines, and a few industrial "trusts," but without the slightest attempt either to end the "rule of property" or to secure "equal opportunity" for any but farmers and small business men. They do nothing, moreover, to bring about the new political and class alignment that is the very first requirement, if the rule of property in all its forms is to be ended, or equal opportunity secured for the lower as well as the comparatively well-to-do middle classes.

Similarly the essential or practical difference between the "Socialism" of Mr. Roosevelt's editorial associate, Dr. Lyman Abbott, who acknowledges that classes exist and says that capitalism must be abolished, and the Socialism of the international movement is this, that Dr. Abbott expects to work, on the whole, with the capitalists who are to be done away with, while Socialists expect to work against them.

Dr. Abbott claims that the "democratic Socialism" he advocates is directly the opposite of "State Socialism ... the doctrine of Bismarck," that it "aims to abolish the distinction between possessing and non-possessing classes," that our present industrial institutions are based on autocracy and inequality instead of liberty, democracy, and equality, that under the wages system or capitalism, the laborers or wage earners are practically unable to earn their daily bread "except by permission of the capitalists who own the tools by which the labor must be carried on." He then proceeds to what would be regarded by many as a thoroughly Socialist conclusion:

"The real and radical remedy for the evils of capitalism is the organization of the industrial system in which the laborers or tool users will themselves become the capitalists or tool owners; in which, therefore, the class distinction which exists under capitalism will be abolished."[36]

And what separates the advanced "State Socialism" of Mr. Hearst's brilliant editor, Mr. Arthur Brisbane, from the Socialism of the organized Socialist movement? Has not Mr. Brisbane hinted repeatedly at a possible revolution in the future? Has he not insisted that the crux of "the cost of living question" is not so much the control of prices by the private ownership of necessities of life (as some "State Socialist" reformers say, and even some official publications of the Socialist Party), as the exploitation of the worker at the point of production, the fact that he does not get the full product of his labor—phrases which might have been used by Marx himself?

The New York Evening Journal has even predicted an increasing conflict of economic interests on the political field—failing to state only that the people's fight must be won by a class struggle, a movement directed against capitalism and excluding capitalists (except in such cases where they have completely abandoned their financial interests).

Asked whether the influence of the Interests (the "trusts") would increase or diminish in this country in the near future, the Journal answered:—

"The influence of the interests, which means the power of the trusts, or organized industry and commerce, will go forward steadily without interruption.

"Just as steadily as early military feudalism advanced and grew, UNTIL THE PEOPLE AT LAST CONTROLLED IT AND OWNED IT, JUST SO STEADILY WILL TO-DAY'S INDUSTRIAL FEUDALISM advance and grow without interruption UNTIL THE PEOPLE CONTROL IT and own it.

"The trusts are destined to be infinitely more powerful than now, infinitely more ably organized.

"And that will be a good thing in the long run for the people. The trusts are the people's great teachers, proving that destructive, selfish, unbrotherly competition is unnecessary.

"They are proving that the genius of man can free a nation or a world. They are saying to the people: 'You work under our ORDERS. One power can own and manage industry.'

"It is hard for individual ambition just now. But in time THE PEOPLE WILL LEARN THE LESSON AND WILL SAY TO THE TRUST OWNERS:—

"'THANK YOU VERY MUCH. WE HAVE LEARNED THE LESSON. WE SEE THAT IT IS POSSIBLE FOR ONE POWER TO OWN AND CONTROL ALL INDUSTRY, ALL MANUFACTURES, ALL COMMERCE, AND WE, THE PEOPLE, WILL BE THAT ONE POWER.'

"Just as the individual feudal lords organized their little armies in France, and just as the French people themselves have all the armies in one—UNDER THE PEOPLE'S POWER—so the industries organized NOW by the barons of industrial feudalism, one by one, will be taken and put together by the people, UNDER THE PEOPLE'S OWNERSHIP."[37]

Yet we find the Journal, like all the vehicles and mouthpieces of radicalism, other than those of the Socialists, unready to take the first step necessary in any conflict; namely, to decide who is the enemy. Unless defended by definite groups in the community, "the rule of property," could be ended in a single election. Nor can the group that maintains capitalist government consist, as radicals suggest, merely of a handful of large capitalists, nor of these aided by certain cohorts of hired political mercenaries—nor yet of these two groups supported by the deceived and ignorant among the masses. Unimportant elections may be fought with such support, but not revolutionary "civil wars" or "the upheavals of the centuries." In every historical instance such struggles were supported on both sides by powerful, and at the same time numerically important, social classes, acting on the solid basis of economic interest.

Yet non-Socialist reformers persist in claiming that they represent all classes with the exception of a handful of monopolists, the bought, and the ignorant; and many assert flatly that their movement is altruistic, which can only mean that they intend to bestow such benefits as they think proper on some social class that they expect to remain powerless to help itself. Here, then, in the attitude of non-Socialist reformers towards various social classes, we begin to see the inner structure of their movement. They do not propose to attack any "vested interests" except those of the financial magnates, and they expect the lower classes to remain politically impotent, which they as democrats, know means that these classes are only going to receive such secondary consideration as the interests of the other classes require.

Whether the radical of to-day, the "State Socialist," favors political democracy or not, depends on whether these "passive beneficiaries" of the new "altruistic" system are in a majority. If they are not in a majority, certain political objects may be gained (without giving the non-capitalist masses any real power) by allowing them all to vote, by removing undemocratic constitutional restrictions, and by introducing direct legislation, the recall, and similar measures. If they are a majority, it is generally agreed that it is unsafe to allow them an equal voice in government, as they almost universally fail to rest satisfied with the benefits they secure from collectivist capitalism and press on immediately to a far more radical policy.

So in agricultural communities like New Zealand, Australia, and some of our Western States, where there is a prosperous property-holding majority, the most complete political democracy has come to prevail. Judging everything by local conditions, the progressive small capitalists of our West sometimes even favor the extension of this democracy to the nation and the whole world, as when the Wisconsin legislature proposes direct legislation and the recall in our national government. But they are being warned against this "extremist" stand by conservative progressive leaders of the industrial sections like Ex-President Roosevelt or Governor Woodrow Wilson.

This latter type of progressive not only opposes the extension of radical democracy to districts like our South and East, numerically dominated by agricultural or industrial laborers, but often wants to restrict the ballot in those regions. Professor E. A. Ross, for example, writes in La Follette's Weekly that "no one ought to be given the ballot unless he can give proof of ability to read and write the English language," which would disqualify a large part, if not the majority, of the working people in many industrial centers; while Dr. Abbott concluded a lengthy series of articles with the suggestion that the Southern States have "set an example which it would be well, if it were possible, for all the States to follow."

"Many of them have adopted in their constitutions," Dr. Abbott continues, "a qualified suffrage. The qualifications are not the same in all the States, but there is not one of those States in which every man, black or white, has not a legal right to vote, provided he can read and write the English language, owns three hundred dollars' worth of property, and has paid his taxes. A provision that no man should vote unless he has intelligence enough to read and write, thrift enough to have laid up three hundred dollars' worth of property, and patriotism enough to have paid his taxes, would not be a bad provision for any State in the Union to incorporate in its constitution."[38]

Such a provision accompanied by the customary Southern poll tax, which, Dr. Abbott overlooked (evidently inadvertently), would add several million more white workingmen to the millions (colored and white) that are already without a vote.[39]

We cannot wonder, then, that the working people, who are enthusiastic supporters of every democratic reform, should nevertheless distrust the democracy of the new movement. It is generally supposed in the United States that the reason the new "Insurgency" is weaker in the East than in the West is because of the greater ignorance and political corruption of the masses of the great cities of the East. But when we see the radicalism of the West also, as soon as it enters the towns, tending to support the Socialists and Labor parties rather than the reformers, we realize that the distrust has no such local cause.

Perhaps the issue is more clearly seen in the hostility that exists among the working people and the Socialists towards the so-called commission plan of city government, which the progressives unanimously regard as a sort of democratic municipal panacea. The commission plan for cities vests the whole local government in a board of half a dozen elected officials subject to the initiative and referendum and recall. The Socialists approve of the last feature. They object to the commission and stand for the very opposite principle of an executive subordinate to a legislature and without veto power, because a board does not permit of minority representation, and because it allows most officials to be appointed through "influence" instead of being elected. They object also, of course, to the high percentages usually required for the initiative and the recall. It is Socialist and Labor Union opposition, and not merely that of political machines, that has defeated the proposed plan in St. Louis, Jersey City, Hoboken, and elsewhere, and promises to check it all over the country. As a device for saving the taxpayer's money, the commission plan in its usual form is ideal, as a means for securing the benefits of the expenditure of this money to the non-propertied or very small propertied classes, it is in its present form worse in the long run than the present corruption and waste. State legislatures and courts already protect the taxpayers from any measure in the least Socialistic, whatever form of local government and whatever party may prevail. It has caused more than a little resentment among the propertyless that the taxpayers should actually have the effrontery to propose the still more conservative commission plan as being a radically democratic reform.

It is on such substantial grounds that the propertyless distrust the democracy of the progressives and radicals. They find it extends only to sections or districts where small capitalist voters are in a majority. The "State Socialist" and Reform attitude towards political democracy is indeed essentially opportunistic. Not only does it vary from place to place, but it also changes rapidly with events. As long as the new movement is in its early stages, it deserves popularity, owing to the fact that it brings immediate material benefits to all and paves the way, either for capitalistic or for Socialistic progress, robs capitalism of all fear of the masses, and is ready to remove all undemocratic constitutional barriers and to do everything it can to advance popular government. These constitutional checks and balances prevent the small capitalists and their progressive large capitalist allies from bringing to time the reactionaries of the latter class, while they are so many that, in removing a few of them, there is little danger of that pure political democracy which would alone give to the masses any "dangerous" power. At a later stage, when "State Socialism" will have carried out its program, and the masses see that it is ready to go only so far as the small capitalists' interests allow and no farther, and when it will already have forced recalcitrant large capitalists to terms, and so have reunited the capitalist class, we may expect to see a complete reversal of the present semi-democratic attitude. But as long as the "State Socialist" program is still largely ahead of us, the large capitalists not yet put into their place, and full political democracy—in spite of rapid progress—still far in the distance, a radical position as to this, that, or the other piece of political machinery signifies little. So many reforms of this kind are needed before political democracy can become effective—and in the meanwhile many things can happen that will give ample excuse to any of the "progressive" classes that decide to reverse their present more or less democratic attitude, such as an "unpatriotic" attitude on the part of the masses, a grave railroad strike, etc.

For there will be abundant time before democratic machinery can reach that point in its evolution, when the non-capitalist masses can make the first and smallest use of it against their small and large capitalist masters. If, for example, the Supreme Court of this country should ever be made elective, or by any other means be shorn of its political power, and if then the President's veto were abolished, and others of his powers given to Congress, there would remain still other alternatives for vetoing the execution of the people's will—and one veto is sufficient for every practical purpose. Even if the senators are everywhere directly elected, the Senate may still remain the permanent stronghold of capitalism unless overturned by a political revolution.

The one section of the Constitution that is not subject to amendment is the allotment of two senators to each of the States. And even if public opinion should decide that this feature must be made changeable by ordinary amendment like the rest, it might require 90 or even 95 per cent of the people to pass such an amendment or to call a constitutional convention for the purpose. For Connecticut, Rhode Island, Vermont, Delaware, are not only governed by antiquated and undemocratic constitutions, but are so small that wholesale bribery or a system of public doles is easily possible. The constitutions of the mountain States are more modern, but Utah, Wyoming, Nevada, and New Mexico, and others of these States are so little populated as make them very easy for capitalist manipulation, as present political conditions show. Now if we add to these States the whole South, where the upper third or at most the upper half of the population is in firm control, through the disfranchisement of the majority of the non-capitalistic classes (white and colored), we see that, even if the country were swept by a tide of democratic opinion, it is most unlikely that it will ever control the Senate. Moreover, if the capitalists (large and small) are ever in danger of losing the Senate, they have only to annex Mexico to add half a dozen or a dozen new States with limited franchises and undemocratic constitutions.

Either the President, or the Senate, or the Supreme Court might prove quite sufficient to prevent the execution of the will of the people, in any important crisis—they would be especially effective when revolutionary changes in property, and rapid shifting of economic and political power into the hands of the people, are at stake, as Socialists believe they will be. But to resist such a movement, still another political weapon is available,—even if President, Senate, and Supreme Court fell into the hands of the people (and it is highly probable that the small capitalists, who themselves suffer under the above-mentioned constitutional limitations, will force the larger capitalists to fall back on this other weapon in the end),—namely, a limitation of the suffrage.

The property and educational qualifications for voting which are directed against the colored people in the Southern States are being used to a considerable degree, both North and South, against the poorer whites. While there is no likelihood that this process will continue indefinitely, or that it will spread to all parts of the country, it is already sufficient to throw the balance of political power in favor of the capitalists in the national elections. If we put the total number of voters in the country at 15,000,000, we can see how significant is the fact that more than a million, black and white, have already been directly disfranchised in the South alone.

In view of these numerous methods of thwarting democracy in this country (and there are others) there is no reason why the capitalists should not permit political leaders after a time to accept a number of radical and even revolutionary reforms in political methods. The direct election of senators, though it was bitterly opposed a few years ago, is already widely accepted; the direct nomination of the President has become the law in several States; Mr. Roosevelt threatens that the "entire system" may have to be changed, that constitutions may be "thrown out of the window," and the power of judges over legislation abolished, which, as he notes, has already been advocated by the Socialist member of Congress[40]; the Wisconsin legislature formally calls for a national constitutional convention and proposes to make the constitution amendable henceforth by the "initiative"; Governor Woodrow Wilson suggests that many of our existing evils may be remedied by national constitutional amendments[41], and two such amendments are now nearing adoption after forty years, during which it was thought that all amendment had ceased indefinitely.

Whether it will be decided to take away the power of the Supreme Court over legislation and make it directly responsible to Congress or the people, or to call a constitutional convention, is doubtful. A convention, as Senator Heyburn recently pointed out in the Senate, is "bigger than the Constitution" and might conceivably amend what is declared in that instrument not to be amendable, by providing that the States should be represented in the Senate in proportion to population. Even then the existing partial disfranchisement of the electors would prevent a new constitution from going "too far" in a democratic direction. It is also true, as the same senator said, that the habit of amending the Constitution is a dangerous one (to capitalism), and that it might some day put the capitalistic government's life at stake[42]. But this after all amounts only to saying that political evolution, like all other kinds, is cumulative, and that its tempo is in the long run constantly accelerated. Certainly each change leads to more change. None of these proposed political reforms, however, even a constitutional convention, is in itself revolutionary, or promises to establish even a political democracy. All could coexist, for example, with a still greater restriction of the suffrage.

Nor do any of these measures in themselves constitute the smallest step in the direction of political democracy as long as a single effective check is allowed to remain. If there is any doubt on the matter, we have only to refer to other constitutions than ours which accomplish the same object of checkmating democracy without a Supreme Court, without an absolute executive veto, without an effective second chamber, and in one important case without a written constitution (England).

Or, we can turn to France, Switzerland, or New Zealand, where the suffrage is universal and political democracy is already approximated but rendered meaningless to the non-capitalist masses by the existence of a majority composed of small capitalists. And in countries like the United States, where the small capitalists and their immediate dependents are nearly as numerous as the other classes, a temporary majority may also be formed that may soon make full democracy as "safe" for a considerable period as it is in Switzerland or New Zealand.[43]

As soon as "State Socialism" reaches its point of most rapid development, and as long as it continues to reach ever new classes with its immediate benefits, it will doubtless receive the support of a majority, not only of the voters, but also of the whole population. During this period the "Socialistic" capitalists will be tempted to popularize and strengthen their movement not only by uncompleted political reforms, that are abortive and futile as far as the masses are concerned, but also by the most thoroughgoing democracy. For radical democracy will not only be without danger, but useful and invaluable in the struggle of the progressive and collectivist capitalists against the retrogressive and individualist capitalists. As long as there is a majority composed of large and small capitalists and their dependents, together with those of the salaried and professional classes who are satisfied with the capitalistic kind of collectivism (i.e. while its progress is most brilliant), it is only necessary for the progressives to hold the balance of power in order to have everything their own way both against Socialism and reaction. The powerful Socialist and revolutionary minority created in industrial communities by equal suffrage and a democratic form of government, as long as it remains distinctly a minority, is unable to injure the combined forces of capitalism, while it furnishes a useful and invaluable club by which the progressive capitalists can threaten and overwhelm the reactionaries.

In Great Britain, for example, the new collectivist movement of Messrs. Churchill and Lloyd George, basing itself primarily on the support of the small capitalist class, which there as elsewhere constitutes a very large part (over a third) of the population, seeks also the support of a part of the non-propertied classes. It cannot make them any plausible or honest promise of any equitable redistribution of income or of political power, but it can promise an increase of well-paid government employment, and it can guarantee that it will develop the industrial efficiency of all classes and allow them a certain share, if a lesser one, in the benefits of this policy.

If then "State Socialism," like the benevolent despotisms and oligarchies of history, sometimes offers the purely material benefits which it brings in some measure to all classes, as a substitute for democratic government, it also favors democracy in those places where the small capitalists and related classes form a majority of the community. The purpose of the democratic policy, where it is adopted, is to stimulate new political interest in the "State Socialistic" program, and by increasing cautiously the political weight of the non-capitalists—without going far enough to give them any real or independent power—to check the reactionary element among the capitalists that tries to hold back the industrial and governmental organization the progressives have in view. It was in order to shift the political balance of power that the reactionary Bismarck introduced universal suffrage in Germany, and the same motive is leading Premier Asquith, who is not radical, to add considerably to the political weight of the working classes in England, i.e. not to the point where they have any power whatever for their own purposes, but only to that point where their weight, added to that of the Liberals, counterbalances the Tories, and so automatically aids the former party.

The Liberals are giving Labor this almost valueless installment of democracy, just as they had previously granted instead such immediate and material benefits as we see in the recent British budgets, as if they were concessions, only hiding the fact that they would soon have conferred these benefits on the workers through their own self-interest, whether the workers had given them their political support or not.

Mr. Lloyd George has said:—

"The workingman is no fool. He knows that a great party like ours can, with his help, do things for him he could not hope to accomplish for himself without its aid. It brings to his assistance the potent influences drawn from the great middle classes of this country, which would be frightened into positive hostility by a purely class organization to which they do not belong. No party could ever hope for success in this country which does not win the confidence of a large portion of this middle class....

"You are not going to make Socialists in a hurry out of farmers and traders and professional men of this country, but you may scare them into reaction.... They are helping us now to secure advanced Labor legislation; they will help us later to secure land reform and other measures for all classes of wealth producers, and we need all the help they give us. But if they are threatened with a class war, then they will surely sulk and harden into downright Toryism. What gain will that be for Labor?" (My italics.)[44]

The Chancellor of the Exchequer here bids for Labor's political support on the plea that what he was doing for Labor meant an expense and not a profit to the middle class, and that these reforms would only be assented to by that class as the necessary price of the Labor vote. I have shown grounds for believing that the chief motives of the new reforms have nothing to do with the Labor vote. However much Mr. Lloyd George, as a political manager, may desire to control that vote, he knows he can do without it, as long as it is cast against the Tories. The Liberals will hold the balance of power, and their small capitalist followers will continue to carry out their capitalistic progressive and collectivist program—even without a Labor alliance. Nor does he fear that even the most radical of reforms, whether economic or political, will enable Labor to seize a larger share of the national income or of political power. On the contrary, he predicted in 1906 that it would be a generation before Labor could even hope to be sufficiently united to take the first step in Socialism. "Does any one believe," he asked, "that within a generation, to put it at the very lowest, we are likely to see in power a party pledged forcibly to nationalize land, railways, mines, quarries, factories, workshops, warehouses, shops, and all and every agency for the production and distribution of wealth? I say again, within a generation? He who entertains such hopes must indeed be a sanguine and simple-minded Socialist."[45]

Mr. Lloyd George sought the support of Labor then, not because it was all-powerful, but because, for a generation at least, it seemed doomed to impotence—except as an aid to the Liberals. The logic of his position was really not that Labor ought to get a price for its political support, but that having no immediate alternative, being unable to form a majority either alone or with any other element than the Liberals, they should accept gladly anything that was offered, for example, a material reform like his Insurance bill—even though this measure is at bottom and in the long run purely capitalistic in its tendency.

And this is practically what Labor in Great Britain has done. It has supported a government all of whose acts strengthen capitalism in its new collectivist form, both economically and politically. And even if some day an isolated measure should be found to prove an exception, it would still remain true that the present policies considered as a whole are carrying the country rapidly and uninterruptedly in the direction of State Capitalism. And this is equally true of every other country, whether France, Germany, Australia, or the United States, where the new reform program is being put into execution.

Many "Socialistic" capitalists, however, are looking forward to a time when through complete political democracy they can secure a permanent popular majority of small capitalists and other more or less privileged classes, and so build their new society on a more solid basis. Let us assume that the railways, mines, and the leading "trusts" are nationalized, public utilities municipalized, and the national and local governments busily engaged on canals, roads, forests, deserts, and swamps. Here are occupations employing, let us say, a fourth or a fifth of the working population; and solvent landowning farmers, their numbers kept up by land reforms and scientific farming encouraged by government, may continue as now to constitute another fifth. We can estimate that these classes together with those among the shopkeepers, professional elements, etc., who are directly dependent on them will compose 40 to 50 per cent of the population, while the other capitalists and their direct dependents account for another 10 per cent or more. Here we have the possibility of a privileged majority, the logical goal of "State Socialism," and the nightmare of every democrat for whom democracy is anything more than an empty political reform. With government employees and capitalists (large and small)—and their direct dependents, forming 50 per cent or more of the population, and supported by a considerable part of the skilled manual workers, there is a possibility of the establishment of an iron-bound caste society solidly intrenched in majority rule.

There are strong reasons, which I shall give in later chapters, for thinking that some great changes may take place before this day can arrive.

FOOTNOTES:

[35] William Allen White in the American Magazine, January, 1911.

[36] Dr. Lyman Abbott in a series of articles published in the Outlook, 1910, entitled "The Spirit of Democracy," now in book form.

[37] New York Journal, Aug. 2, 1910.

[38] The Outlook, Sept. 10, 1910.

[39] In his enthusiasm for these undemocratic measures, Dr. Abbott has retrogressed more than the Southern States, which do not require both a property and educational qualification, but only one of the two. Moreover, by the "grandfather" and "understanding" clauses they seek to exempt as many as possible of the whites, i.e. a majority of the population in most of these States, from any substantial qualification whatever. Nor does it seem likely that even in the future they will apply freely; against the poor and illiterate of the white race, the measures Dr. Abbott advocates. Just such restricted suffrage laws were repealed in many Southern States from 1820 to 1850, and it is not likely that the present reaction will go back that far.

[40] The Outlook, May 24, 1911.

[41] Governor Woodrow Wilson, Speech in Portland, Oregon, May 18, 1911.

[42] Speech in Senate, May 24, 1911.

[43] Miss Jessie Wallace Hughan in her "American Socialism of the Present Day" (page 184) has quoted me as saying (in the New York Call of December 12, 1909) that the amendability of the Constitution by majority vote is a demand so revolutionary that it is exclusively Socialist property. Within the limitations of a very brief journalistic article I believe this statement was justified. It holds for the United States to-day. It does not hold for agrarian countries like Australia, Canada, or South Africa, for backward countries like Russia, or dependent countries like Switzerland or Denmark, where there is no danger of Socialism. And before it can be put into effect, which may take a decade or more, the increased proportion in the population of well-paid government employees and of agricultural lessees of government lands and similar classes, may make a democratic constitution a safe capitalistic policy, for a while, even in the United States.

[44] Lloyd George, op. cit., pp. 33, 34.

[45] Lloyd George, op. cit., p. 35.



CHAPTER IV

"STATE SOCIALISM" AND LABOR

State Capitalism has a very definite principle and program of labor reform. It capitalizes labor, views it as the principal resource and asset of each community (or of the class that controls the community), and undertakes every measure that is not too costly for its conservation, utilization, and development—i.e. its development to fill those positions ordinarily known as labor, but not such development as might enable the laborers or their children to compete for higher social functions on equal terms with the children of the upper classes.

On the one hand is the tendency, not very advanced, but unmistakable and almost universal, to invest larger and larger sums for the scientific development of industrial efficiency—healthy surroundings in childhood, good food and healthy living conditions, industrial education, model factories, reasonable hours, time and opportunity for recreation and rest, and on the other a rapidly increasing difficulty for either the laborer or his children to advance to other social positions and functions—and a restriction of the liberty of laborers and of labor organizations, lest they should attempt to establish equality of opportunity or to take the first step in that direction by assuming control over industry and government. From the moment it approaches the labor question the "Socialist" part of "State Socialism" completely falls away, and nothing but the purest collectivist capitalism remains. Even the plausible contention that it will result in the maximum efficiency and give the maximum product breaks down. For no matter how much the condition of the laborers is improved, or what political rights they are allowed to exercise, if they are deprived of all initiative and power in their employments, and of the equal opportunity to develop their capacities to fill other social positions for which they may prove to be more fit than the present occupants, then the human resources of the community are not only left underdeveloped, but are prevented from development.

In the following chapters I shall deal successively with the plans of the "State Socialists" to develop the productive powers of the laboring people and their children—as laborers, together with the accompanying tendencies towards compulsory labor, and formation of a class society.

"Our Home policy," says a manifesto of the Fabian Society (edited by Bernard Shaw), "must include a labor policy, whether the laborer wants it or not, directed to securing for him, what, for the nation's sake even the poorest of its subjects should have." (Italics mine.)[46]

Here is the basis of the attitude of the "State Socialist" towards labor. Labor is to be given more and more attention and consideration. But the governing is to be done by other classes, and the foundation of the new policy is to be the welfare of society as these other classes conceive it,—and not the welfare of the masses of the people as conceived by the masses themselves.

Indeed, a government official has recently pleaded with capital in the name of labor that the time has come when it pays to treat labor as well as valuable horses and cattle. George H. Webb, Commissioner of Labor of Rhode Island, begins his report on Welfare Work by assuring the manufacturers that it is profitable. He says: "Mankind, at least that portion of it that has to do with horseflesh, discovered ages ago that a horse does the best service when it is well fed, well stabled, and well groomed. The same principle applies to the other brands of farm stock. They one and all yield the best results when their health and comforts are best looked after. It is strange, though these truths have been a matter of general knowledge for centuries, that it is only quite recently that it has been discovered that the same rule is applicable to the human race. We are just beginning to learn that the employer who gives steady employment, pays fair wages, and pays close attention to the physical health and comfort of his employees gets the best results from their labor."[47]

Mr. George W. Perkins, recently retired from the firm of J. P. Morgan and Company, who has managed the introduction of pensions, profit sharing, and other investments in labor for the International Harvester Company, has also expressed the view that these measures were profitable "from a pecuniary standpoint." A good illustration is the calculation of the Dayton Cash Register Company, which has led in this "welfare work," that "the luncheons given each girl costs three cents, and that the woman does five cents more of work each day." Some such calculation will apply to the whole colossal system of governmental labor reforms now favored so widely by far-sighted employers.[48]

In order that the private policy of the more enlightened of the large corporations should become the policy of governments, which employers as a class know they can control, only two conditions need to be filled. Since all employers must to some degree share the burdens of the new taxes needed for such governmental investments in the improvement of labor, there must be some assurance, first, that all capitalists shall share in the opportunity to employ this more efficient and more profitable labor; and second, that the supply of cheap labor, which has cost almost nothing to produce, is either exhausted or, on account of its inefficiency, is less adapted to the new industry than it was to the old. The impending reorganization of governments to protect the smaller capitalists from the large (through better control over the banks, railroads, trusts, tariffs, and natural resources) will furnish the first condition, the natural exhaustion or artificial restriction of immigration now imminent together with the introduction of "scientific management," the second. From a purely business standpoint the greatest asset of the capitalists' government, its chief natural resource, the most fruitful field for conservation, and the most profitable place for the investment of capital will then undoubtedly be in the labor supply.

In presenting the British Budget of 1910 to Parliament, Mr. Lloyd George argued that the higher incomes and fortunes ought to bear a greater than proportionate share of the taxes, because present governmental expenditures were largely on their behalf, and because the new labor reforms were equally to their benefit.

"What is it," he said, "that enabled the fortunate possessors of these incomes and these fortunes to amass the wealth they enjoy or bequeath? The security insured for property by the agency of the State, the guaranteed immunity from the risks and destruction of war, insured by our natural advantages and our defensive forces. This is an essential element even now in the credit of the country; and, in the past, it means that we were accumulating great wealth in this land, when the industrial enterprises of less fortunately situated countries were not merely at a standstill, but their resources were being ravaged and destroyed by the havoc of war.

"What, further, is accountable for this growth of wealth? The spread of intelligence amongst the masses of the people, the improvements in sanitation and in the general condition of the people. These have all contributed towards the efficiency of the people, even as wealth-producing machines. Take, for instance, such legislation as the Educational Acts and the Public Health Acts; they have cost much money, but they have made infinitely more. That is true of all legislation which improves the conditions of life for the people. An educated, well-fed, well-clothed, well-housed people invariably leads to the growth of a numerous well-to-do class. If property were to grudge a substantial contribution towards proposals which insure the security which is one of the essential conditions of its existence or toward keeping from poverty and privation the old people whose lives of industry and toil have either created that wealth or made it productive, then property would be not only shabby, but shortsighted." (Italics mine.)[49]

The property interests should be far-sighted enough to support the present economic and labor reforms, not because there is any fear in Great Britain either from a revolutionary Socialist movement or from an organized political or labor union upheaval, for Mr. Lloyd George ridicules both these bogeys, but because such reforms contribute towards the efficiency of the people, even as wealth-producing machines—and increase the incomes of the wealthy and the well-to-do.

Mr. Lloyd George continued:—

"We have, more especially during the last 60 years, in this country accumulated wealth to an extent which is almost unparalleled in the history of the world, but we have done it at an appalling waste of human material. We have drawn upon the robust vitality of the rural areas of Great Britain, and especially Ireland, and spent its energies recklessly in the devitalizing atmosphere of urban factories and workshops as if the supply were inexhaustible. We are now beginning to realize that we have been spending our capital, at a disastrous rate, and it is time we should take a real, concerted, national effort to replenish it. I put forward this proposal, not a very extravagant one, as a beginning." (My italics.)[50]

In order to do away with the economic waste of profitable "human material" and the still more serious exhaustion of the supply, the propertyless wage earner or salaried man for the first time obtains a definite status in the official political economy; he becomes the property of the nation viewed "as a business firm," a part of "our" capital. His position was much like a peasant or a laborer during the formation of the feudal system. To obtain any status at all, to become half free he had to become somebody's "man." Now he is the "man," the industrial asset, of the government. This paternal attitude towards the individual, however, is not at all similar to the paternalist attitude towards capital. While the individual capitalist often does not object to having his capital reckoned as a part of the resources of a government which capitalists as a class control,—roughly speaking in proportion to their wealth,—we can picture his protests if either his personal activity or ability or his private income were similarly viewed as dependent for their free use and development on the benevolent patronage of the State. However, for the workers to become an asset of the State, even while the latter is still viewed primarily as a commercial institution and remains in the hands of the business class, is undoubtedly a revolutionary advance.

Mr. Winston Churchill also gives, as the basis for the whole program, the need of putting an end to that "waste of earning power" and of "the stamina, the virtue, safety, and honor of the British race," that is due to existing poverty and economic maladjustment.[51] Mr. John A. Hobson, a prominent economist and radical, shows that the purpose of the "New Liberalism" is the full development of "the productive resources of our land and labor,"[52] and denies that this broad purpose has anything to do with Socialist collectivism.

Professor Simon Patten of the University of Pennsylvania writes very truly about the proposed labor reforms, that "they can cause poverty to disappear and can give a secure income to every family," without requiring any sacrifice on the part of the possessing classes. No one has shown more clearly or in fewer words how intimately connected are the advance of the worker and the further increase of profits. "Social improvement," Professor Patten says, "takes him [the workman] from places where poverty and diseases oppress, and introduce him to the full advantage of a better position.... It gives to the city workman the air, light, and water that the country workman has, but without his inefficiency and isolation. It gives more working years and more working days in each year, with more zeal and vitality in each working day; health makes work pleasant, and pleasant work becomes efficiency when the environment stimulates men's powers to the full.... The unskilled workman must be transformed into an efficient citizen; children must be kept from work, and women must have shorter hours and better conditions."[53]

Professor Patten has even drawn up a complete scientific program of social reforms which lead necessarily to the economic advantage of all elements in a community without any decrease of the existing inequalities of wealth. "The incomes and personal efforts of those favorably situated," says Professor Patten, "can reduce the evils of poverty without the destruction of that upon which their wealth and the progress of society depend." (Italics mine.)

The reform program begins with childhood and extends over every period of the worker's life. Ex-President Eliot of Harvard and President Hadley of Yale and other leading educators propose that its principles be applied to the nation's children. Dr. Eliot insists that greater emphasis should be laid on vocational and physical training and the teaching of hygiene and the preservation of the health, which will secure the approval of every "State Socialist." Anything that can be done to elevate the health of the nation, and to increase its industrial efficiency by the teaching of trades, will pay the nation, considered as a going concern, a business undertaking of all its capitalists. It might not improve the opportunity of the wage earners to rise to better-paid positions, because it would augment competition among skilled laborers; while it would probably improve wages somewhat, it might not advance them proportionately to the general increase of wealth; it might leave the unequal distribution of wealth, political power, and opportunity even more unequal than they are to-day, but as long as the nation as a whole is richer and the masses of the people better off, "State Socialists" will apparently be satisfied.

President Hadley is even more definite than Dr. Eliot. The new educational policy so thoroughly in accord with the interests of the business and capitalist classes demands "for the people" every opportunity in education that will make the individual a better worker, while it allows his development as a man and a citizen to take care of itself. President Hadley urges that we follow along German lines in public education. What he feels we still lack, and ought to take from Germany, are the "industrial training and the military training of the people": the children are forced to go to the elementary schools for a time, and during that part of their education they are kept out of the shops and the factories. They, however, receive instructions in the rudiments of shop and factory work."[54] In other words, the children are kept out of the factory, but the shop and the factory are permitted to enter the school. Doubtless an improvement, but not yet the sort of education any business or professional man would desire for his own children at twelve, fourteen, or sixteen years of age.[55]

"State Socialism" looks at the individual, and especially the workingman, almost wholly from the standpoint of what the community, as at present organized, the capitalists being the chief shareholders, is able to make out of him. Each newborn child represents so much cost to the community for his education. If he dies, the community loses so and so much. If he lives, he brings during his life such and such a sum to the community, and it is worth while to spend a considerable amount both to prevent his early death or disablement and to increase his industrial efficiency while he lives. According to this view, Professor Irving Fisher of Yale has calculated that the annual child crop in the United States is worth about seven billion dollars per annum, a sum almost equal to the annual value of our agricultural crops. In both cases great economies are possible. Professor Fisher has estimated that 47 per cent of the children who die in America less than five years old could be saved at an average cost of $20 per child, which means an annual loss to the nation of $576,000,000, according to Professor Fisher's calculation of what would have been the future value of all the children now lost (above their cost of maintenance).

"We have counted it our good fortune," says Professor Fisher, "to dwell in a land where nature has been so prodigal that we have not needed to fear want. We are only beginning to realize that this very prodigality of nature has produced a spirit of prodigality in men.

"It is the purpose of the conservation movement to rebuke and correct this national trait, and the resources of science are now concentrated in this mighty effort in that direction.

"The conservation of human life will, I believe, constitute the grandest movement of the twentieth century.

"Not only do human beings constitute by far the greatest part of our natural resources, but the waste of human life and strength is by far the greatest of all wastes. In the report of President Roosevelt's conservation commission, although his commission was primarily appointed to conserve our natural rather than our vital resources, it was pointed out that human beings, considered as capitalized working power, are worth three to five times all our other capital, and that, even on a very moderate estimate, the total waste and unnecessary loss of our national vitality amounts to one and one half billions of dollars per year."[56]

When the "State Socialist" policy has taken possession of the world, which may be in the very near future, or, more correctly speaking, when the world's business and politics are so organized as to give this policy a chance for a full and free application, is it not evident that every advanced nation will consider it as being to its business interest to put an end to this vast, unnecessary loss of life? And if half a billion a year is lost through unnecessary deaths of very young children, is it not probable that an equal sum is lost through death later in childhood or early youth, another similar sum through underfeeding in later life, or through lack of sufficient exercise, rest, recreation, and outdoor life, and a far larger amount through lack of industrial training? Is it not certain that unnecessary industrial accidents, sickness due to overwork and early old age due to overstrain, are responsible for another enormous loss? And, finally, is not unemployment costing a billion a year to the "nation, considered as a business firm"? This last-named loss has been calculated, for the United States alone, as 1,300,000 years of labor time annually. If a round million of these years are saved—if we estimate their value in profits at the low figure of $1000 each,—we have another billion (even allowing for 300,000 unemployable).[57]

Is it not clear that nearly every element in the community will soon combine to do all that is humanly possible to put an end to such costly abuses and neglect; and that conscientious and wholesale efforts to preserve the public health and to secure industrial efficiency cannot be a matter of the distant future, when movements in that direction have already been initiated in Great Britain, Australia, Germany, and some other countries? Sir Joseph Ward, Premier of New Zealand, says that the people of that country have already calculated the value of each child—and, on this basis, made it the subject of certain governmental investments. He says:—

"To return to the annuity fund, apart from the assistance it gives to the wife and children if the father is sick, it also contributes the services of a medical man for a woman at childbirth, and the State pays $30 for that purpose. If all of this is not needed to pay the physician, the rest may be used for carrying on the home. This has all been done with the view to helping the birth rate and bringing into the world children under the most healthy conditions possible, so that they may have a free chance of attaining man's or woman's estate.

"We assess the value of an adult in our country as $1500. So, from a business standpoint and on national grounds, we regard the expenditure of a sum up to $30 as judicious, when the value of the infant to the country may be fifty times that sum. Thus the small wage earner's wife and children are provided for, and his fear about being able to provide for a large family is decreased." (Italics mine.)[58]

"I am of the opinion," declares Mr. Churchill, "that the State should increasingly assume the position of the reserve employer of labor," and that "the State must increasingly and earnestly concern itself with the care of the sick and aged, and, above all, of the children." He looks forward "to the universal establishment of the minimum standards of life and labor, and their progressive elevation as the increasing energies of production may permit."[59]

Mr. Churchill rejects the supposition that the government intends to stop with the extension of the eight-hour law to miners. "I welcome and support this measure, not only for its own sake," he said, "but more because it is, I believe, simply the precursor of the general movement which is in progress, all over the world, and in other industries besides this, towards reconciling the conditions of labor with the well-ascertained laws of science and health."[60]

It might be supposed that this measure would prove costly to employers, but this is only a short-sighted view. In the first place, working for less hours, the miners will produce somewhat more per hour, but an even more important ultimate benefit comes from the fact that the most experienced miners, those who are most profitable, being subject to less overstrain, will have a longer working life.

Another measure already enacted towards establishing "a national minimum" applies to the wages in ready-made tailoring and some less important industries, to which shirt-waist making is soon to be added. These are known as the "sweated" trades, "where the feebleness and ignorance of the workers and their isolation from each other render them an easy prey to the tyranny of bad masters and middlemen one step above them upon the lowest rungs of the ladder, and themselves held in the grip of the same relentless forces,"—where "you have a condition not of progress but of progressive degeneration." Mr. Churchill asked Parliament to regard these industries as "sick and diseased," and "to deal with them in exactly the same mood and temper as we should deal with sick people," and accordingly boards were established for the purpose of setting up a minimum wage.[61]

But if employers are forced to pay higher wages, it may be thought that they will lose from the law. This Mr. Churchill effectively denies.

"In most instances," he says, "the best employers in the trade are already paying wages equal or superior to the probable minimum which the Trade Board will establish. The inquiries I have set on foot in the various trades scheduled have brought to me most satisfactory assurances from nearly all the employers to whom my investigations have addressed themselves.... But most of all I have put my faith in the practical effect of a powerful band of employers, perhaps a majority, who, whether from high motives or self-interest, or from a combination of the two—they are not necessarily incompatible ideas—will form a vigilant and instructed police, knowing every turn and twist of the trade, and who will labor constantly to protect themselves from being undercut by the illegal competition of unscrupulous rivals."

Mr. Churchill claims that employers who are trying to pursue such trades with modern machinery and modern methods are more seriously hampered by the competition of the "sweaters" than they are by that of foreign employers. "I cannot believe," he concludes, "that the process of raising the degenerate and parasitical portion of these trades up to the level of the most efficient branches of the trade, if it is conducted by those conversant with the conditions of the trade and interested in it, will necessarily result in an increase in the price of the ultimate product. It may even sensibly diminish it through better methods."[62] Mr. Churchill is able to point out, as with most of the other reforms, that in one country or another they are already being put into effect, the legislation against "sweating" being already in force in Bavaria and Baden, as well as in Australia, under a somewhat different form.

But the most striking of the British labor reforms has yet to be mentioned. Not only were the present old age pensions established by the common consent of all the political parties, but a law has now been enacted—also with the approval of all parties (and only twenty-one negative votes in Parliament)—to apply the same methods of state insurance of workingmen to sickness, accidents, and even to unemployment. The old age pensions were already more radical than those of Prussia in that the workingmen do not have to contribute under the British law, while the National Insurance Bill as now enacted surpasses both the former British measure and the German precedent in everything, except that it demands a lesser total sum from the government. In the insurance against accidents, sickness, and unemployment the government, instead of contributing the whole amount, gives from two ninths to one third, one third to one half being assessed against employers and one sixth to four ninths against employees. At first this reform, it is expected, will cost only about $12,500,000, and it will be several years before the maximum expenditure of $25,000,000 is reached. But the measure is radical in several particulars: it applies to clerks, domestic servants, and many other classes usually not reached by measures of the kind,—a total of some 14,000,000 persons; it provides $5,000,000 a year for the maintenance of sanatoria for tuberculosis and creates new health boards to improve sanitation and educate the people in hygiene; and it furnishes physicians and medicines for the insured, thus organizing practically the whole medical force and drug supply as far as the masses are concerned.

In fact, the whole scheme may be looked on not so much as a measure to aid the sick and wounded of industry financially, as to set at work an automatic pressure working towards the preservation of the health, strength, and productive capacity of the people, and incidentally to the increase of profits. As Mr. Lloyd George said in an interview printed in the Daily Mail: "I want to make the nation more healthy than it is. The great mass of illness which afflicts us weighs us down and is easily preventable. It is a better thing to make a man healthy than to pay him so much a week when he is ill."

Mr. Lloyd George points out that the German employers have found that the governmental insurance against accidents has proved a good investment:—

"When Bismarck was strengthening the foundation of the new German Empire, one of the very first tasks he undertook was the organization of a scheme which insured the German workmen and their families against the worst evils arising from these common accidents of life. And a superb scheme it was. It has saved an incalculable amount of human misery to hundreds of thousands and possibly millions of people.

"Wherever I went in Germany, north or south, and whomever I met, whether it was an employer or a workman, a Conservative or a Liberal, a Socialist or a Trade-union Leader—men of all ranks, sections and creeds, with one accord joined in lauding the benefits which have been conferred upon Germany by this beneficent policy. Several wanted extensions, but there was not one who wanted to go back. The employers admitted that at first they did not quite like the new burdens it cast upon them, but they now fully realized the advantages which even they derived from the expenditure, for it had raised the standard of the workman throughout Germany." (My italics.)[63]

It is not only worry and anxiety that were removed, but definite and irregular sums that workers or their employers had formerly set aside for insurance against accident, sickness, and old age, were now calculated and regulated on a business basis more profitable to both parties to the labor contract. It is true that in Germany the employers only pay part of the cost, the rest being borne almost entirely by employees, while in Great Britain—as far as the old age pensions go—the government pays all, and is likely to pay a considerable part, perhaps a third, in the other insurance schemes. But the plan by which the government pays all may prove even less costly to the employing class, since landlords and inactive capitalists on the one hand and the working people on the other, pay the larger part of the taxes—so that state insurance in this thoroughgoing form is perhaps destined to be even more popular than the German kind.

The most radical provision of the new bill is that which deals with unemployment. Though applying only to the engineering and building trades, it reaches 2,400,000 people. It proposes to give a weekly allowance to every insured person who loses employment through no fault of his own, though nothing is given in strikes and lockouts. And it is intended to extend this measure to other employments. This is only the first installment.

It is probable that Mr. Churchill's project that the State should undertake to abolish unemployment altogether is the most radical of all the proposed policies, excepting only that to gradually expropriate all the future unearned increment of land.

"An industrial disturbance in the manufacturing districts and the great cities of this country," says Mr. Churchill, "presents itself to the ordinary artisan in exactly the same way as the failure of crops in a large province in India presents itself to the Hindoo cultivator. The means by which he lives are suddenly removed, and ruin in a form more or less swift and terrible stares him instantly in the face. That is a contingency which seems to fall within the most primary and fundamental obligations of any organization of government. I do not know whether in all countries or in all ages that responsibility could be maintained, but I do say that here and now, in this wealthy country and in this scientific age, it does in my opinion exist, is not discharged, and will have to be discharged."[64]

Mr. Churchill proposes not only to guard against periods of unemployment which extend to all industries in the case of industrial crises, but also to provide more steady employment for those who are unoccupied during the slack seasons of the year or while passing from one employer to another. Above all he plans that the youth of the nation shall not waste their strength entirely in unremunerative employment or in idleness, but that every boy or girl under eighteen years of age should be learning a trade as well as making a living. Few will deny that the program of Mr. Churchill and his associates in this direction marks a great step towards that "more complete or elaborate social organization" which he advocates.

One of the most significant of all the measures by which Mr. Churchill plans to lend the aid of the State to the raising of the level of the working classes is his "Development" Act. The object of this bill, in the language of Mr. Churchill, is "to provide a fund for the economic development of our country, for the encouragement of agriculture, for afforestation, for the colonization of England (the settlement of agricultural land), and for the making of roads, harbors, and other public works." Stated in these terms, the Development Act is a measure of "State Socialism" for the general industrial advance of the country, but the main argument in its behalf lies in that clause of the bill which provides, to quote from Mr. Churchill again: "that the prosecution of these works shall be regulated, as far as possible, by the conditions of the labor market, so that in a very bad year of unemployment they can be expanded, so as to increase the demand for labor at times of exceptional slackness, and thus correct and counterbalance the cruel fluctuations of the labor market."[65]

We have seen that Mr. Churchill has justified these measures, not as increasing the relative share of the working classes, but as adding to the total product. They are to add to the industrial efficiency of the nation as a whole, and so incidentally to bring a greater income to all,—but in much the same proportions as wealth now distributes itself.

In this country Mr. Roosevelt has advocated a typical "State Socialist" program of labor reforms including:—

"A workday of not more than eight hours."

"The abolition of the sweat-shop system."

"Sanitary inspection of factory, workshop, mine, and home."

"Liability of employers for injury to body and loss of life" and "an automatically fixed compensation."

"The passage and enforcement of rigid anti-child-labor laws which will cover every portion of this country."

"Laws limiting woman's labor."

All these measures except the first were adopted long ago, in considerable part at least, by the reactionary government of Prussia and are being introduced generally in monarchical and aristocratic Europe, and I have shown that the eight-hour day has been instituted for miners in Great Britain and that Mr. Winston Churchill proposed to extend it. Mr. Roosevelt himself concedes that "we are far behind the older and poorer countries" in such matters. But an examination of the action of State legislatures during the year just past will show that we are making rapid progress in the same direction.

"Social" or "industrial" efficiency, promoted by the government, is already the central idea in American labor reform. Government insurance against old age, accident, sickness, and unemployment is regarded, not as the "workingmen's compensation" for injuries done them by society, but as an automatic means of forcing backward employers to economize the community's limited supply of labor power—not to wear it out too soon, not to overstrain it, not to damage it irreparably or lay it up unnecessarily for repairs, and not to leave it idle. Mr. Louis Brandeis points out that mutual fire insurance has appealed to certain manufacturers because in twenty years it has resulted in measures that have prevented more than two thirds of the expected losses by fire. Similarly, he says, "if society and industry and the individual were made to pay from day to day the actual cost of sickness, accident, invalidity, premature death, or premature old age consequent upon excessive hours of labor, of unhygienic conditions of work, of unnecessary risk, and of irregularity in employment, those evils would be rapidly reduced."[66]

This, as Mr. Brandeis says, is undoubtedly on the "road to social efficiency" and its practical application will convince employers better than "mere statements of cost, however clear and forceful." It will remove a vast sea of human misery, and the process will immensely enrich society. But like the other State Capitalist reforms (until they are supplemented by some more radical policy) it will at the same time automatically bring about an increase of existing inequalities of income and an intensification of social injustice.

Mr. William Hard in a study of workingmen's compensation for Everybody's Magazine has reached a similar conclusion to that of Mr. Brandeis: "Far from attacking the present relationship between employer and employee, automatic compensation specifically recognizes it. The backbone of the present so-called 'capitalism'; namely, the hiring of the unpropertied class by the propertied class to do work for wages, is not caused by automatic compensation to lose a single vertebra, and automatic compensation has nothing whatever to do with Socialism except that it is accomplished under the supervision of the State." If compulsory insurance against accidents "has nothing whatever to do with Socialism," neither have compulsory insurance against sickness, against old age, against certain phases of unemployment.

The social reformers propose a labor policy that is for the people whether they like it or not; the only "rights" it gives them are "the right to live" and "the right to work." Its first object is to produce more efficient and profitable laborers, its second to have the government take control of organized charity, to which aspect I must now turn. Most of the labor reforms, enacted to secure for the laborer "what for the Nation's sake even the poorest of its subjects should have," have been urged more strongly by philanthropists and political economists than by representatives of the workers. In America "the minimum wage," for example, is being worked up by a special committee consisting almost exclusively of this class, while workmen's compensation has been indorsed by the most varied political and social elements, from the chief organ of American philanthropists, and Theodore Roosevelt, to the Hearst newspapers.

With "the national efficiency" in view, Mr. Webb asks the British government to take up the policy of a "national minimum," including not only a minimum below which wages are not to fall, but also a similar minimum of leisure, sanitation, and education.[67] Mr. Edward Devine, editor of the leading philanthropic and reform journal in America, the Survey, outlines an identical policy and also insists like Mr. Webb that the Socialist can lay no exclusive claim to it.

"The social economist [i.e. reformer]," writes Mr. Devine, "is sometimes confused with the Utopian [i.e. Socialist]. They are, however, very distinct types of reformers. The Utopian dreams of ideals. The social economist seeks to establish the normal.... The social worker is primarily concerned, not with the lifting of humanity to a higher level, but with eradicating the maladjustments and abnormalities, the needless inequalities, which prevent our realizing our own reasonable standards."

Speaking in the name of American reformers in general, Mr. Devine demands for the lower levels of society "normal standards" of life, which are equivalent to Mr. Webb's national minimum, and definitely denies the applicability of "the question-begging epithet of Socialism which is hurled at all the reformers engaged in such work."

"Whether it belongs to the Socialist program," Mr. Devine objects, "is a question so far as we can see of interest only to the Socialists. Our advocacy of such laws as we enumerate has no Socialist origin." He claims that the "expenditures legitimately directed towards the removal of adverse social conditions, are not uneconomic and unproductive," and that "they do not represent a mere indulgence of altruistic sentiment," but are "investments"; of which prison reforms and the expenditures for the prevention of tuberculosis are examples.[68]

Another phrase for the proposed saving of the national labor resources and the introduction of minimum standards in its philanthropic aspect is "the abolition of poverty." When he speaks of this as a definite and by no means a distant reform, the reformer refers to that extreme form of poverty, so widely prevalent to-day, which results in the physical deterioration and the industrial inefficiency of a large part of the population.

This sort of poverty is a burden on industry and the capitalists, and Mr. Lloyd George was widely applauded when he said that it can and must be done away with. He has calculated, too, that this abolition can be accomplished at half the cost of the annual increase in armaments.

"This is a War Budget," said Mr. Lloyd George in presenting the reform program of 1910. "It is for waging implacable war against poverty and squalidness. I cannot help hoping and believing that before this generation has passed away we shall have advanced a great step toward the time when poverty, and the wretchedness and the human degradation which always follows in its camp, will be as remote from the people of this country as the wolves which once infested its forests."

Mr. H. G. Wells, who has been a leading figure in the British reform world and in the Fabian Society for many years, speaks on this reform movement not merely as a keen outside observer. As an advocate of more radical measures, he argues that there is nothing Socialistic about "the national minimum." This "philanthropic administrative Socialism," as Mr. Wells calls it, is very remote, he says, from the spirit of his own.[69] Yet, critical as Mr. Wells is, he also advocates a policy that could be summed up in the single phrase, "industrial efficiency." "The advent of a strongly Socialistic government would mean no immediate revolutionary changes at all," he says. "There would be no doubt an educational movement to increase the economic value and productivity of the average citizen of the next generation, and legislation upon the lines laid down by the principle of the 'minimum wage' to check the waste of our national resources by destructive employment. Also a shifting of the burden of taxation of enterprise to rent would begin." (My italics.) The Liberals who are already setting these reforms on foot disclaim any connection whatever with Socialism, but Mr. Wells argues that they do not realize the real nature of their policy.

The establishment of this paternal "State Socialism," whether based on a philanthropic "national minimum" or a scientific policy of "industrial efficiency," many other "Socialists" besides those of Great Britain consider to be the chief task of Socialism itself in our generation. Among the latter was the late Edmond Kelly, a member of the Socialist party in this country at the time of his death, who, in his posthumous work, "Twentieth Century Socialism," has summed up his political faith in much the same way as the anti-Socialist reformer might have done. He says that three of the four chief objects of Socialism are the organization of society, first "to prevent that overwork and unemployment which lead to drunkenness, pauperism, prostitution, and crime"; second, "to preserve the resources of the country"; and third, "to produce with the greatest economy, with the greatest efficiency."[70] Yet Mr. Carnegie and Mr. Rockefeller, as well as Mr. Roosevelt, agree to all three of these policies. They are precisely what the leading Socialists have called "State Socialism."

A part of the working people, also, are disposed to subordinate their own conceptions of what is just, in spite of their own better judgment, to an exclusive longing for an immediate trial of this kind of State benevolence. This is expressed in the widely used phrase, "every man to have the right to work and live,"—employed editorially, for example, by Mr. Berger, now Socialist Congressman. What is demanded by this principle is not a greater proportion of the national income or an increasing share of the control over the national government, but the "State Socialist" remedies, employment, and the minimum wage. In its origin this is the begging on the part of the economically lowest element, a class which Henry George well remarks has been degraded by poverty until it considers that "the chance to labor is a boon."

Some years ago the municipal platform of the Milwaukee Socialists said that it must be borne in mind "that the famine-stricken is better served with a piece of bread than with the most brilliant program of the future" and that "in view of the hopelessness of an immediate radical betterment in the position of the working class" it is necessary to emphasize the importance of attaining "the next best."[71] Here again was admitted complete dependence on those who own the bread and have the disposition of "the next best" in political reforms. When capitalism is a little better organized, the working people will be guaranteed "the next best": steady work and the food, conditions, and training necessary to make that work efficient—just as surely as valuable slaves were given these rights by intelligent masters or as valuable horses even are given care and kindly treatment to-day.

"A Socialist Social Worker" has published anonymously in the Survey a letter which presents in a few words the whole Socialist position as to this type of reform. The writer claims that the very fact that he is a social worker shows that even as a Socialist he welcomes "every addition to the standard of living that may be wrested or argued from the Capitalist class," since all Socialists recognize that "no undernourished class ever won a fight against economic exploitation, but that the more is given the more will be demanded and secured." But he does not feel that the material betterments have any closer relation to Socialism.

"The new feudalism," he says, "will care for and conserve the powers of the human industrial tool as the lord of the manor looked after the human agricultural implement...." Here is the essential point: the efficiency of the human industrial tool is to be improved with or without his consent.

"Unrestrained Capitalism," says the same writer in explanation of his prediction, "has hitherto invariably meant the physical deterioration of the working class and the marginal disintegration of society—the loosening of social ties and the pushing of marginal members of society over the brink into poverty, pauperism, vagrancy, drunkenness, prostitution, wife desertion and crime, but this deterioration is not the main indictment against capitalism, and will be remedied by the wiser capitalists themselves. The main indictment of capitalism is that it selfishly and stupidly blocks the road of orderly and continuous progress for the race."