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places and bringing forth a vigorous crop of goods and services and making the world into one great market united by the bonds of industry and finance. In many large industrial companies nowadays, shares of i each or less are now issued, and in this way capitalism has been democratized to an extent which a hundred years ago would have been thought quite incredible. Enormous enterprises, the most obvious example of which are the Egyptian pyramids, have been carried out in the past by means of slave labour employed by tyrants; and the Roman roads and aqueducts are another example of what could be done by the application of state management to a highly disciplined people. But the most notable achievement of modern capitalism is that it has vastly increased the productive power of mankind by making use of the resources of thousands of individuals volun- tarily subscribing their money in the hope of profit which can only be earned if the consuming public will voluntarily buy the goods and services produced. Thus capitalism is essentially based on freedom the freedom of the subscriber in risking his money, and the freedom of the consumer in giving or withholding his custom and the profit that it makes possible. It opens its pocket freely sometimes too freely to anyone who can persuade it that an enterprise is likely to be profitable. Under it the way is open from the bottom of the ladder to the top for those who have the diligence, determination, capacity, and luck to climb; and they can climb only by producing something that will fetch a good price in the market of their fellow-creatures' needs and desires. The freedom of capitalism is thus limited by the con- sumers' veto. It can only succeed by pleasing the ultimate buyer and cooperating with the consumer by satisfying his needs.

Prejudice against Capitalism. Nevertheless, capitalism is per- haps now more virulently criticized than any other human in- stitution, largely owing to the belief that it involves robbery of the wage-earning classes by those who place the means of pro- duction at their disposal and pay them wages for working upon them. The prejudice against capitalism could not be as wide as it is unless there were some foundation for it; and in the first half century in which modern capitalism was active the exploita- tion of the wage-earners through low wages, long hours, dis- graceful working conditions and ruthless dismissal at any time when it seemed more profitable to the employers to reduce out- put, was carried on to an extent which is now seen to have been criminal. This seems to be the reason for the astonishing hold which the works of Karl Marx have exercised upon those of the wage-earners who are attracted by his revolutionary doctrines. It is admitted by Marx's most fervent admirers that most of his theories were wrong, that many of his assertions were incorrect, and that most of his forecasts have been proved to be baseless. But the fact remains that he was able to describe a state of things in English industry on the authority of official documents which was entirely disgraceful; and the wage-earners, who prob- ably seldom study his works but usually rely upon a summary of their contents, find that with regard to the exploitation of the worker he has a solid basis of facts which are known to them by the tradition they have received from their forbears who worked under the miserable conditions that he describes.

It need not be said that since the middle of the igth century there has been a very great change in this respect, thanks to Factory Acts, the growing strength of the trade unions and a more humane and sensible spirit among the employers; and it is interesting to consider why it should be that the employers of the first half of the igth century, most of whom were probably quite human and kindly people who thought that they were doing their best according to their lights, should have treated those who worked for them in a manner which now seems to us so inhuman. In the first place, we must remember that a very large number of them in those days were men who had risen from the ranks and had themselves had to suffer the hardships which they imposed on others, and, since they had come through them successfully, did not see any reason why anything better should be done for those who worked under them. But a further excuse has to be found for the men of noble lineage and high intellectual attainment, who also suffered barbarities to be perpe-

trated in the mines and factories which they owned; and this ex- cuse is provided by the pessimistic utterances of economists such as Adam Smith, Malthus and Ricardo, who stated or implied that the pay of the wage-earners could not rise above the level required to maintain them as efficient workers; and that any attempt to improve their condition would simply lead to an increase in their number by procreation which would inevitably defeat the efforts of those who tried to improve their lot. With doctrines such as this in the air, and expounded by high author- ity, there is some reason to excuse wickedness or mistakes which have cost the industrial world dear by the legacy of bitterness and suspicion which they have left behind.

Capitalism and Wages. It is also true that too many modern capitalists are still apt to resent any attempt on the part of the wage-earners to improve their lot by demanding better wages and shorter hours of work, and do not seem able to perceive how entirely short-sighted such resentment is. When the wage- earners are confronted, every time they ask for an improvement, by demonstrations on the part of capitalists that its granting would immediately ruin the industry in which they are concerned, and when nevertheless they insist upon the improvement and then find that the industry is by no means ruined but goes ahead to fresh prosperity, it is natural and inevitable that the wage- earners should be filled with a deep distrust of any statement made by their employers concerning what is and what is not possible to be granted by industry. And it is not only owing to this distrust and bitterness that this policy on the part of em- ployers has been short-sighted. They might have recognized that for all the great staple commodities the wage-earning classes are already, and will be to an increasing degree, the most im- portant consumers; and therefore that those who are engaged in making any product of general use will find it to their own inter- est that the general level of wages should be high so that there should be a good and steady demand for the product which they have to sell. It may be true from the point of view of the next balance sheet that it will pay any individual employer to pay as low wages as possible to his workmen, but he ought to recognize that what he needs is that all the workers in all other industries should be paid as well as possible and that he, by paying his own workers low, is doing what he can to depress the general level and so defeat his own objects in securing a market. This is quite apart from the wider question how far low wages involve cheap production. Up to a point, and as long as the wage-earners can be induced to give a fair day's work in return for their wage, experience has shown especially in America that high wages are an important item in cheapening production. Lately, and especially since the war, experience has shown that increases of wages have been followed by absenteeism on the part of the workers, and slack work while they are at work. Up to this point it should be the ambition of enlightened employers to pay the highest wages that the industry can stand. Capitalism in- creases its own efficiency and those of its wage-earners up to the point at which it enables them to improve their health and efficiency by paying higher wages; but when, as sometimes happens, the wage-earner simply has no use for any increase in his money receipts, then higher wages merely mean that he works fewer days in the week. The only remedy for this dead- lock seems to be the education of the worker in the habit of accumulating for himself out of any surplus that he earns. If the wage-earners could thus be induced by accumulation to become capitalists themselves, it is possible that an improvement, the extent of which it is quite impossible to measure, might be secured in the relations between labour and capital.

Charges Examined. If then we admit, as we must, that the early days of modern capitalism were marked by serious injustice inflicted on the manual workers, and that even to-day employers are much too ready to resist demands on the part of labour for improvements in its conditions, it must at the same time be remembered that these faults in the working of capitalism do not necessarily imply any essential injustice in the system or any blots upon it which cannot be improved out of existence. If the early employers, taking advantage of the unorganized state