IX. Industrial Economics

Before entering upon the application of our fundamental principles to our fifth division, insurance, or security, I desire to group certain deductions, both critical and constructive, that we may better see the paramount importance of freedom in industrial economics.

1. DIVISION OF LABOR is an outgrowth of social progress, essential to the augmentation of wealth, the evils incidental to it being the result of extraneous causes; and Economists, in speaking of limitations and disadvantages of this social law, have shown their incompetence to clearly analyze the essential factors of the industrial problem. It is not in division, but in the subordination of division to privilege that the Economists make the error of ascribing disadvantages to a law evolved in social growth. The element of freedom lacking in exchange, division consequently falls under the control of prerogative, hence the limitations and disadvantages of which Economists learnedly prate.

2. MACHINERY socializes where division isolates. Machinery is to the industrial toiler what the musket is to the militant supporter, a tool by which their respective lines of activity are rendered effective. In the cheapening of products, in the annihilation of time by the telegraph and of space by the railway, and the countless facilities to comfort with which we are surrounded, we see the social results of machinery. Economists never weary of dwelling on the benefits of labor saved by the use of machinery, but gloss over the actual fact that a rapid increase of mechanical appliances tends to render the artisan a superfluous quantity and a marketless tool. Under natural relations whatever tends to lessen the exhaustiveness of toil and cheapen products, should also redound to the direct, no less than the indirect, benefit of the individual laborer. Here, again, we find freedom lacking in distribution and are forced to look elsewhere for the source of the restrictions to ascertain whether they arise from natural causes or artificial interference.

3. MONOPOLY has been fostered under the delusive pretext of protecting industry by hedging in a portion of human activity at the expense of the rest; and at the same time, as zealously protecting the very restrictions of which labor complains. The opposite school, having a partial view of the truth that the law of supply and demand can only have full course under liberty, and that all interference but hampers their natural adaptation to each other, still believed that they were contending under that standard while limiting their demands for freedom of trade to the manufactured product, an error which even Herbert Spencer has not escaped. In asserting theoretical liberty for labor and capital, they are blind to the fact that labor was handicapped, inasmuch as the capital employed was the offspring of monopoly. Thus their freedom only enters in after monopolized production has thrown the product on the market, and is never conceived as entering into relations prior to production. Consequently, in the present “strained relations between capital and labor” we find the “freedom of contract” a meaningless phrase, and professed apostles of liberty, like Amasa Walker, delivering themselves as follows:

“In relation to capital and labor, there must be a just proportion of each to the most efficient production, – sufficient labor for the capital, and capital for the labor: so there must be sufficient enterprise, business talent and tact to use both; and the several parties must be left to act voluntarily; under the instincts of human nature and the laws of value.”{43}

Whether legalization of the lower instincts and the speculative laws now dominant tend to the higher evolution of free action, our apostle of liberty sayeth not.

4. COMPETITION is the exact opposite, not parent of monopoly. Freedom is essential to true competition, and wherever restriction exists on one side, it implies privilege on the other, and in so far competition ceases: monopoly rather than competition now exists. In the abrogation of privilege competition becomes not only free, but acts, as the governor on an engine, self-regulative and bringing cost as the mean of price. “Our friends, the enemy,” the Socialists, in flying into a passion at the mention of competition but thereby betray their own logical adherence to the militant camp, for liberty includes and implies freedom to compete.

But that cannot in justice be called a competitive system where wages are constantly depressed as with an iron hand as a definite residual dividend; and the divorce between labor and capital justified as calling in an “indispensable” go-between whose earnings, or profits, “constitute a special or fourth branch of the national income, co-ordinate with rent, wages, and interest on capital” – and hailed as an extension of freedom.{44}

5. THE REAL PROBLEM is a far deeper one than enters into the arguments of the advocates of protection and restriction, or of a post-production liberty. It is the same as has for centuries past underlain all struggles in social progress and which, looking back over the centuries, we find recorded as ever won for the sovereignty of the individual, the widening of the sphere of personal initiative, the conflict between militant authority and personal liberty. The renaissance of mind from scholastic tyranny; the revolt of Luther and his followers against mental dictation; the temporary compromise in religious toleration; the insurrection against kingcraft leading in its triumph to the toleration of political opinions; – have now logically led to an insurrection against economic subjection to the privileges usurped and hotly defended by capital in its alliance with labor, and calling from thinkers of all schools – even from economic Hessian allies – the prediction that unless an equitable adjustment be found, civilization must again go through the parturition pangs of revolutionary strife and bloodshed. By one or other of these antagonistic principles must every proposed solution be tested, and reposing confidently on the historical development of progress, wherein even the man of genius is but “the secretary of his age,” {45} we assert that no answer can be given to the eternal conflict that is not based upon full freedom to human activity : for freedom destroys strife by removing its cause – denial of freedom.

With these deductions for our guide we began the search for economic laws based upon justice, enlightened by wisdom, supported by truth, in which alone industry can find its goal in equitable cooperation. Taking these, therefore, as the basis of industrial economics, rather than laws describing modes of action under inequitable conditions, we have been led to demand for labor:

6. FREE LAND, that labor in its struggle shall not forever find the source of production the ward of monopoly, and thus left upon as unequal a footing to compete in production as existed between the slave and his master. That as land is the source of production its real, or natural, value lies in its use, not what it will bring where privilege exists to give it a fictitious value. One of the effects of this would be the elimination of rent as a necessary prelude to occupancy, or a factor in the distribution of the shares of production. That under freedom of access to vacant land, and the spring it would give to production, labor would determine a juster proportionality of values between products, wherein alone real value exists.

We see in nationalization of land but a recurrence to militancy in its methods, and its application beset with many fatal compromises. Mr. George utterly mistakes the problem in asserting:

“This thing is absolutely certain: Private property in land blocks the way of advancing civilization. The two cannot long co-exist.”{46}

To one who accepts authority, rather than liberty, as a guiding principle, the conclusion may be natural; but to one who endeavors to square his principles by the test of liberty, whether land be called private property or not, after it has ceased to be a factor in economic exploitation, is immaterial. Liberty cannot deny the calling of one’s possession of anything his own. It is in the power given by legalization to hold for speculative purposes, not particular possession for occupancy, that the danger to civilization lies. We also submit that making it “common property” involves invasion of individual freedom to use, for it can be neither so made nor so maintained except by militant methods, whether under George’s or Most’s attempted organization of liberty.{47}

Further, Mr. George’s scheme does not solve the problem, for it leaves capital still armed with power to exploit, which his scheme ignores, and which would still leave capital a preferred bidder for land even under single tax “direction.” Edmund About{48} says that on January 1, 1851, it was estimated that there were in France 7,846,000 owners of real estate, out of 36,000 population, a proportion of about 1 to 4½. Yet he adds:

“Out of these 7,846,000 property owners, 8,000,000 were considered paupers, or so nearly so as to be excused on that ground from personal taxation. It was estimated that there were 600,000 whose tax on principal did not exceed one cent per annum. Those calculations were in 1851 . The division of the soil has since gone still further.”

Here was an extraordinary extension of the right and opportunity to the possession of soil which did not carry with it opportunity to full use.

7. FREE we have seen would break the monopoly now possessed by currency, the instrument of exchange, and also could open full use of the possession of land. To day the small retail dealer cannot compete with the merchant prince in the purchase of goods, any more than the mechanic who buys his coal by the bushel enters into competition with one who buys his year’s supply by the cargo. Has the workman equal freedom to compete with the employer of labor ? Can “hands” enter the market on equal term with the wealthy contractor? But why not? Because behind the capitalist, as we now find him, privilege lends support which transforms the result of honest industry into a hideous Moloch standing with outstretched arms to receive as sacrificial victims the toilers who have made that capital possible. The legalized power given to money determines the difference; it makes it more than the mere instrument of exchange; it becomes an implement of exploitation, having a fictitious value and culling from industry to increase by payment for use. Thus claiming that “yesterday’s labor” is more than wealth acquired, and through interest entitled to prerogatives not granted to today&#!46;s labor, but even taken from it. We thus see that it is not capital per se that liberty assails, but the artificial power it usurps; that under equal freedom, where no privilege exists to entail exploitation, it is as harmless as we have seen private property would be. Capital itself is man’s best friend, the true social savior that opens the march of progress and that has transformed society from warlike to peaceful pursuits. But under the crucifying hands of legalization, where prerogative mocks at penury, its mission is thwarted and it becomes a ravenous beast. As Satan is said to have once been an angel of light, so, in the denial of equal freedom to the capitalization of the fruits of labor, capital has become a demon of hell, and beyond the power of redemption by single-tax sanctification.

8. MUTUAL BANKING we have seen would open the door for relief. In the absence of artificial restraint upon individual activity, that every one in possession of returns for labor applied, endorsed by business capacity or not, whether individually or by association, could command credit to the extent of their honestly acquired wealth, or confidence in their pledge of labor force, and use their own labor as a basis for increased production. Whether production would then be individualistic or associative – on which point the author has strong convictions – would not in the least alter the case. Freedom to normal growth secured, its natural course is a detail which would regulate itself. The fact remains that under release from compulsory rent, and cessation of usury, energy and capacity would be more assiduously cultivated and command greater confidence than a State certificate for honesty, and thereby create an ample medium for exchange based on labor products. To doubt it is to assert that capacity and energy, together with inventive talent, can only germinate where exhaustive mental or manual labor most exist, and where rest and recreation are least known.

Credit would be a matter of confidence in both security and character, and character would be as essential an element then as shrewdness and cunning are now. “Business” emancipated from inequitable conditions would continue as uninterruptedly as under the present system of a mortgage security on the source of production where labor toils for another’s benefit, and the benumbing effect of a Frankenstein-State no longer repress individuality nor inspire the superstitious with awe.