Title: The Acquisitive Society
Author: Tawney, R. H.
Language: English
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THE ACQUISITIVE SOCIETY



BY

R. H. TAWNEY


FELLOW OF BALLIOL COLLEGE, OXFORD; LATE MEMBER
  OF THE COAL INDUSTRY COMMISSION



NEW YORK

HARCOURT, BRACE AND COMPANY



COPYRIGHT, 1920, BY

HARCOURT, BRACE AND HOWE, INC.



PRINTED IN THE U. S. A. BY

THE QUINN & BODEN COMPANY

RAHWAY, N. J.



CONTENTS


CHAPTER

    I  INTRODUCTORY
   II  RIGHTS AND FUNCTIONS
  III  THE ACQUISITIVE SOCIETY
   IV  THE NEMESIS OF INDUSTRIALISM
    V  PROPERTY AND CREATIVE WORK
   VI  THE FUNCTIONAL SOCIETY
  VII  INDUSTRY AS A PROFESSION
 VIII  THE "VICIOUS CIRCLE"
   IX  THE CONDITION OF EFFICIENCY
    X  THE POSITION OF THE BRAIN WORKER
   XI  PORRO UNUM NECESSARIUM



_The author desires to express his acknowledgments to the Editor of
the_ Hibbert Journal _for permission to reprint an article which
appeared in it_.



{1}

THE ACQUISITIVE SOCIETY


I

INTRODUCTORY

It is a commonplace that the characteristic virtue of Englishmen is
their power of sustained practical activity, and their characteristic
vice a reluctance to test the quality of that activity by reference to
principles.  They are incurious as to theory, take fundamentals for
granted, and are more interested in the state of the roads than in
their place on the map.  And it might fairly be argued that in ordinary
times that combination of intellectual tameness with practical energy
is sufficiently serviceable to explain, if not to justify, the
equanimity with which its possessors bear the criticism of more
mentally adventurous nations.  It is the mood of those who have made
their bargain with fate and are content to take what it offers without
re-opening the deal.  It leaves the mind free to concentrate
undisturbed upon profitable activities, because it is not distracted by
a taste for unprofitable speculations.  Most generations, it might be
said, walk in a path which they neither make, nor discover, but accept;
the main thing is that they should march.  The blinkers worn by
Englishmen enable them to trot all the more steadily along the beaten
{2} road, without being disturbed by curiosity as to their destination.

But if the medicine of the constitution ought not to be made its daily
food, neither can its daily food be made its medicine.  There are times
which are not ordinary, and in such times it is not enough to follow
the road.  It is necessary to know where it leads, and, if it leads
nowhere, to follow another.  The search for another involves
reflection, which is uncongenial to the bustling people who describe
themselves as practical, because they take things as they are and leave
them as they are.  But the practical thing for a traveler who is
uncertain of his path is not to proceed with the utmost rapidity in the
wrong direction: it is to consider how to find the right one.  And the
practical thing for a nation which has stumbled upon one of the
turning-points of history is not to behave as though nothing very
important were involved, as if it did not matter whether it turned to
the right or to the left, went up hill or down dale, provided that it
continued doing with a little more energy what it has done hitherto;
but to consider whether what it has done hitherto is wise, and, if it
is not wise, to alter it.  When the broken ends of its industry, its
politics, its social organization, have to be pieced together after a
catastrophe, it must make a decision; for it makes a decision even if
it refuses to decide.  If it is to make a decision which will wear, it
must travel beyond the philosophy momentarily in favor with the
proprietors of its newspapers.  Unless it is to move with the energetic
futility of a squirrel in a revolving cage, it must have a clear
apprehension both of the {3} deficiency of what is, and of the
character of what ought to be.  And to obtain this apprehension it must
appeal to some standard more stable than the momentary exigencies of
its commerce or industry or social life, and judge them by it.  It
must, in short, have recourse to Principles.


Such considerations are, perhaps, not altogether irrelevant at a time
when facts have forced upon Englishmen the reconsideration of their
social institutions which no appeal to theory could induce them to
undertake.  An appeal to principles is the condition of any
considerable reconstruction of society, because social institutions are
the visible expression of the scale of moral values which rules the
minds of individuals, and it is impossible to alter institutions
without altering that moral valuation.  Parliament, industrial
organizations, the whole complex machinery through which society
expresses itself, is a mill which grinds only what is put into it, and
when nothing is put into it grinds air.  There are many, of course, who
desire no alteration, and who, when it is attempted, will oppose it.
They have found the existing economic order profitable in the past.
They desire only such changes as will insure that it is equally
profitable in the future.  _Quand le Roi avait bu, la Pologne était
ivre_.  They are genuinely unable to understand why their countrymen
cannot bask happily by the fire which warms themselves, and ask, like
the French farmer-general:--"When everything goes so happily, why
trouble to change it?"  Such persons are to be pitied, for they lack
the social quality which is {4} proper to man.  But they do not need
argument; for Heaven has denied them one of the faculties required to
apprehend it.

There are others, however, who are conscious of the desire for a new
social order, but who yet do not grasp the implications of their own
desire.  Men may genuinely sympathize with the demand for a radical
change.  They may be conscious of social evils and sincerely anxious to
remove them.  They may set up a new department, and appoint new
officials, and invent a new name to express their resolution to effect
something more drastic than reform, and less disturbing than
revolution.  But unless they will take the pains, not only to act, but
to reflect, they end by effecting nothing.  For they deliver themselves
bound to those who think they are practical, because they take their
philosophy so much for granted as to be unconscious of its
implications, and directly they try to act, that philosophy re-asserts
itself, and serves as an overruling force which presses their action
more deeply into the old channels.  "Unhappy man that I am; who shall
deliver me from the body of this death?"  When they desire to place
their economic life on a better foundation, they repeat, like parrots,
the word "Productivity," because that is the word that rises first in
their minds; regardless of the fact that productivity is the foundation
on which it is based already, that increased productivity is the one
characteristic achievement of the age before the war, as religion was
of the Middle Ages or art of classical Athens, and that it is precisely
in the century which has seen the greatest increase in {5} productivity
since the fall of the Roman Empire that economic discontent has been
most acute.  When they are touched by social compunction, they can
think of nothing more original than the diminution of poverty, because
poverty, being the opposite of the riches which they value most, seems
to them the most terrible of human afflictions.  They do not understand
that poverty is a symptom and a consequence of social disorder, while
the disorder itself is something at once more fundamental and more
incorrigible, and that the quality in their social life which causes it
to demoralize a few by excessive riches, is also the quality which
causes it to demoralize many by excessive poverty.

"But increased production is important."  Of course it is!  That plenty
is good and scarcity evil--it needs no ghost from the graves of the
past five years to tell us that.  But plenty depends upon co-operative
effort, and co-operation upon moral principles.  And moral principles
are what the prophets of this dispensation despise.  So the world
"continues in scarcity," because it is too grasping and too
short-sighted to seek that "which maketh men to be of one mind in a
house."  The well-intentioned schemes for social reorganization put
forward by its commercial teachers are abortive, because they endeavor
to combine incompatibles, and, if they disturb everything, settle
nothing.  They are like a man who, when he finds that his shoddy boots
wear badly, orders a pair two sizes larger instead of a pair of good
leather, or who makes up for putting a bad sixpence in the plate on
Sunday by putting in a bad shilling the next.  And when their fit of
feverish energy {6} has spent itself, and there is nothing to show for
it except disillusionment, they cry that reform is impracticable, and
blame human nature, when what they ought to blame is themselves.

Yet all the time the principles upon which industry should be based are
simple, however difficult it may be to apply them; and if they are
overlooked it is not because they are difficult, but because they are
elementary.  They are simple because industry is simple.  An industry,
when all is said, is, in its essence, nothing more mysterious than a
body of men associated, in various degrees of competition and
co-operation, to win their living by providing the community with some
service which it requires.  Organize it as you will, let it be a group
of craftsmen laboring with hammer and chisel, or peasants plowing their
own fields, or armies of mechanics of a hundred different trades
constructing ships which are miracles of complexity with machines which
are the climax of centuries of invention, its function is service, its
method is association.  Because its function is service, an industry as
a whole has rights and duties towards the community, the abrogation of
which involves privilege.  Because its method is association, the
different parties within it have rights and duties towards each other;
and the neglect or perversion of these involves oppression.

The conditions of a right organization of industry are, therefore,
permanent, unchanging, and capable of being apprehended by the most
elementary intelligence, provided it will read the nature of its
countrymen in the large outlines of history, not in the bloodless {7}
abstractions of experts.  The first is that it should be subordinated
to the community in such a way as to render the best service
technically possible, that those who render no service should not be
paid at all, because it is of the essence of a function that it should
find its meaning in the satisfaction, not of itself, but of the end
which it serves.  The second is that its direction and government
should be in the hands of persons who are responsible to those who are
directed and governed, because it is the condition of economic freedom
that men should not be ruled by an authority which they cannot control.
The industrial problem, in fact, is a problem of right, not merely of
material misery, and because it is a problem of right it is most acute
among those sections of the working classes whose material misery is
least.  It is a question, first of Function, and secondly of Freedom.



{8}

II

RIGHTS AND FUNCTIONS

A function may be defined as an activity which embodies and expresses
the idea of social purpose.  The essence of it is that the agent does
not perform it merely for personal gain or to gratify himself, but
recognizes that he is responsible for its discharge to some higher
authority.  The purpose of industry is obvious.  It is to supply man
with things which are necessary, useful or beautiful, and thus to bring
life to body or spirit.  In so far as it is governed by this end, it is
among the most important of human activities.  In so far as it is
diverted from it, it may be harmless, amusing, or even exhilarating to
those who carry it on, but it possesses no more social significance
than the orderly business of ants and bees, the strutting of peacocks,
or the struggles of carnivorous animals over carrion.

Men have normally appreciated this fact, however unwilling or unable
they may have been to act upon it; and therefore from time to time, in
so far as they have been able to control the forces of violence and
greed, they have adopted various expedients for emphasizing the social
quality of economic activity.  It is not easy, however, to emphasize it
effectively, because to do so requires a constant effort of will,
against which egotistical instincts are in rebellion, and because, if
that will is to prevail, it must be embodied in some social {9} and
political organization, which may itself become so arbitrary,
tyrannical and corrupt as to thwart the performance of function instead
of promoting it.  When this process of degeneration has gone far, as in
most European countries it had by the middle of the eighteenth century,
the indispensable thing is to break the dead organization up and to
clear the ground.  In the course of doing so, the individual is
emancipated and his rights are enlarged; but the idea of social purpose
is discredited by the discredit justly attaching to the obsolete order
in which it is embodied.

It is not surprising, therefore, that in the new industrial societies
which arose on the ruins of the old régime the dominant note should
have been the insistence upon individual rights, irrespective of any
social purpose to which their exercise contributed.  The economic
expansion which concentrated population on the coal-measures was, in
essence, an immense movement of colonization drifting from the south
and east to the north and west; and it was natural that in those
regions of England, as in the American settlements, the characteristic
philosophy should be that of the pioneer and the mining camp.  The
change of social quality was profound.  But in England, at least, it
was gradual, and the "industrial revolution," though catastrophic in
its effects, was only the visible climax of generations of subtle moral
change.  The rise of modern economic relations, which may be dated in
England from the latter half of the seventeenth century, was coincident
with the growth of a political theory which replaced the conception of
purpose by that of mechanism.  During a great part of history men had
{10} found the significance of their social order in its relation to
the universal purposes of religion.  It stood as one rung in a ladder
which stretched from hell to Paradise, and the classes who composed it
were the hands, the feet, the head of a corporate body which was itself
a microcosm imperfectly reflecting a larger universe.  When the
Reformation made the Church a department of the secular government, it
undermined the already enfeebled spiritual forces which had erected
that sublime, but too much elaborated, synthesis.  But its influence
remained for nearly a century after the roots which fed it had been
severed.  It was the atmosphere into which men were born, and from
which, however practical, or even Machiavellian, they could not easily
disengage their spirits.  Nor was it inconvenient for the new
statecraft to see the weight of a traditional religious sanction added
to its own concern in the subordination of all classes and interests to
the common end, of which it conceived itself, and during the greater
part of the sixteenth century was commonly conceived, to be the
guardian.  The lines of the social structure were no longer supposed to
reproduce in miniature the plan of a universal order.  But common
habits, common traditions and beliefs, common pressure from above gave
them a unity of direction, which restrained the forces of individual
variation and lateral expansion; and the center towards which they
converged, formerly a Church possessing some of the characteristics of
a State, was now a State that had clothed itself with many of the
attributes of a Church.

The difference between the England of Shakespeare, {11} still visited
by the ghosts of the Middle Ages, and the England which merged in 1700
from the fierce polemics of the last two generations, was a difference
of social and political theory even more than of constitutional and
political arrangements.  Not only the facts, but the minds which
appraised them, were profoundly modified.  The essence of the change
was the disappearance of the idea that social institutions and economic
activities were related to common ends, which gave them their
significance and which served as their criterion.  In the eighteenth
century both the State and the Church had abdicated that part of the
sphere which had consisted in the maintenance of a common body of
social ethics; what was left of it was repression of a class, not the
discipline of a nation.  Opinion ceased to regard social institutions
and economic activity as amenable, like personal conduct, to moral
criteria, because it was no longer influenced by the spectacle of
institutions which, arbitrary, capricious, and often corrupt in their
practical operation, had been the outward symbol and expression of the
subordination of life to purposes transcending private interests.  That
part of government which had been concerned with social administration,
if it did not end, became at least obsolescent.  For such democracy as
had existed in the Middle Ages was dead, and the democracy of the
Revolution was not yet born, so that government passed into the
lethargic hand of classes who wielded the power of the State in the
interests of an irresponsible aristocracy.  And the Church was even
more remote from the daily life of mankind than the State.
Philanthropy abounded; but religion, {12} once the greatest social
force, had become a thing as private and individual as the estate of
the squire or the working clothes of the laborer.  There were special
dispensations and occasional interventions, like the acts of a monarch
who reprieved a criminal or signed an order for his execution.  But
what was familiar, and human and lovable--what was Christian in
Christianity had largely disappeared.  God had been thrust into the
frigid altitudes of infinite space.  There was a limited monarchy in
Heaven, as well as upon earth.  Providence was the spectator of the
curious machine which it had constructed and set in motion, but the
operation of which it was neither able nor willing to control.  Like
the occasional intervention of the Crown in the proceedings of
Parliament, its wisdom was revealed in the infrequency of its
interference.

The natural consequence of the abdication of authorities which had
stood, however imperfectly, for a common purpose in social
organization, was the gradual disappearance from social thought of the
idea of purpose itself.  Its place in the eighteenth century was taken
by the idea of mechanism.  The conception of men as united to each
other, and of all mankind as united to God, by mutual obligations
arising from their relation to a common end, which vaguely conceived
and imperfectly realized, had been the keystone holding together the
social fabric, ceased to be impressed upon men's minds, when Church and
State withdrew from the center of social life to its circumference.
What remained when the keystone of the arch was removed, was private
rights and private interests, the materials of a society rather {13}
than a society itself.  These rights and interests were the natural
order which had been distorted by the ambitions of kings and priests,
and which emerged when the artificial super-structure disappeared,
because they were the creation, not of man, but of Nature herself.
They had been regarded in the past as relative to some public end,
whether religion or national welfare.  Henceforward they were thought
to be absolute and indefeasible, and to stand by their own virtue.
They were the ultimate political and social reality; and since they
were the ultimate reality, they were not subordinate to other aspects
of society, but other aspects of society were subordinate to them.

The State could not encroach upon these rights, for the State existed
for their maintenance.  They determined the relation of classes, for
the most obvious and fundamental of all rights was property--property
absolute and unconditioned--and those who possessed it were regarded as
the natural governors of those who did not.  Society arose from their
exercise, through the contracts of individual with individual.  It
fulfilled its object in so far as, by maintaining contractual freedom,
it secured full scope for their unfettered exercise.  It failed in so
far as, like the French monarchy, it overrode them by the use of an
arbitrary authority.  Thus conceived, society assumed something of the
appearance of a great joint-stock company, in which political power and
the receipt of dividends were justly assigned to those who held the
most numerous shares.  The currents of social activity did not converge
upon common ends, but were dispersed through a multitude of channels,
{14} created by the private interests of the individuals who composed
society.  But in their very variety and spontaneity, in the very
absence of any attempt to relate them to a larger purpose than that of
the individual, lay the best security of its attainment.  There is a
mysticism of reason as well as of emotion, and the eighteenth century
found, in the beneficence of natural instincts, a substitute for the
God whom it had expelled from contact with society, and did not
hesitate to identify them.

  "Thus God and nature planned the general frame
  And bade self-love and social be the same."


The result of such ideas in the world of practice was a society which
was ruled by law, not by the caprice of Governments, but which
recognized no moral limitation on the pursuit by individuals of their
economic self-interest.  In the world of thought, it was a political
philosophy which made rights the foundation of the social order, and
which considered the discharge of obligations, when it considered it at
all, as emerging by an inevitable process from their free exercise.
The first famous exponent of this philosophy was Locke, in whom the
dominant conception is the indefeasibility of private rights, not the
pre-ordained harmony between private rights and public welfare.  In the
great French writers who prepared the way for the Revolution, while
believing that they were the servants of an enlightened absolutism,
there is an almost equal emphasis upon the sanctity of rights and upon
the infallibility of the {15} alchemy by which the pursuit of private
ends is transmuted into the attainment of public good.  Though their
writings reveal the influence of the conception of society as a
self-adjusting mechanism, which afterwards became the most
characteristic note of the English individualism, what the French
Revolution burned into the mind of Europe was the former not the
latter.  In England the idea of right had been negative and defensive,
a barrier to the encroachment of Governments.  The French leapt to the
attack from trenches which the English had been content to defend, and
in France the idea became affirmative and militant, not a weapon of
defense, but a principle of social organization.  The attempt to
refound society upon rights, and rights springing not from musty
charters, but from the very nature of man himself, was at once the
triumph and the limitation of the Revolution.  It gave it the
enthusiasm and infectious power of religion.

What happened in England might seem at first sight to have been
precisely the reverse.  English practical men, whose thoughts were
pitched in a lower key, were a little shocked by the pomp and
brilliance of that tremendous creed.  They had scanty sympathy with the
absolute affirmations of France.  What captured their imagination was
not the right to liberty, which made no appeal to their commercial
instincts, but the expediency of liberty, which did; and when the
Revolution had revealed the explosive power of the idea of natural
right, they sought some less menacing formula.  It had been offered
them first by Adam Smith and his precursors, who showed how the
mechanism of economic life {16} converted "as with an invisible hand,"
the exercise of individual rights into the instrument of public good.
Bentham, who despised metaphysical subtleties, and thought the
Declaration of the Rights of Man as absurd as any other dogmatic
religion, completed the new orientation by supplying the final
criterion of political institutions in the principle of Utility.
Henceforward emphasis was transferred from the right of the individual
to exercise his freedom as he pleased to the expediency of an
undisturbed exercise of freedom to society.

The change is significant.  It is the difference between the universal
and equal citizenship of France, with its five million peasant
proprietors, and the organized inequality of England established
solidly upon class traditions and class institutions; the descent from
hope to resignation, from the fire and passion of an age of illimitable
vistas to the monotonous beat of the factory engine, from Turgot and
Condorcet to the melancholy mathematical creed of Bentham and Ricardo
and James Mill.  Mankind has, at least, this superiority over its
philosophers, that great movements spring from the heart and embody a
faith; not the nice adjustments of the hedonistic calculus.  So in the
name of the rights of property France abolished in three years a great
mass of property rights which, under the old régime had robbed the
peasant of part of the produce of his labor, and the social
transformation survived a whole world of political changes.  In England
the glad tidings of democracy were broken too discreetly to reach the
ears of the hind in the furrow or the shepherd on the hill; {17} there
were political changes without a social transformation.  The doctrine
of Utility, though trenchant in the sphere of politics, involved no
considerable interference with the fundamentals of the social fabric.
Its exponents were principally concerned with the removal of political
abuses and legal anomalies.  They attacked sinecures and pensions and
the criminal code and the procedure of the law courts.  But they
touched only the surface of social institutions.  They thought it a
monstrous injustice that the citizen should pay one-tenth of his income
in taxation to an idle Government, but quite reasonable that he should
pay one-fifth of it in rent to an idle landlord.

The difference, neverthelesss, was one of emphasis and expression, not
of principle.  It mattered very little in practice whether private
property and unfettered economic freedom were stated, as in France, to
be natural rights, or whether, as in England, they were merely assumed
once for all to be expedient.  In either case they were taken for
granted as the fundamentals upon which social organization was to be
based, and about which no further argument was admissible.  Though
Bentham argued that rights were derived from utility, not from nature,
he did not push his analysis so far as to argue that any particular
right was relative to any particular function, and thus endorsed
indiscriminately rights which were not accompanied by service as well
as rights which were.  While eschewing, in short, the phraseology of
natural rights, the English Utilitarians retained something not unlike
the substance of them.  For they assumed that private property in {18}
land, and the private ownership of capital, were natural institutions,
and gave them, indeed, a new lease of life, by proving to their own
satisfaction that social well-being must result from their continued
exercise.  Their negative was as important as their positive teaching.
It was a conductor which diverted the lightning.  Behind their
political theory, behind the practical conduct, which as always,
continues to express theory long after it has been discredited in the
world of thought, lay the acceptance of absolute rights to property and
to economic freedom as the unquestioned center of social organization.

The result of that attitude was momentous.  The motive and inspiration
of the Liberal Movement of the eighteenth century had been the attack
on Privilege.  But the creed which had exorcised the specter of
agrarian feudalism haunting village and _château_ in France, was
impotent to disarm the new ogre of industrialism which was stretching
its limbs in the north of England.  When, shorn of its splendors and
illusions, liberalism triumphed in England in 1832, it carried without
criticism into the new world of capitalist industry categories of
private property and freedom of contract which had been forged in the
simpler economic environment of the pre-industrial era.  In England
these categories are being bent and twisted till they are no longer
recognizable, and will, in time, be made harmless.  In America, where
necessity compelled the crystallization of principles in a
constitution, they have the rigidity of an iron jacket.  The
magnificent formulæ in which a society of farmers {19} and master
craftsmen enshrined its philosophy of freedom are in danger of becoming
fetters used by an Anglo-Saxon business aristocracy to bind insurgent
movements on the part of an immigrant and semi-servile proletariat.



{20}

III

THE ACQUISITIVE SOCIETY

This doctrine has been qualified in practice by particular limitations
to avert particular evils and to meet exceptional emergencies.  But it
is limited in special cases precisely because its general validity is
regarded as beyond controversy, and, up to the eve of the present war,
it was the working faith of modern economic civilization.  What it
implies is, that the foundation of society is found, not in functions,
but in rights; that rights are not deducible from the discharge of
functions, so that the acquisition of wealth and the enjoyment of
property are contingent upon the performances of services, but that the
individual enters the world equipped with rights to the free disposal
of his property and the pursuit of his economic self-interest, and that
these rights are anterior to, and independent of, any service which he
may render.  True, the service of society will, in fact, it is assumed,
result from their exercise.  But it is not the primary motive and
criterion of industry, but a secondary consequence, which emerges
incidentally through the exercise of rights, a consequence which is
attained, indeed, in practice, but which is attained without being
sought.  It is not the end at which economic activity aims, or the
standard by which it is judged, but a by-product, as coal-tar is a
by-product of the {21} manufacture of gas; whether that by-product
appears or not, it is not proposed that the rights themselves should be
abdicated.  For they are regarded, not as a conditional trust, but as a
property, which may, indeed, give way to the special exigencies of
extraordinary emergencies, but which resumes its sway when the
emergency is over, and in normal times is above discussion.

That conception is written large over the history of the nineteenth
century, both in England and in America.  The doctrine which it
inherited was that property was held by an absolute right on an
individual basis, and to this fundamental it added another, which can
be traced in principle far back into history, but which grew to its
full stature only after the rise of capitalist industry, that societies
act both unfairly and unwisely when they limit opportunities of
economic enterprise.  Hence every attempt to impose obligations as a
condition of the tenure of property or of the exercise of economic
activity has been met by uncompromising resistance.  The story of the
struggle between humanitarian sentiment and the theory of property
transmitted from the eighteenth century is familiar.  No one has
forgotten the opposition offered in the name of the rights of property
to factory legislation, to housing reform, to interference with the
adulteration of goods, even to the compulsory sanitation of private
houses.  "May I not do what I like with my own?" was the answer to the
proposal to require a minimum standard of safety and sanitation from
the owners of mills and houses.  Even to {22} this day, while an
English urban landlord can cramp or distort the development of a whole
city by withholding land except at fancy prices, English municipalities
are without adequate powers of compulsory purchase, and must either pay
through the nose or see thousands of their members overcrowded.  The
whole body of procedure by which they may acquire land, or indeed new
powers of any kind, has been carefully designed by lawyers to protect
owners of property against the possibility that their private rights
may be subordinated to the public interest, because their rights are
thought to be primary and absolute and public interests secondary and
contingent.

No one needs to be reminded, again, of the influence of the same
doctrine in the sphere of taxation.  Thus the income tax was excused as
a temporary measure, because the normal society was conceived to be one
in which the individual spent his whole income for himself and owed no
obligations to society on account of it.  The death duties were
denounced as robbery, because they implied that the right to benefit by
inheritance was conditional upon a social sanction.  The Budget of 1909
created a storm, not because the taxation of land was heavy--in amount
the land-taxes were trifling--but because it was felt to involve the
doctrine that property is not an absolute right, but that it may
properly be accompanied by special obligations, a doctrine which, if
carried to its logical conclusion, would destroy its sanctity by making
ownership no longer absolute but conditional.

{23}

Such an implication seems intolerable to an influential body of public
opinion, because it has been accustomed to regard the free disposal of
property and the unlimited exploitation of economic opportunities, as
rights which are absolute and unconditioned.  On the whole, until
recently, this opinion had few antagonists who could not be ignored.
As a consequence the maintenance of property rights has not been
seriously threatened even in those cases in which it is evident that no
service is discharged, directly or indirectly, by their exercise.  No
one supposes, that the owner of urban land, performs _qua_ owner, any
function.  He has a right of private taxation; that is all.  But the
private ownership of urban land is as secure to-day as it was a century
ago; and Lord Hugh Cecil, in his interesting little book on
Conservatism, declares that whether private property is mischievous or
not, society cannot interfere with it, because to interfere with it is
theft, and theft is wicked.  No one supposes that it is for the public
good that large areas of land should be used for parks and game.  But
our country gentlemen are still settled heavily upon their villages and
still slay their thousands.  No one can argue that a monopolist is
impelled by "an invisible hand" to serve the public interest.  But over
a considerable field of industry competition, as the recent Report on
Trusts shows, has been replaced by combination, and combinations are
allowed the same unfettered freedom as individuals in the exploitation
of economic opportunities.  No one really believes that the production
of coal depends upon the payment of {24} mining royalties or that ships
will not go to and fro unless ship-owners can earn fifty per cent. upon
their capital.  But coal mines, or rather the coal miner, still pay
royalties, and ship-owners still make fortunes and are made Peers.

At the very moment when everybody is talking about the importance of
increasing the output of wealth, the last question, apparently, which
it occurs to any statesman to ask is why wealth should be squandered on
futile activities, and in expenditure which is either disproportionate
to service or made for no service at all.  So inveterate, indeed, has
become the practice of payment in virtue of property rights, without
even the pretense of any service being rendered, that when, in a
national emergency, it is proposed to extract oil from the ground, the
Government actually proposes that every gallon shall pay a tax to
landowners who never even suspected its existence, and the ingenuous
proprietors are full of pained astonishment at any one questioning
whether the nation is under moral obligation to endow them further.
Such rights are, strictly speaking, privileges.  For the definition of
a privilege is a right to which no corresponding function is attached.

The enjoyment of property and the direction of industry are considered,
in short, to require no social justification, because they are regarded
as rights which stand by their own virtue, not functions to be judged
by the success with which they contribute to a social purpose.  To-day
that doctrine, if intellectually discredited, is still the practical
foundation of social {25} organization.  How slowly it yields even to
the most insistent demonstration of its inadequacy is shown by the
attitude which the heads of the business world have adopted to the
restrictions imposed on economic activity during the war.  The control
of railways, mines and shipping, the distribution of raw materials
through a public department instead of through competing merchants, the
regulation of prices, the attempts to check "profiteering"--the
detailed application of these measures may have been effective or
ineffective, wise or injudicious.  It is evident, indeed, that some of
them have been foolish, like the restriction of imports when the world
has five years' destruction to repair, and that others, if sound in
conception, have been questionable in their execution.  If they were
attacked on the ground that they obstruct the efficient performance of
function--if the leaders of industry came forward and said generally,
as some, to their honor, have:--"We accept your policy, but we will
improve its execution; we desire payment for service and service only
and will help the state to see that it pays for nothing else"--there
might be controversy as to the facts, but there could be none as to the
principle.

In reality, however, the gravamen of the charges brought against these
restrictions appears generally to be precisely the opposite.  They are
denounced by most of their critics not because they limit the
opportunity of service, but because they diminish the opportunity for
gain, not because they prevent the trader enriching the community, but
because they make it {26} more difficult for him to enrich himself;
not, in short, because they have failed to convert economic activity
into a social function, but because they have come too near succeeding.
If the financial adviser to the Coal Controller may be trusted, the
shareholders in coal mines would appear to have done fairly well during
the war.  But the proposal to limit their profits to 1/2 per ton is
described by Lord Gainford as "sheer robbery and confiscation."  With
some honorable exceptions, what is demanded is that in the future as in
the past the directors of industry should be free to handle it as an
enterprise conducted for their own convenience or advancement, instead
of being compelled, as they have been partially compelled during the
war, to subordinate it to a social purpose.  For to admit that the
criterion of commerce and industry is its success in discharging a
social purpose is at once to turn property and economic activity from
rights which are absolute into rights which are contingent and
derivative, because it is to affirm that they are relative to functions
and that they may justly be revoked when the functions are not
performed.  It is, in short, to imply that property and economic
activity exist to promote the ends of society, whereas hitherto society
has been regarded in the world of business as existing to promote them.
To those who hold their position, not as functionaries, but by virtue
of their success in making industry contribute to their own wealth and
social influence, such a reversal of means and ends appears little less
than a revolution.  For it means that they must justify before a social
tribunal {27} rights which they have hitherto taken for granted as part
of an order which is above criticism.

During the greater part of the nineteenth century the significance of
the opposition between the two principles of individual rights and
social functions was masked by the doctrine of the inevitable harmony
between private interests and public good.  Competition, it was argued,
was an effective substitute for honesty.  To-day that subsidiary
doctrine has fallen to pieces under criticism; few now would profess
adherence to the compound of economic optimism and moral bankruptcy
which led a nineteenth century economist to say: "Greed is held in
check by greed, and the desire for gain sets limits to itself."  The
disposition to regard individual rights as the center and pivot of
society is still, however, the most powerful element in political
thought and the practical foundation of industrial organization.  The
laborious refutation of the doctrine that private and public interests
are co-incident, and that man's self-love is God's Providence, which
was the excuse of the last century for its worship of economic egotism,
has achieved, in fact, surprisingly small results.  Economic egotism is
still worshiped; and it is worshiped because that doctrine was not
really the center of the position.  It was an outwork, not the citadel,
and now that the outwork has been captured, the citadel is still to win.

What gives its special quality and character, its toughness and
cohesion, to the industrial system built up in the last century and a
half, is not its exploded theory of economic harmonies.  It is the
doctrine that {28} economic rights are anterior to, and independent of
economic functions, that they stand by their own virtue, and need
adduce no higher credentials.  The practical result of it is that
economic rights remain, whether economic functions are performed or
not.  They remain to-day in a more menacing form than in the age of
early industrialism.  For those who control industry no longer compete
but combine, and the rivalry between property in capital and property
in land has long since ended.  The basis of the New Conservatism
appears to be a determination so to organize society, both by political
and economic action, as to make it secure against every attempt to
extinguish payments which are made, not for service, but because the
owners possess a right to extract income without it.  Hence the fusion
of the two traditional parties, the proposed "strengthening" of the
second chamber, the return to protection, the swift conversion of rival
industrialists to the advantages of monopoly, and the attempts to buy
off with concessions the more influential section of the working
classes.  Revolutions, as a long and bitter experience reveals, are apt
to take their color from the régime which they overthrow.  Is it any
wonder that the creed which affirms the absolute rights of property
should sometimes be met with a counter-affirmation of the absolute
rights of labor, less anti-social, indeed, and inhuman, but almost as
dogmatic, almost as intolerant and thoughtless as itself?


A society which aimed at making the acquisition of wealth contingent
upon the discharge of social {29} obligations, which sought to
proportion remuneration to service and denied it to those by whom no
service was performed, which inquired first not what men possess but
what they can make or create or achieve, might be called a Functional
Society, because in such a society the main subject of social emphasis
would be the performance of functions.  But such a society does not
exist, even as a remote ideal, in the modern world, though something
like it has hung, an unrealized theory, before men's minds in the past.
Modern societies aim at protecting economic rights, while leaving
economic functions, except in moments of abnormal emergency, to fulfil
themselves.  The motive which gives color and quality to their public
institutions, to their policy and political thought, is not the attempt
to secure the fulfilment of tasks undertaken for the public service,
but to increase the opportunities open to individuals of attaining the
objects which they conceive to be advantageous to themselves.  If asked
the end or criterion of social organization, they would give an answer
reminiscent of the formula the greatest happiness of the greatest
number.  But to say that the end of social institutions is happiness,
is to say that they have no common end at all.  For happiness is
individual, and to make happiness the object of society is to resolve
society itself into the ambitions of numberless individuals, each
directed towards the attainment of some personal purpose.

Such societies may be called Acquisitive Societies, because their whole
tendency and interest and preoccupation is to promote the acquisition
of wealth.  The {30} appeal of this conception must be powerful, for it
has laid the whole modern world under its spell.  Since England first
revealed the possibilities of industrialism, it has gone from strength
to strength, and as industrial civilization invades countries hitherto
remote from it, as Russia and Japan and India and China are drawn into
its orbit, each decade sees a fresh extension of its influence.  The
secret of its triumph is obvious.  It is an invitation to men to use
the powers with which they have been endowed by nature or society, by
skill or energy or relentless egotism or mere good fortune, without
inquiring whether there is any principle by which their exercise should
be limited.  It assumes the social organization which determines the
opportunities which different classes shall in fact possess, and
concentrates attention upon the right of those who possess or can
acquire power to make the fullest use of it for their own
self-advancement.  By fixing men's minds, not upon the discharge of
social obligations, which restricts their energy, because it defines
the goal to which it should be directed, but upon the exercise of the
right to pursue their own self-interest, it offers unlimited scope for
the acquisition of riches, and therefore gives free play to one of the
most powerful of human instincts.  To the strong it promises unfettered
freedom for the exercise of their strength; to the weak the hope that
they too one day may be strong.  Before the eyes of both it suspends a
golden prize, which not all can attain, but for which each may strive,
the enchanting vision of infinite expansion.  It assures men that there
are no ends other {31} than their ends, no law other than their
desires, no limit other than that which they think advisable.  Thus it
makes the individual the center of his own universe, and dissolves
moral principles into a choice of expediences.  And it immensely
simplifies the problems of social life in complex communities.  For it
relieves them of the necessity of discriminating between different
types of economic activity and different sources of wealth, between
enterprise and avarice, energy and unscrupulous greed, property which
is legitimate and property which is theft, the just enjoyment of the
fruits of labor and the idle parasitism of birth or fortune, because it
treats all economic activities as standing upon the same level, and
suggests that excess or defect, waste or superfluity, require no
conscious effort of the social will to avert them, but are corrected
almost automatically by the mechanical play of economic forces.

Under the impulse of such ideas men do not become religious or wise or
artistic; for religion and wisdom and art imply the acceptance of
limitations.  But they become powerful and rich.  They inherit the
earth and change the face of nature, if they do not possess their own
souls; and they have that appearance of freedom which consists in the
absence of obstacles between opportunities for self-advancement and
those whom birth or wealth or talent or good fortune has placed in a
position to seize them.  It is not difficult either for individuals or
for societies to achieve their object, if that object be sufficiently
limited and immediate, and if they are not distracted from its {32}
pursuit by other considerations.  The temper which dedicates itself to
the cultivation of opportunities, and leaves obligations to take care
of themselves, is set upon an object which is at once simple and
practicable.  The eighteenth century defined it.  The twentieth century
has very largely attained it.  Or, if it has not attained it, it has at
least grasped the possibilities of its attainment.  The national output
of wealth per head of population is estimated to have been
approximately $200 in 1914.  Unless mankind chooses to continue the
sacrifice of prosperity to the ambitions and terrors of nationalism, it
is possible that by the year 2000 it may be doubled.



{33}

IV

THE NEMESIS OF INDUSTRIALISM

Such happiness is not remote from achievement.  In the course of
achieving it, however, the world has been confronted by a group of
unexpected consequences, which are the cause of its _malaise_, as the
obstruction of economic opportunity was the cause of social _malaise_
in the eighteenth century.  And these consequences are not, as is often
suggested, accidental mal-adjustments, but flow naturally from its
dominant principle: so that there is a sense in which the cause of its
perplexity is not its failure, but the quality of its success, and its
light itself a kind of darkness.  The will to economic power, if it is
sufficiently single-minded, brings riches.  But if it is single-minded
it destroys the moral restraints which ought to condition the pursuit
of riches, and therefore also makes the pursuit of riches meaningless.
For what gives meaning to economic activity, as to any other activity
is, as we have said, the purpose to which it is directed.  But the
faith upon which our economic civilization reposes, the faith that
riches are not a means but an end, implies that all economic activity
is equally estimable, whether it is subordinated to a social purpose or
not.  Hence it divorces gain from service, and justifies rewards for
which no function is performed, or which are out of all proportion to
it.  Wealth in modern societies is distributed according to {34}
opportunity; and while opportunity depends partly upon talent and
energy, it depends still more upon birth, social position, access to
education and inherited wealth; in a word, upon property.  For talent
and energy can create opportunity.  But property need only wait for it.
It is the sleeping partner who draws the dividends which the firm
produces, the residuary legatee who always claims his share in the
estate.

Because rewards are divorced from services, so that what is prized most
is not riches obtained in return for labor but riches the economic
origin of which, being regarded as sordid, is concealed, two results
follow.  The first is the creation of a class of pensioners upon
industry, who levy toll upon its product, but contribute nothing to its
increase, and who are not merely tolerated, but applauded and admired
and protected with assiduous care, as though the secret of prosperity
resided in them.  They are admired because in the absence of any
principle of discrimination between incomes which are payment for
functions and incomes which are not, all incomes, merely because they
represent wealth, stand on the same level of appreciation, and are
estimated solely by their magnitude, so that in all societies which
have accepted industrialism there is an upper layer which claims the
enjoyment of social life, while it repudiates its responsibilities.
The _rentier_ and his ways, how familiar they were in England before
the war!  A public school and then club life in Oxford and Cambridge,
and then another club in town; London in June, when London is pleasant,
the moors in August, and pheasants in October, Cannes in {35} December
and hunting in February and March; and a whole world of rising
bourgeoisie eager to imitate them, sedulous to make their expensive
watches keep time with this preposterous calendar!

The second consequence is the degradation of those who labor, but who
do not by their labor command large rewards; that is of the great
majority of mankind.  And this degradation follows inevitably from the
refusal of men to give the purpose of industry the first place in their
thought about it.  When they do that, when their minds are set upon the
fact that the meaning of industry is the service of man, all who labor
appear to them honorable, because all who labor serve, and the
distinction which separates those who serve from those who merely spend
is so crucial and fundamental as to obliterate all minor distinctions
based on differences of income.  But when the criterion of function is
forgotten, the only criterion which remains is that of wealth, and an
Acquisitive Society reverences the possession of wealth, as a
Functional Society would honor, even in the person of the humblest and
most laborious craftsman, the arts of creation.

So wealth becomes the foundation of public esteem, and the mass of men
who labor, but who do not acquire wealth, are thought to be vulgar and
meaningless and insignificant compared with the few who acquire wealth
by good fortune, or by the skilful use of economic opportunities.  They
come to be regarded, not as the ends for which alone it is worth while
to produce wealth at all, but as the instruments of its {36}
acquisition by a world that declines to be soiled by contact with what
is thought to be the dull and sordid business of labor.  They are not
happy, for the reward of all but the very mean is not merely money, but
the esteem of their fellow-men, and they know they are not esteemed, as
soldiers, for example, are esteemed, though it is because they give
their lives to making civilization that there is a civilization which
it is worth while for soldiers to defend.  They are not esteemed,
because the admiration of society is directed towards those who get,
not towards those who give; and though workmen give much they get
little.  And the _rentiers_ whom they support are not happy; for in
discarding the idea of function, which sets a limit to the acquisition
of riches, they have also discarded the principle which alone give
riches their meaning.  Hence unless they can persuade themselves that
to be rich is in itself meritorious, they may bask in social
admiration, but they are unable to esteem themselves.  For they have
abolished the principle which makes activity significant, and therefore
estimable.  They are, indeed, more truly pitiable than some of those
who envy them.  For like the spirits in the Inferno, they are punished
by the attainment of their desires.

A society ruled by these notions is necessarily the victim of an
irrational inequality.  To escape such inequality it is necessary to
recognize that there is some principle which ought to limit the gains
of particular classes and particular individuals, because gains drawn
from certain sources or exceeding certain amounts are illegitimate.
But such a limitation implies a {37} standard of discrimination, which
is inconsistent with the assumption that each man has a right to what
he can get, irrespective of any service rendered for it.  Thus
privilege, which was to have been exorcised by the gospel of 1789,
returns in a new guise, the creature no longer of unequal legal rights
thwarting the natural exercise of equal powers of hand and brain, but
of unequal powers springing from the exercise of equal rights in a
world where property and inherited wealth and the apparatus of class
institutions have made opportunities unequal.  Inequality, again, leads
to the mis-direction of production.  For, since the demand of one
income of £50,000 is as powerful a magnet as the demand of 500 incomes
of £100, it diverts energy from the creation of wealth to the
multiplication of luxuries, so that, for example, while one-tenth of
the people of England are overcrowded, a considerable part of them are
engaged, not in supplying that deficiency, but in making rich men's
hotels, luxurious yachts, and motorcars like that used by the Secretary
of State for War, "with an interior inlaid with silver in quartered
mahogany, and upholstered in fawn suede and morocco," which was
recently bought by a suburban capitalist, by way of encouraging useful
industries and rebuking public extravagance with an example of private
economy, for the trifling sum of $14,000.

Thus part of the goods which are annually produced, and which are
called wealth, is, strictly speaking, waste, because it consists of
articles which, though reckoned as part of the income of the nation,
either should not have been produced until other articles had already
{38} been produced in sufficient abundance, or should not have been
produced at all.  And some part of the population is employed in making
goods which no man can make with happiness, or indeed without loss of
self-respect, because he knows that they had much better not be made;
and that his life is wasted in making them.  Everybody recognizes that
the army contractor who, in time of war, set several hundred navvies to
dig an artificial lake in his grounds, was not adding to, but
subtracting from, the wealth of the nation.  But in time of peace many
hundred thousand workmen, if they are not digging ponds, are doing work
which is equally foolish and wasteful; though, in peace, as in war,
there is important work, which is waiting to be done, and which is
neglected.  It is neglected because, while the effective demand of the
mass of men is only too small, there is a small class which wears
several men's clothes, eats several men's dinners, occupies several
families' houses, and lives several men's lives.  As long as a minority
has so large an income that part of it, if spent at all, must be spent
on trivialities, so long will part of the human energy and mechanical
equipment of the nation be diverted from serious work, which enriches
it, to making trivialities, which impoverishes it, since they can only
be made at the cost of not making other things.  And if the peers and
millionaires who are now preaching the duty of production to miners and
dock laborers desire that more wealth, not more waste, should be
produced, the simplest way in which they can achieve their aim is to
transfer to the public their whole incomes over (say) $5,000 a year, in
order that it may {39} be spent in setting to work, not gardeners,
chauffeurs, domestic servants and shopkeepers in the West End of
London, but builders, mechanics and teachers.

So to those who clamor, as many now do, "Produce!  Produce!" one simple
question may be addressed:--"Produce what?"  Food, clothing,
house-room, art, knowledge?  By all means!  But if the nation is
scantily furnished with these things had it not better stop producing a
good many others which fill shop windows in Regent Street?  If it
desires to re-equip its industries with machinery and its railways with
wagons, had it not better refrain from holding exhibitions designed to
encourage rich men to re-equip themselves with motor-cars?  What can be
more childish than to urge the necessity that productive power should
be increased, if part of the productive power which exists already is
misapplied?  Is not _less_ production of futilities as important as,
indeed a condition of, _more_ production of things of moment?  Would
not "Spend less on private luxuries" be as wise a cry as "produce
more"?  Yet this result of inequality, again, is a phenomenon which
cannot be prevented, or checked, or even recognized by a society which
excludes the idea of purpose from its social arrangements and
industrial activity.  For to recognize it is to admit that there is a
principle superior to the mechanical play of economic forces, which
ought to determine the relative importance of different occupations,
and thus to abandon the view that all riches, however composed, are an
end, and that all economic activity is equally justifiable.

{40}

The rejection of the idea of purpose involves another consequence which
every one laments, but which no one can prevent, except by abandoning
the belief that the free exercise of rights is the main interest of
society and the discharge of obligations a secondary and incidental
consequence which may be left to take care of itself.  It is that
social life is turned into a scene of fierce antagonisms and that a
considerable part of industry is carried on in the intervals of a
disguised social war.  The idea that industrial peace can be secured
merely by the exercise of tact and forbearance is based on the idea
that there is a fundamental identity of interest between the different
groups engaged in it, which is occasionally interrupted by regrettable
misunderstandings.  Both the one idea and the other are an illusion.
The disputes which matter are not caused by a misunderstanding of
identity of interests, but by a better understanding of diversity of
interests.  Though a formal declaration of war is an episode, the
conditions which issue in a declaration of war are permanent; and what
makes them permanent is the conception of industry which also makes
inequality and functionless incomes permanent.  It is the denial that
industry has any end or purpose other than the satisfaction of those
engaged in it.

That motive produces industrial warfare, not as a regrettable incident,
but as an inevitable result.  It produces industrial war, because its
teaching is that each individual or group has a right to what they can
get, and denies that there is any principle, other than the mechanism
of the market, which determines what {41} they ought to get.  For,
since the income available for distribution is limited, and since,
therefore, when certain limits have been passed, what one group gains
another group must lose, it is evident that if the relative incomes of
different groups are not to be determined by their functions, there is
no method other than mutual self-assertion which is left to determine
them.  Self-interest, indeed, may cause them to refrain from using
their full strength to enforce their claims, and, in so far as this
happens, peace is secured in industry, as men have attempted to secure
it in international affairs, by a balance of power.  But the
maintenance of such a peace is contingent upon the estimate of the
parties to it that they have more to lose than to gain by an overt
struggle, and is not the result of their acceptance of any standard of
remuneration as an equitable settlement of their claims.  Hence it is
precarious, insincere and short.  It is without finality, because there
can be no finality in the mere addition of increments of income, any
more than in the gratification of any other desire for material goods.
When demands are conceded the old struggle recommences upon a new
level, and will always recommence as long as men seek to end it merely
by increasing remuneration, not by finding a principle upon which all
remuneration, whether large or small, should be based.

Such a principle is offered by the idea of function, because its
application would eliminate the surpluses which are the subject of
contention, and would make it evident that remuneration is based upon
service, {42} not upon chance or privilege or the power to use
opportunities to drive a hard bargain.  But the idea of function is
incompatible with the doctrine that every person and organization have
an unlimited right to exploit their economic opportunities as fully as
they please, which is the working faith of modern industry; and, since
it is not accepted, men resign themselves to the settlement of the
issue by force, or propose that the State should supersede the force of
private associations by the use of its force, as though the absence of
a principle could be compensated by a new kind of machinery.  Yet all
the time the true cause of industrial warfare is as simple as the true
cause of international warfare.  It is that if men recognize no law
superior to their desires, then they must fight when their desires
collide.  For though groups or nations which are at issue with each
other may be willing to submit to a principle which is superior to them
both, there is no reason why they should submit to each other.

Hence the idea, which is popular with rich men, that industrial
disputes would disappear if only the output of wealth were doubled, and
every one were twice as well off, not only is refuted by all practical
experience, but is in its very nature founded upon an illusion.  For
the question is one not of amounts but of proportions; and men will
fight to be paid $120 a week, instead of $80, as readily as they will
fight to be paid $20 instead of $16, as long as there is no reason why
they should be paid $80 instead of $120, and as long as other men who
do not work are paid anything {43} at all.  If miners demanded higher
wages when every superfluous charge upon coal-getting had been
eliminated, there would be a principle with which to meet their claim,
the principle that one group of workers ought not to encroach upon the
livelihood of others.  But as long as mineral owners extract royalties,
and exceptionally productive mines pay thirty per cent. to absentee
shareholders, there is no valid answer to a demand for higher wages.
For if the community pays anything at all to those who do not work, it
can afford to pay more to those who do.  The naïve complaint, that
workmen are never satisfied, is, therefore, strictly true.  It is true,
not only of workmen, but of all classes in a society which conducts its
affairs on the principle that wealth, instead of being proportioned to
function, belongs to those who can get it.  They are never satisfied,
nor can they be satisfied.  For as long as they make that principle the
guide of their individual lives and of their social order, nothing
short of infinity could bring them satisfaction.


So here, again, the prevalent insistence upon rights, and prevalent
neglect of functions, brings men into a vicious circle which they
cannot escape, without escaping from the false philosophy which
dominates them.  But it does something more.  It makes that philosophy
itself seem plausible and exhilarating, and a rule not only for
industry, in which it had its birth, but for politics and culture and
religion and the whole compass of social life.  The possibility that
one aspect of human life may be so exaggerated as to overshadow, {44}
and in time to atrophy, every other, has been made familiar to
Englishmen by the example of "Prussian militarism."  Militarism is the
characteristic, not of an army, but of a society.  Its essence is not
any particular quality or scale of military preparation, but a state of
mind, which, in its concentration on one particular element in social
life, ends finally by exalting it until it becomes the arbiter of all
the rest.  The purpose for which military forces exist is forgotten.
They are thought to stand by their own right and to need no
justification.  Instead of being regarded as an instrument which is
necessary in an imperfect world, they are elevated into an object of
superstitious veneration, as though the world would be a poor insipid
place without them, so that political institutions and social
arrangements and intellect and morality and religion are crushed into a
mold made to fit one activity, which in a sane society is a subordinate
activity, like the police, or the maintenance of prisons, or the
cleansing of sewers, but which in a militarist state is a kind of
mystical epitome of society itself.

Militarism, as Englishmen see plainly enough, is fetich worship.  It is
the prostration of men's souls before, and the laceration of their
bodies to appease, an idol.  What they do not see is that their
reverence for economic activity and industry and what is called
business is also fetich worship, and that in their devotion to that
idol they torture themselves as needlessly and indulge in the same
meaningless antics as the Prussians did in their worship of militarism.
For what the military tradition and spirit have done for Prussia, {45}
with the result of creating militarism, the commercial tradition and
spirit have done for England, with the result of creating
industrialism.  Industrialism is no more a necessary characteristic of
an economically developed society than militarism is a necessary
characteristic of a nation which maintains military forces.  It is no
more the result of applying science to industry than militarism is the
result of the application of science to war, and the idea that it is
something inevitable in a community which uses coal and iron and
machinery, so far from being the truth, is itself a product of the
perversion of mind which industrialism produces.  Men may use what
mechanical instruments they please and be none the worse for their use.
What kills their souls is when they allow their instruments to use
_them_.  The essence of industrialism, in short, is not any particular
method of industry, but a particular estimate of the importance of
industry, which results in it being thought the only thing that is
important at all, so that it is elevated from the subordinate place
which it should occupy among human interests and activities into being
the standard by which all other interests and activities are judged.

When a Cabinet Minister declares that the greatness of this country
depends upon the volume of its exports, so that France, with exports
comparatively little, and Elizabethan England, which exported next to
nothing, are presumably to be pitied as altogether inferior
civilizations, that is Industrialism.  It is the confusion of one minor
department of life with the {46} whole of life.  When manufacturers cry
and cut themselves with knives, because it is proposed that boys and
girls of fourteen shall attend school for eight hours a week, and the
President of the Board of Education is so gravely impressed by their
apprehensions, that he at once allows the hours to be reduced to seven,
that is Industrialism.  It is fetich worship.  When the Government
obtains money for a war, which costs $28,000,000 a day, by closing the
Museums, which cost $80,000 a year, that is Industrialism.  It is a
contempt for all interests which do not contribute obviously to
economic activity.  When the Press clamors that the one thing needed to
make this island an Arcadia is productivity, and more productivity, and
yet more productivity, that is Industrialism.  It is the confusion of
means with ends.

Men will always confuse means with ends if they are without any clear
conception that it is the ends, not the means, which matter--if they
allow their minds to slip from the fact that it is the social purpose
of industry which gives it meaning and makes it worth while to carry it
on at all.  And when they do that, they will turn their whole world
upside down, because they do not see the poles upon which it ought to
move.  So when, like England, they are thoroughly industrialized, they
behave like Germany, which was thoroughly militarized.  They talk as
though man existed for industry, instead of industry existing for man,
as the Prussians talked of man existing for war.  They resent any
activity which is not colored by the predominant interest, because it
seems a rival to it.  So they {47} destroy religion and art and
morality, which cannot exist unless they are disinterested; and having
destroyed these, which are the end, for the sake of industry, which is
a means, they make their industry itself what they make their cities, a
desert of unnatural dreariness, which only forgetfulness can make
endurable, and which only excitement can enable them to forget.

Torn by suspicions and recriminations, avid of power, and oblivious of
duties, desiring peace, but unable to "seek peace and ensue it,"
because unwilling to surrender the creed which is the cause of war, to
what can one compare such a society but to the international world,
which also has been called a society and which also is social in
nothing but name?  And the comparison is more than a play upon words.
It is an analogy which has its roots in the facts of history.  It is
not a chance that the last two centuries, which saw the new growth of a
new system of industry, saw also the growth of the system of
international politics which came to a climax in the period from 1870
to 1914.  Both the one and the other are the expression of the same
spirit and move in obedience to similar laws.  The essence of the
former was the repudiation of any authority superior to the individual
reason.  It left men free to follow their own interests or ambitions or
appetites, untrammeled by subordination to any common center of
allegiance.  The essence of the latter was the repudiation of any
authority superior to the sovereign state, which again was conceived as
a compact self-contained unit--a unit {48} which would lose its very
essence if it lost its independence of other states.  Just as the one
emancipated economic activity from a mesh of antiquated traditions, so
the other emancipated nations from arbitrary subordination to alien
races or Governments, and turned them into nationalities with a right
to work out their own destiny.

Nationalism is, in fact, the counterpart among nations of what
individualism is within them.  It has similar origins and tendencies,
similar triumphs and defects.  For nationalism, like individualism,
lays its emphasis on the rights of separate units, not on their
subordination to common obligations, though its units are races or
nations, not individual men.  Like individualism it appeals to the
self-assertive instincts, to which it promises opportunities of
unlimited expansion.  Like individualism it is a force of immense
explosive power, the just claims of which must be conceded before it is
possible to invoke any alternative principle to control its operations.
For one cannot impose a supernational authority upon irritated or
discontented or oppressed nationalities any more than one can
subordinate economic motives to the control of society, until society
has recognized that there is a sphere which they may legitimately
occupy.  And, like individualism, if pushed to its logical conclusion,
it is self-destructive.  For as nationalism, in its brilliant youth,
begins as a claim that nations, because they are spiritual beings,
shall determine themselves, and passes too often into a claim that they
shall dominate others, so individualism begins by asserting the right
of men to {49} make of their own lives what they can, and ends by
condoning the subjection of the majority of men to the few whom good
fortune or special opportunity or privilege have enabled most
successfully to use their rights.  They rose together.  It is probable
that, if ever they decline, they will decline together.  For life
cannot be cut in compartments.  In the long run the world reaps in war
what it sows in peace.  And to expect that international rivalry can be
exorcised as long as the industrial order within each nation is such as
to give success to those whose existence is a struggle for
self-aggrandizement is a dream which has not even the merit of being
beautiful.

So the perversion of nationalism is imperialism, as the perversion of
individualism is industrialism.  And the perversion comes, not through
any flaw or vice in human nature, but by the force of the idea, because
the principle is defective and reveals its defects as it reveals its
power.  For it asserts that the rights of nations and individuals are
absolute, which is false, instead of asserting that they are absolute
in their own sphere, but that their sphere itself is contingent upon
the part which they play in the community of nations and individuals,
which is true.  Thus it constrains them to a career of indefinite
expansion, in which they devour continents and oceans, law, morality
and religion, and last of all their own souls, in an attempt to attain
infinity by the addition to themselves of all that is finite.  In the
meantime their rivals, and their subjects, and they themselves are
conscious of the danger of opposing forces, and seek to {50} purchase
security and to avoid a collision by organizing a balance of power.
But the balance, whether in international politics or in industry, is
unstable, because it reposes not on the common recognition of a
principle by which the claims of nations and individuals are limited,
but on an attempt to find an equipoise which may avoid a conflict
without adjuring the assertion of unlimited claims.  No such equipoise
can be found, because, in a world where the possibilities of increasing
military or industrial power are illimitable, no such equipoise can
exist.

Thus, as long as men move on this plane, there is no solution.  They
can obtain peace only by surrendering the claim to the unfettered
exercise of their rights, which is the cause of war.  What we have been
witnessing, in short, during the past five years, both in international
affairs and in industry, is the breakdown of the organization of
society on the basis of rights divorced from obligations.  Sooner or
later the collapse was inevitable, because the basis was too narrow.
For a right is simply a power which is secured by legal sanctions, "a
capacity," as the lawyers define it, "residing in one man, of
controlling, with the assistance of the State, the action of others,"
and a right should not be absolute for the same reason that a power
should not be absolute.  No doubt it is better that individuals should
have absolute rights than that the State or the Government should have
them; and it was the reaction against the abuses of absolute power by
the State which led in the eighteenth century to the declaration of the
absolute rights of individuals.  {51} The most obvious defense against
the assertion of one extreme was the assertion of the other.  Because
Governments and the relics of feudalism had encroached upon the
property of individuals it was affirmed that the right of property was
absolute; because they had strangled enterprise, it was affirmed that
every man had a natural right to conduct his business as he pleased.
But, in reality, both the one assertion and the other are false, and,
if applied to practice, must lead to disaster.  The State has no
absolute rights; they are limited by its commission.  The individual
has no absolute rights; they are relative to the function which he
performs in the community of which he is a member, because, unless they
are so limited, the consequences must be something in the nature of
private war.  All rights, in short, are conditional and derivative,
because all power should be conditional and derivative.  They are
derived from the end or purpose of the society in which they exist.
They are conditional on being used to contribute to the attainment of
that end, not to thwart it.  And this means in practice that, if
society is to be healthy, men must regard themselves not as the owners
of rights, but as trustees for the discharge of functions and the
instruments of a social purpose.



{52}

V

PROPERTY AND CREATIVE WORK

The application of the principle that society should be organized upon
the basis of functions, is not recondite, but simple and direct.  It
offers in the first place, a standard for discriminating between those
types of private property which are legitimate and those which are not.
During the last century and a half, political thought has oscillated
between two conceptions of property, both of which, in their different
ways, are extravagant.  On the one hand, the practical foundation of
social organization has been the doctrine that the particular forms of
private property which exist at any moment are a thing sacred and
inviolable, that anything may properly become the object of property
rights, and that, when it does, the title to it is absolute and
unconditioned.  The modern industrial system took shape in an age when
this theory of property was triumphant.  The American Constitution and
the French Declaration of the Rights of Man both treated property as
one of the fundamental rights which Governments exist to protect.  The
English Revolution of 1688, undogmatic and reticent though it was, had
in effect done the same.  The great individualists from Locke to
Turgot, Adam Smith and Bentham all repeated, in different language, a
similar conception.  Though what gave the Revolution its {53}
diabolical character in the eyes of the English upper classes was its
treatment of property, the dogma of the sanctity of private property
was maintained as tenaciously by French Jacobins as by English Tories;
and the theory that property is an absolute, which is held by many
modern Conservatives, is identical, if only they knew it, with that not
only of the men of 1789, but of the Convention itself.

On the other hand, the attack has been almost as undiscriminating as
the defense.  "Private property" has been the central position against
which the social movement of the last hundred years has directed its
forces.  The criticism of it has ranged from an imaginative communism
in the most elementary and personal of necessaries, to prosaic and
partially realized proposals to transfer certain kinds of property from
private to public ownership, or to limit their exploitation by
restrictions imposed by the State.  But, however varying in emphasis
and in method, the general note of what may conveniently be called the
Socialist criticism of property is what the word Socialism itself
implies.  Its essence is the statement that the economic evils of
society are primarily due to the unregulated operation, under modern
conditions of industrial organization, of the institution of private
property.

The divergence of opinion is natural, since in most discussions of
property the opposing theorists have usually been discussing different
things.  Property is the most ambiguous of categories.  It covers a
multitude of rights which have nothing in common except that they are
exercised by persons and enforced by the State.  {54} Apart from these
formal characteristics, they vary indefinitely in economic character,
in social effect, and in moral justification.  They may be conditional
like the grant of patent rights, or absolute like the ownership of
ground rents, terminable like copyright, or permanent like a freehold,
as comprehensive as sovereignty or as restricted as an easement, as
intimate and personal as the ownership of clothes and books, or as
remote and intangible as shares in a gold mine or rubber plantation.
It is idle, therefore, to present a case for or against private
property without specifying the particular forms of property to which
reference is made, and the journalist who says that "private property
is the foundation of civilization" agrees with Proudhon, who said it
was theft, in this respect at least that, without further definition,
the words of both are meaningless.  Arguments which support or demolish
certain kinds of property may have no application to others;
considerations which are conclusive in one stage of economic
organization may be almost irrelevant in the next.  The course of
wisdom is neither to attack private property in general nor to defend
it in general; for things are not similar in quality, merely because
they are identical in name.  It is to discriminate between the various
concrete embodiments of what, in itself, is, after all, little more
than an abstraction.

The origin and development of different kinds of proprietary rights is
not material to this discussion.  Whatever may have been the historical
process by which they have been established and recognized, the {55}
_rationale_ of private property traditional in England is that which
sees in it the security that each man will reap where he has sown.  "If
I despair of enjoying the fruits of labor," said Bentham, repeating
what were in all essentials the arguments of Locke, "I shall only live
from day to day; I shall not undertake labors which will only benefit
my enemies."  Property, it is argued, is a moral right, and not merely
a legal right, because it insures that the producer will not be
deprived by violence of the result of his efforts.  The period from
which that doctrine was inherited differed from our own in three
obvious, but significant, respects.  Property in land and in the simple
capital used in most industries was widely distributed.  Before the
rise of capitalist agriculture and capitalist industry, the ownership,
or at any rate the secure and effective occupation, of land and tools
by those who used them, was a condition precedent to effective work in
the field or in the workshop.  The forces which threatened property
were the fiscal policy of Governments and in some countries, for
example France, the decaying relics of feudalism.  The interference
both of the one and of the other involved the sacrifice of those who
carried on useful labor to those who did not.  To resist them was to
protect not only property but industry, which was indissolubly
connected with it.  Too often, indeed, resistance was ineffective.
Accustomed to the misery of the rural proprietor in France, Voltaire
remarked with astonishment that in England the peasant may be rich, and
"does not fear to increase the number of his beasts or to cover his
roof with tiles."  And {56} the English Parliamentarians and the French
philosophers who made the inviolability of property rights the center
of their political theory, when they defended those who owned, were
incidentally, if sometimes unintentionally, defending those who
labored.  They were protecting the yeoman or the master craftsman or
the merchant from seeing the fruits of his toil squandered by the
hangers-on at St. James or the courtly parasites of Versailles.

In such circumstances the doctrine which found the justification of
private property in the fact that it enabled the industrious man to
reap where he had sown, was not a paradox, but, as far as the mass of
the population was concerned, almost a truism.  Property was defended
as the most sacred of rights.  But it was defended as a right which was
not only widely exercised, but which was indispensable to the
performance of the active function of providing food and clothing.  For
it consisted predominantly of one of two types, land or tools which
were used by the owner for the purpose of production, and personal
possessions which were the necessities or amenities of civilized
existence.  The former had its _rationale_ in the fact that the land of
the peasant or the tools of the craftsman were the condition of his
rendering the economic services which society required; the latter
because furniture and clothes are indispensable to a life of decency
and comfort.  The proprietary rights--and, of course, they were
numerous--which had their source, not in work, but in predatory force,
were protected from criticism by the wide distribution of some kind
{57} of property among the mass of the population, and in England, at
least, the cruder of them were gradually whittled down.  When property
in land and what simple capital existed were generally diffused among
all classes of society, when, in most parts of England, the typical
workman was not a laborer but a peasant or small master, who could
point to the strips which he had plowed or the cloth which he had
woven, when the greater part of the wealth passing at death consisted
of land, household furniture and a stock in trade which was hardly
distinguishable from it, the moral justification of the title to
property was self-evident.  It was obviously, what theorists said that
it was, and plain men knew it to be, the labor spent in producing,
acquiring and administering it.

Such property was not a burden upon society, but a condition of its
health and efficiency, and indeed, of its continued existence.  To
protect it was to maintain the organization through which public
necessities were supplied.  If, as in Tudor England, the peasant was
evicted from his holding to make room for sheep, or crushed, as in
eighteenth century France, by arbitrary taxation and seigneurial dues,
land went out of cultivation and the whole community was short of food.
If the tools of the carpenter or smith were seized, plows were not
repaired or horses shod.  Hence, before the rise of a commercial
civilization, it was the mark of statesmanship, alike in the England of
the Tudors and in the France of Henry IV, to cherish the small
property-owner even to the point of offending the great.  Popular
sentiment idealized the {58} yeoman--"the Joseph of the country who
keeps the poor from starving"--not merely because he owned property,
but because he worked on it, denounced that "bringing of the livings of
many into the hands of one," which capitalist societies regard with
equanimity as an inevitable, and, apparently, a laudable result of
economic development, cursed the usurer who took advantage of his
neighbor's necessities to live without labor, was shocked by the
callous indifference to public welfare shown by those who "not having
before their eyes either God or the profit and advantage of the realm,
have enclosed with hedges and dykes towns and hamlets," and was
sufficiently powerful to compel Governments to intervene to prevent the
laying of field to field, and the engrossing of looms--to set limits,
in short, to the scale to which property might grow.

When Bacon, who commended Henry VII for protecting the tenant right of
the small farmer, and pleaded in the House of Commons for more drastic
land legislation, wrote "Wealth is like muck.  It is not good but if it
be spread," he was expressing in an epigram what was the commonplace of
every writer on politics from Fortescue at the end of the fifteenth
century to Harrington in the middle of the seventeenth.  The modern
conservative, who is inclined to take _au pied de la lettre_ the
vigorous argument in which Lord Hugh Cecil denounces the doctrine that
the maintenance of proprietary rights ought to be contingent upon the
use to which they are put, may be reminded that Lord Hugh's own theory
is of a kind to make his ancestors turn in their graves.  Of the two
members of the {59} family who achieved distinction before the
nineteenth century, the elder advised the Crown to prevent landlords
evicting tenants, and actually proposed to fix a pecuniary maximum to
the property which different classes might possess, while the younger
attacked enclosing in Parliament, and carried legislation compelling
landlords to build cottages, to let them with small holdings, and to
plow up pasture.

William and Robert Cecil were sagacious and responsible men, and their
view that the protection of property should be accompanied by the
enforcement of obligations upon its owners was shared by most of their
contemporaries.  The idea that the institution of private property
involves the right of the owner to use it, or refrain from using it, in
such a way as he may please, and that its principal significance is to
supply him with an income, irrespective of any duties which he may
discharge, would not have been understood by most public men of that
age, and, if understood, would have been repudiated with indignation by
the more reputable among them.  They found the meaning of property in
the public purposes to which it contributed, whether they were the
production of food, as among the peasantry, or the management of public
affairs, as among the gentry, and hesitated neither to maintain those
kinds of property which met these obligations nor to repress those uses
of it which appeared likely to conflict with them.  Property was to be
an aid to creative work, not an alternative to it.  The patentee was
secured protection for a new invention, in order to secure him the
fruits of his own brain, but the monopolist who grew {60} fat on the
industry of others was to be put down.  The law of the village bound
the peasant to use his land, not as he himself might find most
profitable, but to grow the corn the village needed.  Long after
political changes had made direct interference impracticable, even the
higher ranks of English landowners continued to discharge, however
capriciously and tyrannically, duties which were vaguely felt to be the
contribution which they made to the public service in virtue of their
estates.  When as in France, the obligations of ownership were
repudiated almost as completely as they have been by the owner of
to-day, nemesis came in an onslaught upon the position of a _noblesse_
which had retained its rights and abdicated its functions.  Property
reposed, in short, not merely upon convenience, or the appetite for
gain, but on a moral principle.  It was protected not only for the sake
of those who owned, but for the sake of those who worked and of those
for whom their work provided.  It was protected, because, without
security for property, wealth could not be produced or the business of
society carried on.


Whatever the future may contain, the past has shown no more excellent
social order than that in which the mass of the people were the masters
of the holdings which they plowed and of the tools with which they
worked, and could boast, with the English freeholder, that "it is a
quietness to a man's mind to live upon his own and to know his heir
certain."  With this conception of property and its practical
expression in social institutions those who urge that society should be
{61} organized on the basis of function have no quarrel.  It is in
agreement with their own doctrine, since it justifies property by
reference to the services which it enables its owner to perform.  All
that they need ask is that it should be carried to its logical
conclusion.

For the argument has evidently more than one edge.  If it justifies
certain types of property, it condemns others; and in the conditions of
modern industrial civilization, what it justifies is less than what it
condemns.  The truth is, indeed, that this theory of property and the
institutions in which it is embodied have survived into an age in which
the whole structure of society is radically different from that in
which it was formulated, and which made it a valid argument, if not for
all, at least for the most common and characteristic kinds of property.
It is not merely that the ownership of any substantial share in the
national wealth is concentrated to-day in the hands of a few hundred
thousand families, and that at the end of an age which began with an
affirmation of the rights of property, proprietary rights are, in fact,
far from being widely distributed.  Nor is it merely that what makes
property insecure to-day is not the arbitrary taxation of
unconstitutional monarchies or the privileges of an idle _noblesse_,
but the insatiable expansion and aggregation of property itself, which
menaces with absorption all property less than the greatest, the small
master, the little shopkeeper, the country bank, and has turned the
mass of mankind into a proletariat working under the agents and for the
profit of those who own.

The characteristic fact, which differentiates most {62} modern property
from that of the pre-industrial age, and which turns against it the
very reasoning by which formerly it was supported, is that in modern
economic conditions ownership is not active, but passive, that to most
of those who own property to-day it is not a means of work but an
instrument for the acquisition of gain or the exercise of power, and
that there is no guarantee that gain bears any relation to service, or
power to responsibility.  For property which can be regarded as a
condition of the performance of function, like the tools of the
craftsman, or the holding of the peasant, or the personal possessions
which contribute to a life of health and efficiency, forms an
insignificant proportion, as far as its value is concerned, of the
property rights existing at present.  In modern industrial societies
the great mass of property consists, as the annual review of wealth
passing at death reveals, neither of personal acquisitions such as
household furniture, nor of the owner's stock-in-trade, but of rights
of various kinds, such as royalties, ground-rents, and, above all, of
course shares in industrial undertakings which yield an income
irrespective of any personal service rendered by their owners.
Ownership and use are normally divorced.  The greater part of modern
property has been attenuated to a pecuniary lien or bond on the product
of industry which carries with it a right to payment, but which is
normally valued precisely because it relieves the owner from any
obligation to perform a positive or constructive function.

Such property may be called passive property, or property for
acquisition, for exploitation, or for power, {63} to distinguish it
from the property which is actively used by its owner for the conduct
of his profession or the upkeep of his household.  To the lawyer the
first is, of course, as fully property as the second.  It is
questionable, however, whether economists shall call it "Property" at
all, and not rather, as Mr. Hobson has suggested, "Improperty," since
it is not identical with the rights which secure the owner the produce
of his toil, but is opposite of them.  A classification of proprietary
rights based upon this difference would be instructive.  If they were
arranged according to the closeness with which they approximate to one
or other of these two extremes, it would be found that they were spread
along a line stretching from property which is obviously the payment
for, and condition of, personal services, to property which is merely a
right to payment from the services rendered by others, in fact a
private tax.  The rough order which would emerge, if all details and
qualification were omitted, might be something as follows:--

1.  Property in payments made for personal services.

2.  Property in personal possessions necessary to health and comfort.

3.  Property in land and tools used by their owners.

4.  Property in copyright and patent rights owned by authors and
inventors.

5.  Property in pure interest, including much agricultural rent.

6.  Property in profits of luck and good fortune: "quasi-rents."

7.  Property in monopoly profits.

{64}

8.  Property in urban ground rents.

9.  Property in royalties.

The first four kinds of property obviously accompany, and in some sense
condition, the performance of work.  The last four obviously do not.
Pure interest has some affinities with both.  It represents a necessary
economic cost, the equivalent of which must be born, whatever the legal
arrangements under which property is held, and is thus unlike the
property represented by profits (other than the equivalent of salaries
and payment for necessary risk), urban ground-rents and royalties.  It
relieves the recipient from personal services, and thus resembles them.

The crucial question for any society is, under which each of these two
broad groups of categories the greater part (measured in value) of the
proprietary rights which it maintains are at any given moment to be
found.  If they fall in the first group creative work will be
encouraged and idleness will be depressed; if they fall in the second,
the result will be the reverse.  The facts vary widely from age to age
and from country to country.  Nor have they ever been fully revealed;
for the lords of the jungle do not hunt by daylight.  It is probable,
at least, that in the England of 1550 to 1750, a larger proportion of
the existing property consisted of land and tools used by their owners
than either in contemporary France, where feudal dues absorbed a
considerable proportion of the peasants' income, or than in the England
of 1800 to 1850, where the new capitalist manufacturers made hundreds
per cent. while manual workers were goaded by starvation into
ineffectual {65} revolt.  It is probable that in the nineteenth
century, thanks to the Revolution, France and England changed places,
and that in this respect not only Ireland but the British Dominions
resemble the former rather than the latter.  The transformation can be
studied best of all in the United States, in parts of which the
population of peasant proprietors and small masters of the early
nineteenth century were replaced in three generations by a propertyless
proletariat and a capitalist plutocracy.  The abolition of the economic
privileges of agrarian feudalism, which, under the name of equality,
was the driving force of the French Revolution, and which has taken
place, in one form or another, in all countries touched by its
influence, has been largely counter-balanced since 1800 by the growth
of the inequalities springing from Industrialism.

In England the general effect of recent economic development has been
to swell proprietary rights which entitle the owners to payment without
work, and to diminish those which can properly be described as
functional.  The expansion of the former, and the process by which the
simpler forms of property have been merged in them, are movements the
significance of which it is hardly possible to over-estimate.  There
is, of course, a considerable body of property which is still of the
older type.  But though working landlords, and capitalists who manage
their own businesses, are still in the aggregate a numerous body, the
organization for which they stand is not that which is most
representative of the modern economic world.  The general tendency for
the ownership and administration of {66} property to be separated, the
general refinement of property into a claim on goods produced by an
unknown worker, is as unmistakable as the growth of capitalist industry
and urban civilization themselves.  Villages are turned into towns and
property in land changes from the holding worked by a farmer or the
estate administered by a landlord into "rents," which are advertised
and bought and sold like any other investment.  Mines are opened and
the rights of the landowner are converted into a tribute for every ton
of coal which is brought to the surface.  As joint-stock companies take
the place of the individual enterprise which was typical of the earlier
years of the factory system, organization passes from the employer who
both owns and manages his business, into the hands of salaried
officials, and again the mass of property-owners is swollen by the
multiplication of _rentiers_ who put their wealth at the disposal of
industry, but who have no other connection with it.  The change is
taking place in our day most conspicuously, perhaps, through the
displacement in retail trade of the small shopkeeper by the multiple
store, and the substitution in manufacturing industry of combines and
amalgamations for separate businesses conducted by competing employers.
And, of course, it is not only by economic development that such claims
are created.  "Out of the eater came forth meat, and out of the strong
came forth sweetness."  It is probable that war, which in barbarous
ages used to be blamed as destructive of property, has recently created
more titles to property than almost all other causes put together.

Infinitely diverse as are these proprietary rights, they {67} have the
common characteristic of being so entirely separated from the actual
objects over which they are exercised, so rarified and generalized, as
to be analogous almost to a form of currency rather than to the
property which is so closely united to its owner as to seem a part of
him.  Their isolation from the rough environment of economic life,
where the material objects of which they are the symbol are shaped and
handled, is their charm.  It is also their danger.  The hold which a
class has upon the future depends on the function which it performs.
What nature demands is work: few working aristocracies, however
tyrannical, have fallen; few functionless aristocracies have survived.
In society, as in the world of organic life, atrophy is but one stage
removed from death.  In proportion as the landowner becomes a mere
_rentier_ and industry is conducted, not by the rude energy of the
competing employers who dominated its infancy, but by the salaried
servants of shareholders, the argument for private property which
reposes on the impossibility of finding any organization to supersede
them loses its application, for they are already superseded.

Whatever may be the justification of these types of property, it cannot
be that which was given for the property of the peasant or the
craftsman.  It cannot be that they are necessary in order to secure to
each man the fruits of his own labor.  For if a legal right which gives
$200,000 a year to a mineral owner in the North of England and to a
ground landlord in London "secures the fruits of labor" at all, the
fruits are the proprietor's and the labor that of some one else.
Property {68} has no more insidious enemies than those well-meaning
anarchists who, by defending all forms of it as equally valid, involve
the institution in the discredit attaching to its extravagances.  In
reality, whatever conclusion may be drawn from the fact, the greater
part of modern property, whether, like mineral rights and urban
ground-rents, it is merely a form of private taxation which the law
allows certain persons to levy on the industry of others, or whether,
like property in capital, it consists of rights to payment for
instruments which the capitalist cannot himself use but puts at the
disposal of those who can, has as its essential feature that it confers
upon its owners income unaccompanied by personal service.  In this
respect the ownership of land and the ownership of capital are normally
similar, though from other points of view their differences are
important.  To the economist rent and interest are distinguished by the
fact that the latter, though it is often accompanied by surplus
elements which are merged with it in dividends, is the price of an
instrument of production which would not be forthcoming for industry if
the price were not paid, while the former is a differential surplus
which does not affect the supply.  To the business community and the
solicitor land and capital are equally investments, between which,
since they possess the common characteristic of yielding income without
labor, it is inequitable to discriminate; and though their significance
as economic categories may be different, their effect as social
institutions is the same.  It is to separate property from creative
ability, and to divide society into two classes, of which one has its
{69} primary interest in passive ownership, while the other is mainly
dependent upon active work.

Hence the real analogy to many kinds of modern property is not the
simple property of the small land-owner or the craftsman, still less
the household goods and dear domestic amenities, which is what the word
suggests to the guileless minds of clerks and shopkeepers, and which
stampede them into displaying the ferocity of terrified sheep when the
cry is raised that "Property" is threatened.  It is the feudal dues
which robbed the French peasant of part of his produce till the
Revolution abolished them.  How do royalties differ from _quintaines_
and _lods et ventes_?  They are similar in their origin and similar in
being a tax levied on each increment of wealth which labor produces.
How do urban ground-rents differ from the payments which were made to
English sinecurists before the Reform Bill of 1832?  They are equally
tribute paid by those who work to those who do not.  If the monopoly
profits of the owner of _banalités_, whose tenant must grind corn at
his mill and make wine at his press, were an intolerable oppression,
what is the sanctity attaching to the monopoly profits of the
capitalists, who, as the Report of the Government Committee on trusts
tells us, "in soap, tobacco, wallpaper, salt, cement and in the textile
trades ... are in a position to control output and prices" or, in other
words, can compel the consumer to buy from them, at the figure they
fix, on pain of not buying at all?

All these rights--royalties, ground-rents, monopoly profits--are
"Property."  The criticism most fatal to them is not that of
Socialists.  It is contained in the {70} arguments by which property is
usually defended.  For if the meaning of the institution is to
encourage industry by securing that the worker shall receive the
produce of his toil, then precisely in proportion as it is important to
preserve the property which a man has in the results of his own
efforts, is it important to abolish that which he has in the results of
the efforts of some one else.  The considerations which justify
ownership as a function are those which condemn it as a tax.  Property
is not theft, but a good deal of theft becomes property.  The owner of
royalties who, when asked why he should be paid £50,000 a year from
minerals which he has neither discovered nor developed nor worked but
only owned, replies "But it's Property!" may feel all the awe which his
language suggests.  But in reality he is behaving like the snake which
sinks into its background by pretending that it is the dead branch of a
tree, or the lunatic who tried to catch rabbits by sitting behind a
hedge and making a noise like a turnip.  He is practising
protective--and sometimes aggressive--mimicry.  His sentiments about
property are those of the simple toiler who fears that what he has sown
another may reap.  His claim is to be allowed to continue to reap what
another has sown.

It is sometimes suggested that the less attractive characteristics of
our industrial civilization, its combination of luxury and squalor, its
class divisions and class warfare, are accidental maladjustments which
are not rooted in the center of its being, but are excrescences which
economic progress itself may in time be expected to correct.  That
agreeable optimism will not survive an {71} examination of the
operation of the institution of private property in land and capital in
industrialized communities.  In countries where land is widely
distributed, in France or in Ireland, its effect may be to produce a
general diffusion of wealth among a rural middle class who at once work
and own.  In countries where the development of industrial organization
has separated the ownership of property and the performance of work,
the normal effect of private property is to transfer to functionless
owners the surplus arising from the more fertile sites, the better
machinery, the more elaborate organization.  No clearer
exemplifications of this "law of rent" has been given than the figures
supplied to the Coal Industry Commission by Sir Arthur Lowes Dickenson,
which showed that in a given quarter the costs per ton of producing
coal varied from $3.12 to $12 per ton, and the profits from nil to
$4.12.  The distribution in dividends to shareholders of the surplus
accruing from the working of richer and more accessible seams, from
special opportunities and access to markets, from superior machinery,
management and organization, involves the establishment of Privilege as
a national institution, as much as the most arbitrary exactions of a
feudal _seigneur_.  It is the foundation of an inequality which is not
accidental or temporary, but necessary and permanent.  And on this
inequality is erected the whole apparatus of class institutions, which
make not only the income, but the housing, education, health and
manners, indeed the very physical appearance of different classes of
Englishmen almost as different from each other as though the minority
were {72} alien settlers established amid the rude civilization of a
race of impoverished aborigines.


So the justification of private property traditional in England, which
saw in it the security that each man would enjoy the fruits of his own
labor, though largely applicable to the age in which it was formulated,
has undergone the fate of most political theories.  It has been refuted
not by the doctrines of rival philosophers, but by the prosaic course
of economic development.  As far as the mass of mankind are concerned,
the need which private property other than personal possessions does
still often satisfy, though imperfectly and precariously, is the need
for security.  To the small investors, who are the majority of
property-owners, though owning only an insignificant fraction of the
property in existence, its meaning is simple.  It is not wealth or
power, or even leisure from work.  It is safety.  They work hard.  They
save a little money for old age, or for sickness, or for their
children.  They invest it, and the interest stands between them and all
that they dread most.  Their savings are of convenience to industry,
the income from them is convenient to themselves.  "Why," they ask,
"should we not reap in old age the advantage of energy and thrift in
youth?"  And this hunger for security is so imperious that those who
suffer most from the abuses of property, as well as those who, if they
could profit by them, would be least inclined to do so, will tolerate
and even defend them, for fear lest the knife which trims dead matter
should cut into the quick.  They have seen too many men drown to be
{73} critical of dry land, though it be an inhospitable rock.  They are
haunted by the nightmare of the future, and, if a burglar broke it,
would welcome a burglar.

This need for security is fundamental, and almost the gravest
indictment of our civilization is that the mass of mankind are without
it.  Property is one way of organizing it.  It is quite comprehensible
therefore, that the instrument should be confused with the end, and
that any proposal to modify it should create dismay.  In the past,
human beings, roads, bridges and ferries, civil, judicial and clerical
offices, and commissions in the army have all been private property.
Whenever it was proposed to abolish the rights exercised over them, it
was protested that their removal would involve the destruction of an
institution in which thrifty men had invested their savings, and on
which they depended for protection amid the chances of life and for
comfort in old age.  In fact, however, property is not the only method
of assuring the future, nor, when it is the way selected, is security
dependent upon the maintenance of all the rights which are at present
normally involved in ownership.  In so far as its psychological
foundation is the necessity for securing an income which is stable and
certain, which is forthcoming when its recipient cannot work, and which
can be used to provide for those who cannot provide for themselves,
what is really demanded is not the command over the fluctuating
proceeds of some particular undertaking, which accompanies the
ownership of capital, but the security which is offered by an annuity.
Property is the instrument, security is the object, and when some
alternative way is forthcoming {74} of providing the latter, it does
not appear in practice that any loss of confidence, or freedom or
independence is caused by the absence of the former.

Hence not only the manual workers, who since the rise of capitalism,
have rarely in England been able to accumulate property sufficient to
act as a guarantee of income when their period of active earning is
past, but also the middle and professional classes, increasingly seek
security to-day, not in investment, but in insurance against sickness
and death, in the purchase of annuities, or in what is in effect the
same thing, the accumulation of part of their salary towards a pension
which is paid when their salary ceases.  The professional man may buy
shares in the hope of making a profit on the transaction.  But when
what he desires to buy is security, the form which his investment takes
is usually one kind or another of insurance.  The teacher, or nurse, or
government servant looks forward to a pension.  Women, who fifty years
ago would have been regarded as dependent almost as completely as if
femininity were an incurable disease with which they had been born, and
whose fathers, unless rich men, would have been tormented with anxiety
for fear lest they should not save sufficient to provide for them, now
receive an education, support themselves in professions, and save in
the same way.  It is still only in comparatively few cases that this
type of provision is made; almost all wage-earners outside government
employment, and many in it, as well as large numbers of professional
men, have nothing to fall back upon in sickness or old age.  But that
does not alter the fact {75} that, when it is made, it meets the need
for security, which, apart, of course, from personal possessions and
household furniture, is the principal meaning of property to by far the
largest element in the population, and that it meets it more completely
and certainly than property itself.

Nor, indeed, even when property is the instrument used to provide for
the future, is such provision dependent upon the maintenance in its
entirety of the whole body of rights which accompany ownership to-day.
Property is not simple but complex.  That of a man who has invested his
savings as an ordinary shareholder comprises at least three rights, the
right to interest, the right to profits, the right to control.  In so
far as what is desired is the guarantee for the maintenance of a stable
income, not the acquisition of additional wealth without labor--in so
far as his motive is not gain but security--the need is met by interest
on capital.  It has no necessary connection either with the right to
residuary profits or the right to control the management of the
undertaking from which the profits are derived, both of which are
vested to-day in the shareholder.  If all that were desired were to use
property as an instrument for purchasing security, the obvious
course--from the point of view of the investor desiring to insure his
future the safest course--would be to assimilate his position as far as
possible to that of a debenture holder or mortgagee, who obtains the
stable income which is his motive for investment, but who neither
incurs the risks nor receives the profits of the speculator.  To insist
that the elaborate apparatus of proprietary rights which {76}
distributes dividends of thirty per cent to the shareholders in Coats,
and several thousands a year to the owner of mineral royalties and
ground-rents, and then allows them to transmit the bulk of gains which
they have not earned to descendants who in their turn will thus be
relieved from the necessity of earning, must be maintained for the sake
of the widow and the orphan, the vast majority of whom have neither and
would gladly part with them all for a safe annuity if they had, is, to
say the least of it, extravagantly _mal-à-propos_.  It is like pitching
a man into the water because he expresses a wish for a bath, or
presenting a tiger cub to a householder who is plagued with mice, on
the ground that tigers and cats both belong to the genus _felis_.  The
tiger hunts for itself not for its masters, and when game is scarce
will hunt them.  The classes who own little or no property may
reverence it because it is security.  But the classes who own much
prize it for quite different reasons, and laugh in their sleeve at the
innocence which supposes that anything as vulgar as the savings of the
_petite bourgeoisie_ have, except at elections, any interest for them.
They prize it because it is the order which quarters them on the
community and which provides for the maintenance of a leisure class at
the public expense.

"Possession," said the Egoist, "without obligation to the object
possessed, approaches felicity."  Functionless property appears natural
to those who believe that society should be organized for the
acquisition of private wealth, and attacks upon it perverse or
malicious, because the question which they ask of any institution is,
"What does it yield?"  And such property yields much {77} to those who
own it.  Those, however, who hold that social unity and effective work
are possible only if society is organized and wealth distributed on the
basis of function, will ask of an institution, not, "What dividends
does it pay?" but "What service does it perform?"  To them the fact
that much property yields income irrespective of any service which is
performed or obligation which is recognized by its owners will appear
not a quality but a vice.  They will see in the social confusion which
it produces, payments disproportionate to service here, and payments
without any service at all there, and dissatisfaction everywhere, a
convincing confirmation of their argument that to build on a foundation
of rights and of rights alone is to build on a quicksand.

From the portentous exaggeration into an absolute of what once was, and
still might be, a sane and social institution most other social evils
follow the power of those who do not work over those who do, the
alternate subservience and rebelliousness of those who work towards
those who do not, the starving of science and thought and creative
effort for fear that expenditure upon them should impinge on the
comfort of the sluggard and the _fainéant_, and the arrangement of
society in most of its subsidiary activities to suit the convenience
not of those who work usefully but of those who spend gaily, so that
the most hideous, desolate and parsimonious places in the country are
those in which the greatest wealth is produced, the Clyde valley, or
the cotton towns of Lancashire, or the mining villages of Scotland and
Wales, and the gayest and most luxurious {78} those in which it is
consumed.  From the point of view of social health and economic
efficiency, society should obtain its material equipment at the
cheapest price possible, and after providing for depreciation and
expansion should distribute the whole product to its working members
and their dependents.  What happens at present, however, is that its
workers are hired at the cheapest price which the market (as modified
by organization) allows, and that the surplus, somewhat diminished by
taxation, is distributed to the owners of property.  Profits may vary
in a given year from a loss to 100 per cent.  But wages are fixed at a
level which will enable the marginal firm to continue producing one
year with another; and the surplus, even when due partly to efficient
management, goes neither to managers nor manual workers, but to
shareholders.  The meaning of the process becomes startlingly apparent
when, as in Lancashire to-day, large blocks of capital change hands at
a period of abnormal activity.  The existing shareholders receive the
equivalent of the capitalized expectation of future profits.  The
workers, as workers, do not participate in the immense increment in
value; and when, in the future, they demand an advance in wages, they
will be met by the answer that profits, which before the transaction
would have been reckoned large, yield shareholders after it only a low
rate of interest on their investment.

The truth is that whereas in earlier ages the protection of property
was normally the protection of work, the relationship between them has
come in the course of the economic development of the last two
centuries to {79} be very nearly reversed.  The two elements which
compose civilization are active effort and passive property, the labor
of human things and the tools which human beings use.  Of these two
elements those who supply the first maintain and improve it, those who
own the second normally dictate its character, its development and its
administration.  Hence, though politically free, the mass of mankind
live in effect under rules imposed to protect the interests of the
small section among them whose primary concern is ownership.  From this
subordination of creative activity to passive property, the worker who
depends upon his brains, the organizer, inventor, teacher or doctor
suffers almost as much embarrassment as the craftsman.  The real
economic cleavage is not, as is often said, between employers and
employed, but between all who do constructive work, from scientist to
laborer, on the one hand, and all whose main interest is the
preservation of existing proprietary rights upon the other,
irrespective of whether they contribute to constructive work or not.

If, therefore, under the modern conditions which have concentrated any
substantial share of property in the hands of a small minority of the
population, the world is to be governed for the advantages of those who
own, it is only incidentally and by accident that the results will be
agreeable to those who work.  In practice there is a constant collision
between them.  Turned into another channel, half the wealth distributed
in dividends to functionless shareholders, could secure every child a
good education up to 18, could re-endow English Universities, and
(since more efficient production is {80} important) could equip English
industries for more efficient production.  Half the ingenuity now
applied to the protection of property could have made most industrial
diseases as rare as smallpox, and most English cities into places of
health and even of beauty.  What stands in the way is the doctrine that
the rights of property are absolute, irrespective of any social
function which its owners may perform.  So the laws which are most
stringently enforced are still the laws which protect property, though
the protection of property is no longer likely to be equivalent to the
protection of work, and the interests which govern industry and
predominate in public affairs are proprietary interests.  A mill-owner
may poison or mangle a generation of operatives; but his brother
magistrates will let him off with a caution or a nominal fine to poison
and mangle the next.  For he is an owner of property.  A landowner may
draw rents from slums in which young children die at the rate of 200
per 1000; but he will be none the less welcome in polite society.  For
property has no obligations and therefore can do no wrong.  Urban land
may be held from the market on the outskirts of cities in which human
beings are living three to a room, and rural land may be used for sport
when villagers are leaving it to overcrowd them still more.  No public
authority intervenes, for both are property.  To those who believe that
institutions which repudiate all moral significance must sooner or
later collapse, a society which confuses the protection of property
with the preservation of its functionless perversions will appear as
precarious as that which has left the memorials of its {81} tasteless
frivolity and more tasteless ostentation in the gardens of Versailles.

Do men love peace?  They will see the greatest enemy of social unity in
rights which involve no obligation to co-operate for the service of
society.  Do they value equality?  Property rights which dispense their
owners from the common human necessity of labor make inequality an
institution permeating every corner of society, from the distribution
of material wealth to the training of intellect itself.  Do they desire
greater industrial efficiency?  There is no more fatal obstacle to
efficiency than the revelation that idleness has the same privileges as
industry, and that for every additional blow with the pick or hammer an
additional profit will be distributed among shareholders who wield
neither.

Indeed, functionless property is the greatest enemy of legitimate
property itself.  It is the parasite which kills the organism that
produced it.  Bad money drives out good, and, as the history of the
last two hundred years shows, when property for acquisition or power
and property for service or for use jostle each other freely in the
market, without restrictions such as some legal systems have imposed on
alienation and inheritance, the latter tends normally to be absorbed by
the former, because it has less resisting power.  Thus functionless
property grows, and as it grows it undermines the creative energy which
produced property and which in earlier ages it protected.  It cannot
unite men, for what unites them is the bond of service to a common
purpose, and that bond it repudiates, since its very {82} essence is
the maintenance of rights irrespective of service.  It cannot create;
it can only spend, so that the number of scientists, inventors, artists
or men of letters who have sprung in the course of the last century
from hereditary riches can be numbered on one hand.  It values neither
culture nor beauty, but only the power which belongs to wealth and the
ostentation which is the symbol of it.

So those who dread these qualities, energy and thought and the creative
spirit--and they are many--will not discriminate, as we have tried to
discriminate, between different types and kinds of property, in order
that they may preserve those which are legitimate and abolish those
which are not.  They will endeavor to preserve all private property,
even in its most degenerate forms.  And those who value those things
will try to promote them by relieving property of its perversions, and
thus enabling it to return to its true nature.  They will not desire to
establish any visionary communism, for they will realize that the free
disposal of a sufficiency of personal possessions is the condition of a
healthy and self-respecting life, and will seek to distribute more
widely the property rights which make them to-day the privilege of a
minority.  But they will refuse to submit to the naïve philosophy which
would treat all proprietary rights as equal in sanctity merely because
they are identical in name.  They will distinguish sharply between
property which is used by its owner for the conduct of his profession
or the upkeep of his household, and property which is merely a claim on
wealth produced by another's labor.  They will insist that {83}
property is moral and healthy only when it is used as a condition not
of idleness but of activity, and when it involves the discharge of
definite personal obligations.  They will endeavor, in short, to base
it upon the principle of function.



{84}

VI

THE FUNCTIONAL SOCIETY

The application to property and industry of the principle of function
is compatible with several different types of social organization, and
is as unlikely as more important revelations to be the secret of those
who cry "Lo here!" and "Lo there!"  The essential thing is that men
should fix their minds upon the idea of purpose, and give that idea
pre-eminence over all subsidiary issues.  If, as is patent, the purpose
of industry is to provide the material foundation of a good social
life, then any measure which makes that provision more effective, so
long as it does not conflict with some still more important purpose, is
wise, and any institution which thwarts or encumbers it is foolish.  It
is foolish, for example, to cripple education, as it is crippled in
England for the sake of industry; for one of the uses of industry is to
provide the wealth which may make possible better education.  It is
foolish to maintain property rights for which no service is performed,
for payment without service is waste; and if it is true, as
statisticians affirm, that, even were income equally divided, income
per head would be small, then it is all the more foolish, for sailors
in a boat have no room for first-class passengers, and it is all the
more important that none of the small national income should be
misapplied.  It is foolish to leave the direction of industry {85} in
the hands of servants of private property-owners who themselves know
nothing about it but its balance sheets, because this is to divert it
from the performance of service to the acquisition of gain, and to
subordinate those who do creative work to those who do not.

The course of wisdom in the affairs of industry is, after all, what it
is in any other department of organized life.  It is to consider the
end for which economic activity is carried on and then to adapt
economic organization to it.  It is to pay for service and for service
only, and when capital is hired to make sure that it is hired at the
cheapest possible price.  It is to place the responsibility for
organizing industry on the shoulders of those who work and use, not of
those who own, because production is the business of the producer and
the proper person to see that he discharges his business is the
consumer for whom, and not for the owner of property, it ought to be
carried on.  Above all it is to insist that all industries shall be
conducted in complete publicity as to costs and profits, because
publicity ought to be the antiseptic both of economic and political
abuses, and no man can have confidence in his neighbor unless both work
in the light.

As far as property is concerned, such a policy would possess two edges.
On the one hand, it would aim at abolishing those forms of property in
which ownership is divorced from obligations.  On the other hand, it
would seek to encourage those forms of economic organization under
which the worker, whether owner or not, is free to carry on his work
without sharing its control or its profits with the mere _rentier_.
Thus, if in certain {86} spheres it involved an extension of public
ownership, it would in others foster an extension of private property.
For it is not private ownership, but private ownership divorced from
work, which is corrupting to the principle of industry; and the idea of
some socialists that private property in land or capital is necessarily
mischievous is a piece of scholastic pedantry as absurd as that of
those conservatives who would invest all property with some kind of
mysterious sanctity.  It all depends what sort of property it is and
for what purpose it is used.  Provided that the State retains its
eminent domain, and controls alienation, as it does under the Homestead
laws of the Dominions, with sufficient stringency to prevent the
creation of a class of functionless property-owners, there is no
inconsistency between encouraging simultaneously a multiplication of
peasant farmers and small masters who own their own farms or shops, and
the abolition of private ownership in those industries, unfortunately
to-day the most conspicuous, in which the private owner is an absentee
shareholder.

Indeed, the second reform would help the first.  In so far as the
community tolerates functionless property it makes difficult, if not
impossible, the restoration of the small master in agriculture or in
industry, who cannot easily hold his own in a world dominated by great
estates or capitalist finance.  In so far as it abolishes those kinds
of property which are merely parasitic, it facilitates the restoration
of the small property-owner in those kinds of industry for which small
ownership is adapted.  A socialistic policy towards the former is not
{87} antagonistic to the "distributive state," but, in modern economic
conditions, a necessary preliminary to it, and if by "Property" is
meant the personal possessions which the word suggests to nine-tenths
of the population, the object of socialists is not to undermine
property but to protect and increase it.  The boundary between large
scale and small scale production will always be uncertain and
fluctuating, depending, as it does, on technical conditions which
cannot be foreseen: a cheapening of electrical power, for example,
might result in the decentralization of manufactures, as steam resulted
in their concentration.  The fundamental issue, however, is not between
different scales of ownership, but between ownership of different
kinds, not between the large farmer or master and the small, but
between property which is used for work and property which yields
income without it.  The Irish landlord was abolished, not because he
owned a large scale, but because he was an owner and nothing more; if,
and when English land-ownership has been equally attenuated, as in
towns it already has been, it will deserve to meet the same fate.  Once
the issue of the character of ownership has been settled, the question
of the size of the economic unit can be left to settle itself.

The first step, then, towards the organization of economic life for the
performance of function is to abolish those types of private property
in return for which no function is performed.  The man who lives by
owning without working is necessarily supported by the industry of some
one else, and is, therefore, too expensive a luxury to be encouraged.
Though he deserves to be {88} treated with the leniency which ought to
be, and usually is not, shown to those who have been brought up from
infancy to any other disreputable trade, indulgence to individuals must
not condone the institution of which both they and their neighbors are
the victims.  Judged by this standard, certain kinds of property are
obviously anti-social.  The rights in virtue of which the owner of the
surface is entitled to levy a tax, called a royalty, on every ton of
coal which the miner brings to the surface, to levy another tax, called
a way-leave, on every ton of coal transported under the surface of his
land though its amenity and value may be quite unaffected, to distort,
if he pleases, the development of a whole district by refusing access
to the minerals except upon his own terms, and to cause some 3,500 to
4,000 million tons to be wasted in barriers between different
properties, while he in the meantime contributes to a chorus of
lamentation over the wickedness of the miners in not producing more
tons of coal for the public and incidentally more private taxes for
himself--all this adds an agreeable touch of humor to the drab quality
of our industrial civilization for which mineral owners deserve perhaps
some recognition, though not the $400,000 odd a year which is paid to
each of the four leading players, or the $24,000,000 a year which is
distributed among the crowd.

The alchemy by which a gentleman who has never seen a coal mine
distills the contents of that place of gloom into elegant chambers in
London and a place in the country is not the monopoly of royalty
owners.  A similar feat of prestidigitation is performed by the {89}
owner of urban ground-rents.  In rural districts some landlords,
perhaps many landlords, are partners in the hazardous and difficult
business of agriculture, and, though they may often exercise a power
which is socially excessive, the position which they hold and the
income which they receive are, in part at last, a return for the
functions which they perform.  The ownership of urban land has been
refined till of that crude ore only the pure gold is left.  It is the
perfect sinecure, for the only function it involves is that of
collecting its profits, and in an age when the struggle of Liberalism
against sinecures was still sufficiently recent to stir some chords of
memory, the last and greatest of liberal thinkers drew the obvious
deduction.  "The reasons which form the justification ... of property
in land," wrote Mill in 1848, "are valid only in so far as the
proprietor of land is its improver....  In no sound theory of private
property was it ever contemplated that the proprietor of land should be
merely a sinecurist quartered on it."  Urban ground-rents and royalties
are, in fact, as the Prime Minister in his unregenerate days suggested,
a tax which some persons are permitted by the law to levy upon the
industry of others.  They differ from public taxation only in that
their amount increases in proportion not to the nation's need of
revenue but to its need of the coal and space on which they are levied,
that their growth inures to private gain not to public benefit, and
that if the proceeds are wasted on frivolous expenditure no one has any
right to complain, because the arrangement by which Lord Smith spends
wealth produced by Mr. Brown on objects which do no good to either is
part {90} of the system which, under the name of private property, Mr.
Brown as well as Lord Smith have learned to regard as essential to the
higher welfare of mankind.

But if we accept the principle of function we shall ask what is the
_purpose_ of this arrangement, and for what end the inhabitants of, for
example, London pay $64,000,000 a year to their ground landlords.  And
if we find that it is for no purpose and no end, but that these things
are like the horseshoes and nails which the City of London presents to
the Crown on account of land in the Parish of St. Clement Danes, then
we shall not deal harshly with a quaint historical survival, but
neither shall we allow it to distract us from the business of the
present, as though there had been history but there were not history
any longer.  We shall close these channels through which wealth leaks
away by resuming the ownership of minerals and of urban land, as some
communities in the British Dominions and on the Continent of Europe
have resumed it already.  We shall secure that such large accumulations
as remain change hands at least once in every generation, by increasing
our taxes on inheritance till what passes to the heir is little more
than personal possessions, not the right to a tribute from industry
which, though qualified by death-duties, is what the son of a rich man
inherits to-day.  We shall treat mineral owners and land-owners, in
short, as Plato would have treated the poets, whom in their ability to
make something out of nothing and to bewitch mankind with words they a
little resemble, and crown them with flowers and usher them politely
out of the State.



{91}

VII

INDUSTRY AS A PROFESSION

Rights without functions are like the shades in Homer which drank blood
but scattered trembling at the voice of a man.  To extinguish royalties
and urban ground-rents is merely to explode a superstition.  It needs
as little--and as much--resolution as to put one's hand through any
other ghost.  In all industries except the diminishing number in which
the capitalist is himself the manager, property in capital is almost
equally passive.  Almost, but not quite.  For, though the majority of
its owners do not themselves exercise any positive function, they
appoint those who do.  It is true, of course, that the question of how
capital is to be owned is distinct from the question of how it is to be
administered, and that the former can be settled without prejudice to
the latter.  To infer, because shareholders own capital which is
indispensable to industry, that therefore industry is dependent upon
the maintenance of capital in the hands of shareholders, to write, with
some economists, as though, if private property in capital were further
attenuated or abolished altogether, the constructive energy of the
managers who may own capital or may not, but rarely, in the more
important industries, own more than a small fraction of it, must
necessarily be impaired, is to be guilty of a robust _non-sequitur_ and
to ignore the most obvious facts of {92} contemporary industry.  The
less the mere capitalist talks about the necessity for the consumer of
an efficient organization of industry, the better; for, whatever the
future of industry may be, an efficient organization is likely to have
no room for _him_.  But though shareholders do not govern, they reign,
at least to the extent of saying once a year "_le roy le veult_."  If
their rights are pared down or extinguished, the necessity for some
organ to exercise them will still remain.  And the question of the
ownership of capital has this much in common with the question of
industrial organization, that the problem of the constitution under
which industry is to be conducted is common to both.

That constitution must be sought by considering how industry can be
organized to express most perfectly the principle of purpose.  The
application to industry of the principle of purpose is simple, however
difficult it may be to give effect to it.  It is to turn it into a
Profession.  A Profession may be defined most simply as a trade which
is organized, incompletely, no doubt, but genuinely, for the
performance of function.  It is not simply a collection of individuals
who get a living for themselves by the same kind of work.  Nor is it
merely a group which is organized exclusively for the economic
protection of its members, though that is normally among its purposes.
It is a body of men who carry on their work in accordance with rules
designed to enforce certain standards both for the better protection of
its members and for the better service of the public.  The standards
which it maintains may be high or low: all professions have some rules
which protect the interests {93} of the community and others which are
an imposition on it.  Its essence is that it assumes certain
responsibilities for the competence of its members or the quality of
its wares, and that it deliberately prohibits certain kinds of conduct
on the ground that, though they may be profitable to the individual,
they are calculated to bring into disrepute the organization to which
he belongs.  While some of its rules are trade union regulations
designed primarily to prevent the economic standards of the profession
being lowered by unscrupulous competition, others have as their main
object to secure that no member of the profession shall have any but a
purely professional interest in his work, by excluding the incentive of
speculative profit.

The conception implied in the words "unprofessional conduct" is,
therefore, the exact opposite of the theory and practice which assume
that the service of the public is best secured by the unrestricted
pursuit on the part of rival traders of their pecuniary self-interest,
within such limits as the law allows.  It is significant that at the
time when the professional classes had deified free competition as the
arbiter of commerce and industry, they did not dream of applying it to
the occupations in which they themselves were primarily interested, but
maintained, and indeed, elaborated machinery through which a
professional conscience might find expression.  The rules themselves
may sometimes appear to the layman arbitrary and ill-conceived.  But
their object is clear.  It is to impose on the profession itself the
obligation of maintaining the quality of the service, and to prevent
its common purpose being frustrated through {94} the undue influence of
the motive of pecuniary gain upon the necessities or cupidity of the
individual.

The difference between industry as it exists to-day and a profession
is, then, simple and unmistakable.  The essence of the former is that
its only criterion is the financial return which it offers to its
shareholders.  The essence of the latter, is that, though men enter it
for the sake of livelihood, the measure of their success is the service
which they perform, not the gains which they amass.  They may, as in
the case of a successful doctor, grow rich; but the meaning of their
profession, both for themselves and for the public, is not that they
make money but that they make health, or safety, or knowledge, or good
government or good law.  They depend on it for their income, but they
do not consider that any conduct which increases their income is on
that account good.  And while a boot-manufacturer who retires with half
a million is counted to have achieved success, whether the boots which
he made were of leather or brown paper, a civil servant who did the
same would be impeached.

So, if they are doctors, they recognize that there are certain kinds of
conduct which cannot be practised, however large the fee offered for
them, because they are unprofessional; if scholars and teachers, that
it is wrong to make money by deliberately deceiving the public, as is
done by makers of patent medicines, however much the public may clamor
to be deceived; if judges or public servants, that they must not
increase their incomes by selling justice for money; if soldiers, that
the service comes first, and their private inclinations, {95} even the
reasonable preference of life to death, second.  Every country has its
traitors, every army its deserters, and every profession its blacklegs.
To idealize the professional spirit would be very absurd; it has its
sordid side, and, if it is to be fostered in industry, safeguards will
be needed to check its excesses.  But there is all the difference
between maintaining a standard which is occasionally abandoned, and
affirming as the central truth of existence that there is no standard
to maintain.  The meaning of a profession is that it makes the traitors
the exception, not as they are in industry, the rule.  It makes them
the exception by upholding as the criterion of success the end for
which the profession, whatever it may be, is carried on, and
subordinating the inclination, appetites and ambitions of individuals
to the rules of an organization which has as its object to promote the
performance of function.


There is no sharp line between the professions and the industries.  A
hundred years ago the trade of teaching, which to-day is on the whole
an honorable public service, was rather a vulgar speculation upon
public credulity; if Mr. Squeers was a caricature, the Oxford of Gibbon
and Adam Smith was a solid port-fed reality; no local authority could
have performed one-tenth of the duties which are carried out by a
modern municipal corporation every day, because there was no body of
public servants to perform them, and such as there were took bribes.
It is conceivable, at least, that some branches of medicine might have
developed on the lines of industrial capitalism, with hospitals as
factories, {96} doctors hired at competitive wages as their "hands,"
large dividends paid to shareholders by catering for the rich, and the
poor, who do not offer a profitable market, supplied with an inferior
service or with no service at all.

The idea that there is some mysterious difference between making
munitions of war and firing them, between building schools and teaching
in them when built, between providing food and providing health, which
makes it at once inevitable and laudable that the former should be
carried on with a single eye to pecuniary gain, while the latter are
conducted by professional men who expect to be paid for service but who
neither watch for windfalls nor raise their fees merely because there
are more sick to be cured, more children to be taught, or more enemies
to be resisted, is an illusion only less astonishing than that the
leaders of industry should welcome the insult as an honor and wear
their humiliation as a kind of halo.  The work of making boots or
building a house is in itself no more degrading than that of curing the
sick or teaching the ignorant.  It is as necessary and therefore as
honorable.  It should be at least equally bound by rules which have as
their object to maintain the standards of professional service.  It
should be at least equally free from the vulgar subordination of moral
standards to financial interests.

If industry is to be organized as a profession, two changes are
requisite, one negative and one positive.  The first, is that it should
cease to be conducted by the agents of property-owners for the
advantage of property-owners, {97} and should be carried on, instead,
for the service of the public.  The second, is that, subject to
rigorous public supervision, the responsibility for the maintenance of
the service should rest upon the shoulders of those, from organizer and
scientist to laborer, by whom, in effect, the work is conducted.

The first change is necessary because the conduct of industry for the
public advantage is impossible as long as the ultimate authority over
its management is vested in those whose only connection with it, and
interest in it, is the pursuit of gain.  As industry is at present
organized, its profits and its control belong by law to that element in
it which has least to do with its success.  Under the joint-stock
organization which has become normal in all the more important
industries except agriculture, it is managed by the salaried agents of
those by whom the property is owned.  It is successful if it returns
large sums to shareholders, and unsuccessful if it does not.  If an
opportunity presents itself to increase dividends by practices which
deteriorate the service or degrade the workers, the officials who
administer industry act strictly within their duty if they seize it,
for they are the servants of their employers, and their obligation to
their employers is to provide dividends not to provide service.  But
the owners of the property are, _qua_ property-owners functionless, not
in the sense, of course, that the tools of which they are proprietors
are not useful, but in the sense that since work and ownership are
increasingly separated, the efficient use of the tools is not dependent
on the maintenance of the proprietary rights exercised over them.  {98}
Of course there are many managing directors who both own capital and
administer the business.  But it is none the less the case that most
shareholders in most large industries are normally shareholders and
nothing more.

Nor is their economic interest identical, as is sometimes assumed, with
that of the general public.  A society is rich when material goods,
including capital, are cheap, and human beings dear: indeed the word
"riches" has no other meaning.  The interest of those who own the
property used in industry, though not, of course, of the managers who
administer industry and who themselves are servants, and often very
ill-paid servants at that, is that their capital should be dear and
human beings cheap.  Hence, if the industry is such as to yield a
considerable return, or if one unit in the industry, owing to some
special advantage, produces more cheaply than its neighbors, while
selling at the same price, or if a revival of trade raises prices, or
if supplies are controlled by one of the combines which are now the
rule in many of the more important industries, the resulting surplus
normally passes neither to the managers, nor to the other employees,
nor to the public, but to the shareholders.  Such an arrangement is
preposterous in the literal sense of being the reverse of that which
would be established by considerations of equity and common sense, and
gives rise (among other things) to what is called "the struggle between
labor and capital."  The phrase is apposite, since it is as absurd as
the relations of which it is intended to be a description.  To deplore
"ill-feeling" or to advocate {99} "harmony" between "labor and capital"
is as rational as to lament the bitterness between carpenters and
hammers or to promote a mission for restoring amity between mankind and
its boots.  The only significance of these _clichés_ is that their
repetition tends to muffle their inanity, even to the point of
persuading sensible men that capital "employs" labor, much as our pagan
ancestors imagined that the other pieces of wood and iron, which they
deified in their day, sent their crops and won their battles.  When men
have gone so far as to talk as though their idols have come to life, it
is time that some one broke them.  Labor consists of persons, capital
of things.  The only use of things is to be applied to the service of
persons.  The business of persons is to see that they are there to use,
and that no more than need be is paid for using them.

Thus the application to industry of the principle of function involves
an alteration of proprietary rights, because those rights do not
contribute, as they now are, to the end which industry exists to serve.
What gives unity to any activity, what alone can reconcile the
conflicting claims of the different groups engaged in it, is the
purpose for which it is carried on.  If men have no common goal it is
no wonder that they should fall out by the way, nor are they likely to
be reconciled by a redistribution of their provisions.  If they are not
content both to be servants, one or other must be master, and it is
idle to suppose that mastership can be held in a state of suspense
between the two.  There can be a division of functions between
different grades of workers, or between worker and consumer, and each
can {100} have in his own sphere the authority needed to enable him to
fill it.  But there cannot be a division of functions between the
worker and the owner who is owner and nothing else, for what function
does such an owner perform?  The provision of capital?  Then pay him
the sum needed to secure the use of his capital, but neither pay him
more nor admit him to a position of authority over production for which
merely as an owner he is not qualified.  For this reason, while an
equilibrium between worker and manager is possible, because both are
workers, that which it is sought to establish between worker and owner
is not.  It is like the proposal of the Germans to negotiate with
Belgium from Brussels.  Their proposals may be excellent: but it is not
evident why they are where they are, or how, since they do not
contribute to production, they come to be putting forward proposals at
all.  As long as they are in territory where they have no business to
be, their excellence as individuals will be overlooked in annoyance at
the system which puts them where they are.

It is fortunate indeed, if nothing worse than this happens.  For one
way of solving the problem of the conflict of rights in industry is not
to base rights on functions, as we propose, but to base them on force.
It is to re-establish in some veiled and decorous form the institution
of slavery, by making labor compulsory.  In nearly all countries a
concerted refusal to work has been made at one time or another a
criminal offense.  There are to-day parts of the world in which
European capitalists, unchecked by any public opinion or authority
{101} independent of themselves, are free to impose almost what terms
they please upon workmen of ignorant and helpless races.  In those
districts of America where capitalism still retains its primitive
lawlessness, the same result appears to be produced upon immigrant
workmen by the threat of violence.

In such circumstances the conflict of rights which finds expression in
industrial warfare does not arise, because the rights of one party have
been extinguished.  The simplicity of the remedy is so attractive that
it is not surprising that the Governments of industrial nations should
coquet from time to time with the policy of compulsory arbitration.
After all, it is pleaded, it is only analogous to the action of a
supernational authority which should use its common force to prevent
the outbreak of war.  In reality, compulsory arbitration is the
opposite of any policy which such an authority could pursue either with
justice or with hope of success.  For it takes for granted the
stability of existing relationships and intervenes to adjust incidental
disputes upon the assumption that their equity is recognized and their
permanence desired.  In industry, however, the equity of existing
relationships is precisely the point at issue.  A League of Nations
which adjusted between a subject race and its oppressors, between Slavs
and Magyars, or the inhabitants of what was once Prussian Poland and
the Prussian Government, on the assumption that the subordination of
Slavs to Magyars and Poles to Prussians was part of an unchangeable
order, would rightly be resisted by all those who think liberty more
precious than peace.  A State which, in the {102} name of peace, should
make the concerted cessation of work a legal offense would be guilty of
a similar betrayal of freedom.  It would be solving the conflict of
rights between those who own and those who work by abolishing the
rights of those who work.


So here again, unless we are prepared to re-establish some form of
forced labor, we reach an impasse.  But it is an impasse only in so
long as we regard the proprietary rights of those who own the capital
used in industry as absolute and an end in themselves.  If, instead of
assuming that all property, merely because it is property, is equally
sacred, we ask what is the _purpose_ for which capital is used, what is
its _function_, we shall realize that it is not an end but a means to
an end, and that its function is to serve and assist (as the economists
tell us) the labor of human beings, not the function of human beings to
serve those who happen to own it.  And from this truth two consequences
follow.  The first is that since capital is a thing, which ought to be
used to help industry as a man may use a bicycle to get more quickly to
his work, it ought, when it is employed, to be employed on the cheapest
terms possible.  The second is that those who own it should no more
control production than a man who lets a house controls the meals which
shall be cooked in the kitchen, or the man who lets a boat the speed at
which the rowers shall pull.  In other words, capital should always be
got at cost price, which means, unless the State finds it wise, as it
very well may, to own the capital used in certain industries, it should
be paid the lowest interest {103} for which it can be obtained, but
should carry no right either to residuary dividends or to the control
of industry.

There are, in theory, five ways by which the control of industry by the
agents of private property-owners can be terminated.  They may be
expropriated without compensation.  They may voluntarily surrender it.
They may be frozen out by action on the part of the working
_personnel_, which itself undertakes such functions, if any, as they
have performed, and makes them superfluous by conducting production
without their assistance.  Their proprietary interest may be limited or
attenuated to such a degree that they become mere _rentiers_, who are
guaranteed a fixed payment analogous to that of the debenture-holder,
but who receive no profits and bear no responsibility for the
organization of industry.  They may be bought out.  The first
alternative is exemplified by the historical confiscations of the past,
such as, for instance, by the seizure of ecclesiastical property by the
ruling classes of England, Scotland and most other Protestant states.
The second has rarely, if ever, been tried--the nearest approach to it,
perhaps, was the famous abdication of August 4th, 1789.  The third is
the method apparently contemplated by the building guilds which are now
in process of formation in Great Britain.  The fourth method of
treating the capitalist is followed by the co-operative movement.  It
is also that proposed by the committee of employers and trade-unionists
in the building industry over which Mr. Foster presided, and which
proposed that employers should be paid a fixed salary, and a fixed rate
of {104} interest on their capital, but that all surplus profits should
be pooled and administered by a central body representing employers and
workers.  The fifth has repeatedly been practised by municipalities,
and somewhat less often by national governments.

Which of these alternative methods of removing industry from the
control of the property-owner is adopted is a matter of expediency to
be decided in each particular case.  "Nationalization," therefore,
which is sometimes advanced as the only method of extinguishing
proprietary rights, is merely one species of a considerable genus.  It
can be used, of course, to produce the desired result.  But there are
some industries, at any rate, in which nationalization is not necessary
in order to bring it about, and since it is at best a cumbrous process,
when other methods are possible, other methods should be used.
Nationalization is a means to an end, not an end in itself.  Properly
conceived its object is not to establish state management of industry,
but to remove the dead hand of private ownership, when the private
owner has ceased to perform any positive function.  It is unfortunate,
therefore, that the abolition of obstructive property rights, which is
indispensable, should have been identified with a single formula, which
may be applied with advantage in the special circumstances of some
industries, but need not necessarily be applied in all.  Ownership is
not a right, but a bundle of rights, and it is possible to strip them
off piecemeal as well as to strike them off simultaneously.  The
ownership of capital involves, as we have said, three main claims; the
right to interest as the price of capital, the right to {105} profits,
and the right to control, in virtue of which managers and workmen are
the servants of shareholders.  These rights in their fullest degree are
not the invariable accompaniment of ownership, nor need they
necessarily co-exist.  The ingenuity of financiers long ago devised
methods of grading stock in such a way that the ownership of some
carries full control, while that of others does not, that some bear all
the risk and are entitled to all the profits, while others are limited
in respect to both.  All are property, but not all carry proprietary
rights of the same degree.

As long as the private ownership of industrial capital remains, the
object of reformers should be to attenuate its influence by insisting
that it shall be paid not more than a rate of interest fixed in
advance, and that it should carry with it no right of control.  In such
circumstances the position of the ordinary shareholder would
approximate to that of the owner of debentures; the property in the
industry would be converted into a mortgage on its profits, while the
control of its administration and all profits in excess of the minimum
would remain to be vested elsewhere.  So, of course, would the risks.
But risks are of two kinds, those of the individual business and those
of the industry.  The former are much heavier than the latter, for
though a coal mine is a speculative investment, coal mining is not, and
as long as each business is managed as a separate unit, the payments
made to shareholders must cover both.  If the ownership of capital in
each industry were unified, which does not mean centralized, those
risks which are incidental to individual competition would be {106}
eliminated, and the credit of each unit would be that of the whole.

Such a change in the character of ownership would have three
advantages.  It would abolish the government of industry by property.
It would end the payment of profits to functionless shareholders by
turning them into creditors paid a fixed rate of interest.  It would
lay the only possible foundations for industrial peace by making it
possible to convert industry into a profession carried on by all grades
of workers for the service of the public, not for the gain of those who
own capital.  The organization which it would produce will be
described, of course, as impracticable.  It is interesting, therefore,
to find it is that which experience has led practical men to suggest as
a remedy for the disorders of one of the most important of national
industries, that of building.  The question before the Committee of
employers and workmen, which issued last August a Report upon the
Building Trade, was "Scientific Management and the Reduction of
Costs."[1]  These are not phrases which suggest an economic revolution;
but it is something little short of a revolution that the signatories
of the report propose.  For, as soon as they came to grips with the
problem, they found that it was impossible to handle it effectively
without reconstituting the general fabric of industrial relationships
which is its setting.  Why is the service supplied by the industry
ineffective?  Partly because the workers do not give their full
energies to the performance of their part in production.  {107} Why do
they not give their best energies?  Because of "the fear of
unemployment, the disinclination of the operatives to make unlimited
profit for private employers, the lack of interest evinced by
operatives owing to their non-participation in control, inefficiency
both managerial and operative."  How are these psychological obstacles
to efficiency to be counteracted?  By increased supervision and
speeding up, by the allurements of a premium bonus system, or the other
devices by which men who are too ingenious to have imagination or moral
insight would bully or cajole poor human nature into doing what--if
only the systems they invent would let it!--it desires to do, simple
duties and honest work?  Not at all.  By turning the building of houses
into what teaching now is, and Mr. Squeers thought it could never be,
an honorable profession.

"We believe," they write, "that the great task of our Industrial
Council is to develop an entirely new system of industrial control by
the members of the industry itself--the actual producers, whether by
hand or brain, and to bring them into co-operation with the State as
the central representative of the community whom they are organized to
serve."  Instead of unlimited profits, so "indispensable as an
incentive to efficiency," the employer is to be paid a salary for his
services as manager, and a rate of interest on his capital which is to
be both fixed and (unless he fails to earn it through his own
inefficiency) guaranteed; anything in excess of it, any "profits" in
fact, which in other industries are distributed as dividends to
shareholders, he is to {108} surrender to a central fund to be
administered by employers and workmen for the benefit of the industry
as a whole.  Instead of the financial standing of each firm being
treated as an inscrutable mystery to the public, with the result that
it is sometimes a mystery to itself, there is to be a system of public
costing and audit, on the basis of which the industry will assume a
collective liability for those firms which are shown to be competently
managed.  Instead of the workers being dismissed in slack times to
struggle along as best they can, they are to be maintained from a fund
raised by a levy on employers and administered by the trade unions.
There is to be publicity as to costs and profits, open dealing and
honest work and mutual helpfulness, instead of the competition which
the nineteenth century regarded as an efficient substitute for them.
"Capital" is not to "employ labor."  Labor, which includes managerial
labor, is to employ capital; and to employ it at the cheapest rate at
which, in the circumstances of the trade, it can be got.  If it employs
it so successfully that there is a surplus when it has been fairly paid
for its own services, then that surplus is not to be divided among
shareholders, for, when they have been paid interest, they have been
paid their due; it is to be used to equip the industry to provide still
more effective service in the future.

So here we have the majority of a body of practical men, who care
nothing for socialist theories, proposing to establish "organized
Public Service in the Building Industry," recommending, in short, that
their industry shall be turned into a profession.  And they do it, it
{109} will be observed, by just that functional organization, just that
conversion of full proprietary rights into a mortgage secured (as far
as efficient firms are concerned) on the industry as a whole, just that
transference of the control of production from the owner of capital to
those whose business is production, which we saw is necessary if
industry is to be organized for the performance of service, not for the
pecuniary advantage of those who hold proprietary rights.  Their Report
is of the first importance as offering a policy for attenuating private
property in capital in the important group of industries in which
private ownership, in one form or another, is likely for some
considerable time to continue, and a valuable service would be rendered
by any one who would work out in detail the application of its
principle to other trades.

Not, of course, that this is the only way, or in highly capitalized
industries the most feasible way, in which the change can be brought
about.  Had the movement against the control of production by property
taken place before the rise of limited companies, in which ownership is
separated from management, the transition to the organization of
industry as a profession might also have taken place, as the employers
and workmen in the building trade propose that it should, by limiting
the rights of private ownership without abolishing it.  But that is not
what has actually happened, and therefore the proposals of the building
trade are not of universal application.  It is possible to retain
private ownership in building and in industries like building, {110}
while changing its character, precisely because in building the
employer is normally not merely an owner, but something else as well.
He is a manager; that is, he is a workman.  And because he is a
workman, whose interests, and still more whose professional spirit as a
workman may often outweigh his interests and merely financial spirit as
an owner, he can form part of the productive organization of the
industry, after his rights as an owner have been trimmed and limited.

But that dual position is abnormal, and in the highly organized
industries is becoming more abnormal every year.  In coal, in cotton,
in ship-building, in many branches of engineering the owner of capital
is not, as he is in building, an organizer or manager.  His connection
with the industry and interest in it is purely financial.  He is an
owner and nothing more.  And because his interest is merely financial,
so that his concern is dividends and production only as a means to
dividends, he cannot be worked into an organization of industry which
vests administration in a body representing all grades of producers, or
producers and consumers together, for he has no purpose in common with
them; so that while joint councils between workers and managers may
succeed, joint councils between workers and owners or agents of owners,
like most of the so-called Whitley Councils, will not, because the
necessity for the mere owner is itself one of the points in dispute.
The master builder, who owns the capital used, can be included, not
_qua_ capitalist, but _qua_ builder, if he surrenders some of the
rights of ownership, as the Building Industry Committee proposed that
he should.  But {111} if the shareholder in a colliery or a shipyard
abdicates the control and unlimited profits to which, _qua_ capitalist,
he is at present entitled, he abdicates everything that makes him what
he is, and has no other standing in the industry.  He cannot share,
like the master builder, in its management, because he has no
qualifications which would enable him to do so.  His object is profit;
and if industry is to become, as employers and workers in the building
trade propose, an "organized public service," then its subordination to
the shareholder whose object is profit, is, as they clearly see,
precisely what must be eliminated.  The master builders propose to give
it up.  They can do so because they have their place in the industry in
virtue of their function as workmen.  But if the shareholder gave it
up, he would have no place at all.

Hence in coal mining, where ownership and management are sharply
separated, the owners will not admit the bare possibility of any system
in which the control of the administration of the mines is shared
between the management and the miners.  "I am authorized to state on
behalf of the Mining Association," Lord Gainford, the chief witness on
behalf of the mine-owners, informed the Coal Commission, "that if the
owners are not to be left complete executive control they will decline
to accept the responsibility for carrying on the industry."[2]  So the
mine-owners blow away in a sentence the whole body of plausible
make-believe which rests on the idea that, while private ownership
remains {112} unaltered, industrial harmony can be produced by the
magic formula of joint control.  And they are right.  The
representatives of workmen and shareholders, in mining and in other
industries, can meet and negotiate and discuss.  But joint
administration of the shareholders' property by a body representing
shareholders and workmen is impossible, because there is no purpose in
common between them.  For the only purpose which could unite all
persons engaged in industry, and overrule their particular and
divergent interests, is the provision of service.  And the object of
shareholders, the whole significance and _métier_ of industry to them,
is not the provision of service but the provision of dividends.


In industries where management is divorced from ownership, as in most
of the highly organized trades it is to-day, there is no obvious
halfway house, therefore, between the retention of the present system
and the complete extrusion of the capitalist from the control of
production.  The change in the character of ownership, which is
necessary in order that coal or textiles and ship-building may be
organized as professions for the service of the public, cannot easily
spring from within.  The stroke needed to liberate them from the
control of the property-owner must come from without.  In theory it
might be struck by action on the part of organized workers, who would
abolish residuary profits and the right of control by the mere
procedure of refusing to work as long as they were maintained, on the
historical analogy offered by peasants who have destroyed {113}
predatory property in the past by declining to pay its dues and admit
its government, in which case Parliament would intervene only to
register the community's assent to the _fait accompli_.  In practice,
however, the conditions of modern industry being what they are, that
course, apart from its other disadvantages, is so unlikely to be
attempted, or, if attempted, to succeed, that it can be neglected.  The
alternative to it is that the change in the character of property
should be affected by legislation in virtue of which the rights of
ownership in an industry are bought out simultaneously.

In either case, though the procedure is different, the result of the
change, once it is accomplished, is the same.  Private property in
capital, in the sense of the right to profits and control, is
abolished.  What remains of it is, at most, a mortgage in favor of the
previous proprietors, a dead leaf which is preserved, though the sap of
industry no longer feeds it, as long as it is not thought worth while
to strike it off.  And since the capital needed to maintain and equip a
modern industry could not be provided by any one group of workers, even
were it desirable on other grounds that they should step completely
into the position of the present owners, the complex of rights which
constitutes ownership remains to be shared between them and whatever
organ may act on behalf of the general community.  The former, for
example, may be the heir of the present owners as far as the control of
the routine and administration of industry is concerned: the latter may
succeed to their right to dispose of residuary profits.  The elements
composing property, have, in fact, to be {114} disentangled: and the
fact that to-day, under the common name of ownership, several different
powers are vested in identical hands, must not be allowed to obscure
the probability that, once private property in capital has been
abolished, it may be expedient to re-allocate those powers in detail as
well as to transfer them _en bloc_.

The essence of a profession is, as we have suggested, that its members
organize themselves for the performance of function.  It is essential
therefore, if industry is to be professionalized, that the abolition of
functionless property should not be interpreted to imply a continuance
under public ownership of the absence of responsibility on the part of
the _personnel_ of industry, which is the normal accompaniment of
private ownership working through the wage-system.  It is the more
important to emphasize that point, because such an implication has
sometimes been conveyed in the past by some of those who have presented
the case for some such change in the character of ownership as has been
urged above.  The name consecrated by custom to the transformation of
property by public and external action is nationalization.  But
nationalization is a word which is neither very felicitous nor free
from ambiguity.  Properly used, it means merely ownership by a body
representing the nation.  But it has come in practice to be used as
equivalent to a particular method of administration, under which
officials employed by the State step into the position of the present
directors of industry, and exercise all the power which they exercised.
So those who desire to maintain the system under which industry is
carried on, not as a profession {115} serving the public, but for the
advantage of shareholders, attack nationalization on the ground that
state management is necessarily inefficient, and tremble with
apprehension whenever they post a letter in a letter-box; and those who
desire to change it reply that state services are efficient and praise
God whenever they use a telephone; as though either private or public
administration had certain peculiar and unalterable characteristics,
instead of depending for its quality, like an army or railway company
or school, and all other undertakings, public and private alike, not on
whether those who conduct it are private officials or state officials,
but on whether they are properly trained for their work and can command
the good will and confidence of their subordinates.

The arguments on both sides are ingenious, but in reality nearly all of
them are beside the point.  The merits of nationalization do not stand
or fall with the efficiency or inefficiency of existing state
departments as administrators of industry.  For nationalization, which
means public ownership, is compatible with several different types of
management.  The constitution of the industry may be "unitary," as is
(for example) that of the post-office.  Or it may be "federal," as was
that designed by Mr. Justice Sankey for the Coal Industry.
Administration may be centralized or decentralized.  The authorities to
whom it is intrusted may be composed of representatives of the
consumers, or of representatives of professional associations, or of
state officials, or of all three in several different proportions.
Executive work may be placed in the hands of civil {116} servants,
trained, recruited and promoted as in the existing state departments,
or a new service may be created with a procedure and standards of its
own.  It may be subject to Treasury control, or it may be financially
autonomous.  The problem is, in fact, of a familiar, though difficult,
order.  It is one of constitution-making.

It is commonly assumed by controversialists that the organization and
management of a nationalized industry must, for some undefined reason,
be similar to that of the post-office.  One might as reasonably suggest
that the pattern exemplar of private enterprise must be the Steel
Corporation or the Imperial Tobacco Company.  The administrative
systems obtaining in a society which has nationalized its foundation
industries will, in fact, be as various as in one that resigns them to
private ownership; and to discuss their relative advantages without
defining what particular type of each is the subject of reference is
to-day as unhelpful as to approach a modern political problem in terms
of the Aristotelian classification of constitutions.  The highly
abstract dialectics as to "enterprise," "initiative," "bureaucracy,"
"red tape," "democratic control," "state management," which fill the
press of countries occupied with industrial problems, really belong to
the dark ages of economic thought.  The first task of the student,
whatever his personal conclusions, is, it may be suggested, to
contribute what he can to the restoration of sanity by insisting that
instead of the argument being conducted with the counters of a highly
inflated and rapidly depreciating verbal currency, the exact situation,
{117} in so far as is possible, shall be stated as it is; uncertainties
(of which there are many) shall be treated as uncertain, and the
precise meaning of alternative proposals shall be strictly defined.
Not the least of the merits of Mr. Justice Sankey's report was that, by
stating in great detail the type of organization which he recommended
for the Coal Industry, he imparted a new precision and reality into the
whole discussion.  Whether his conclusions are accepted or not, it is
from the basis of clearly defined proposals such as his that the future
discussion of these problems must proceed.  It may not find a solution.
It will at least do something to create the temper in which alone a
reasonable solution can be sought.

Nationalization, then, is not an end, but a means to an end, and when
the question of ownership has been settled the question of
administration remains for solution.  As a means it is likely to be
indispensable in those industries in which the rights of private
proprietors cannot easily be modified without the action of the State,
just as the purchase of land by county councils is a necessary step to
the establishment of small holders, when landowners will not
voluntarily part with their property for the purpose.  But the object
in purchasing land is to establish small holders, not to set up farms
administered by state officials; and the object of nationalizing mining
or railways or the manufacture of steel should not be to establish any
particular form of state management, but to release those who do
constructive work from the control of those whose sole interest is
pecuniary gain, in order that they may be free to {118} apply their
energies to the true purpose of industry, which is the provision of
service, not the provision of dividends.  When the transference of
property has taken place, it will probably be found that the necessary
provision for the government of industry will involve not merely the
freedom of the producers to produce, but the creation of machinery
through which the consumer, for whom he produces, can express his
wishes and criticize the way in which they are met, as at present he
normally cannot.  But that is the second stage in the process of
reorganizing industry for the performance of function, not the first.
The first is to free it from subordination to the pecuniary interests
of the owner of property, because they are the magnetic pole which sets
all the compasses wrong, and which causes industry, however swiftly it
may progress, to progress in the wrong direction.

Nor does this change in the character of property involve a breach with
the existing order so sharp as to be impracticable.  The phraseology of
political controversy continues to reproduce the conventional
antitheses of the early nineteenth century; "private enterprise" and
"public ownership" are still contrasted with each other as light with
darkness or darkness with light.  But, in reality, behind the formal
shell of the traditional legal system the elements of a new body of
relationship have already been prepared, and find piece-meal
application through policies devised, not by socialists, but by men who
repeat the formulæ of individualism, at the very moment when they are
undermining it.  The Esch-Cummins Act in America, the {119} Act
establishing a Ministry of Transport in England, Sir Arthur Duckham's
scheme for the organization of the coal mines, the proposals with
regard to the coal industry of the British Government itself, appear to
have the common characteristic of retaining private ownership in name,
while attenuating it in fact, by placing its operators under the
supervision, accompanied sometimes by a financial guarantee, of a
public authority.  Schemes of this general character appear, indeed, to
be the first instinctive reaction produced by the discovery that
private enterprise is no longer functioning effectively; it is probable
that they possess certain merits of a technical order analogous to
those associated with the amalgamation of competing firms into a single
combination.  It is questionable, however, whether the compromise which
they represent is permanently tenable.  What, after all, it may be
asked, are the advantages of private ownership when it has been pared
down to the point which policies of this order propose?  May not the
"owner" whose rights they are designed to protect not unreasonably
reply to their authors, "Thank you for nothing"?  Individual enterprise
has its merits: so also, perhaps, has public ownership.  But, by the
time these schemes have done with it, not much remains of "the simple
and obvious system of natural liberty," while their inventors are
precluded from appealing to the motives which are emphasized by
advocates of nationalization.  It is one thing to be an entrepreneur
with a world of adventure and unlimited profits--if they can be
achieved--before one.  It is quite another to be a director of a
railway company or coal {120} corporation with a minimum rate of profit
guaranteed by the State, and a maximum rate of profit which cannot be
exceeded.  Hybrids are apt to be sterile.  It may be questioned
whether, in drawing the teeth of private capitalism, this type of
compromise does not draw out most of its virtues as well.

So, when a certain stage of economic development has been reached,
private ownership, by the admission of its defenders, can no longer be
tolerated in the only form in which it is free to display the
characteristic, and quite genuine, advantages for the sake of which it
used to be defended.  And, as step by step it is whittled down by tacit
concessions to the practical necessity of protecting the consumer, or
eliminating waste, or meeting the claims of the workers, public
ownership becomes, not only on social grounds, but for reasons of
economic efficiency, the alternative to a type of private ownership
which appears to carry with it few rights of ownership and to be
singularly devoid of privacy.  Inevitably and unfortunately the change
must be gradual.  But it should be continuous.  When, as in the last
few years, the State has acquired the ownership of great masses of
industrial capital, it should retain it, instead of surrendering it to
private capitalists, who protest at once that it will be managed so
inefficiently that it will not pay and managed so efficiently that it
will undersell them.  When estates are being broken up and sold, as
they are at present, public bodies should enter the market and acquire
them.  Most important of all, the ridiculous barrier, inherited from an
age in which municipal corporations were corrupt oligarchies, which
{121} at present prevents England's Local Authorities from acquiring
property in land and industrial capital, except for purposes specified
by Act of Parliament, should be abolished, and they should be free to
undertake such services as the citizens may desire.  The objection to
public ownership, in so far as it is intelligent, is in reality largely
an objection to over-centralization.  But the remedy for
over-centralization, is not the maintenance of functionless property in
private hands, but the decentralized ownership of public property, and
when Birmingham and Manchester and Leeds are the little republics which
they should be, there is no reason to anticipate that they will tremble
at a whisper from Whitehall.

These things should be done steadily and continuously quite apart from
the special cases like that of the mines and railways, where the
private ownership of capital is stated by the experts to have been
responsible for intolerable waste, or the manufacture of ornaments
[Transcriber's note: armaments?] and alcoholic liquor, which are
politically and socially too dangerous to be left in private hands.
They should be done not in order to establish a single form of
bureaucratic management, but in order to release the industry from the
domination of proprietary interests, which, whatever the form of
management, are not merely troublesome in detail but vicious in
principle, because they divert it from the performance of function to
the acquisition of gain.  If at the same time private ownership is
shaken, as recently it has been, by action on the part of particular
groups of workers, so much the better.  There are more ways of killing
a cat than {122} drowning it in cream, and it is all the more likely to
choose the cream if they are explained to it.  But the two methods are
complementary, not alternative, and the attempt to found rival schools
on an imaginary incompatibility between them is a bad case of the
_odium sociologicum_ which afflicts reformers.



[1] Reprinted in _The Industrial Council for the Building Industry_.

[2] _Coal Industry Commission, Minutes of Evidence_, Vol. I, p. 2506.



{123}

VIII

THE "VICIOUS CIRCLE"

What form of management should replace the administration of industry
by the agents of shareholders?  What is most likely to hold it to its
main purpose, and to be least at the mercy of predatory interests and
functionless supernumeraries, and of the alternations of sullen
dissatisfaction and spasmodic revolt which at present distract it?
Whatever the system upon which industry is administered, one thing is
certain.  Its economic processes and results must be public, because
only if they are public can it be known whether the service of industry
is vigilant, effective and honorable, whether its purpose is being
realized and its function carried out.  The defense of secrecy in
business resembles the defense of adulteration on the ground that it is
a legitimate weapon of competition; indeed it has even less
justification than that famous doctrine, for the condition of effective
competition is publicity, and one motive for secrecy is to prevent it.

Those who conduct industry at the present time and who are most
emphatic that, as the Duke of Wellington said of the unreformed House
of Commons, they "have never read or heard of any measure up to the
present moment which can in any degree satisfy the mind" that the
method of conducting it can in any way be improved, are also those
apparently who, with some {124} honorable exceptions, are most
reluctant that the full facts about it should be known.  And it is
crucial that they should be known.  It is crucial not only because, in
the present ignorance of the real economic situation, all industrial
disagreements tend inevitably to be battles in the dark, in which
"ignorant armies clash by night," but because, unless there is complete
publicity as to profits and costs, it is impossible to form any
judgment either of the reasonableness of the prices which are charged
or of the claims to remuneration of the different parties engaged in
production.  For balance sheets, with their opportunities for
concealing profits, give no clear light upon the first, and no light at
all upon the second.  And so, when the facts come out, the public is
aghast at revelations which show that industry is conducted with
bewildering financial extravagance.  If the full facts had been
published, as they should have been, quarter by quarter, these
revelations would probably not have been made at all, because publicity
itself would have been an antiseptic and there would have been nothing
sensational to reveal.

The events of the last few years are a lesson which should need no
repetition.  The Government, surprised at the price charged for making
shells at a time when its soldiers were ordered by Headquarters not to
fire more than a few rounds per day, whatever the need for retaliation,
because there were not more than a few to fire, establishes a costing
department to analyze the estimates submitted by manufacturers and to
compare them, item by item, with the costs in its own factories.  It
finds that, through the mere pooling of knowledge, {125} "some of the
reductions made in the price of shells and similar munitions," as the
Chartered Accountant employed by the Department tells us, "have been as
high as 50% of the original price."  The household consumer grumbles at
the price of coal.  For once in a way, amid a storm of indignation from
influential persons engaged in the industry, the facts are published.
And what do they show?  That, after 2/6 has been added to the already
high price of coal because the poorer mines are alleged not to be
paying their way, 21% of the output examined by the Commission was
produced at a profit of 1/- to 3/- per ton, 32% at a profit of 3/- to
5/-, 13% at a profit of 5/- to 7/-, and 14% at a profit of 7/- per ton
and over, while the profits of distributors in London alone amount in
the aggregate to over $3,200,000, and the co-operative movement, which
aims not at profit, but at service, distributes household coal at a
cost of from 2/- to 4/- less per ton than is charged by the coal
trade![1]

"But these are exceptions."  They may be.  It is possible that in the
industries, in which, as the recent Committee on Trusts has told us,
"powerful Combinations or Consolidations of one kind or another are in
a position effectively to control output and prices," not only costs
are cut to the bare minimum but profits are inconsiderable.  But then
why insist on this humiliating tradition of secrecy with regard to
them, when every one who uses their products, and every one who renders
honest service to production, stands to gain by publicity?  If industry
is to become a profession, whatever its {126} management, the first of
its professional rules should be, as Sir John Mann told the Coal
Commission, that "all cards should be placed on the table."  If it were
the duty of a Public Department to publish quarterly exact returns as
to costs of production and profits in all the firms throughout an
industry, the gain in mere productive efficiency, which should appeal
to our enthusiasts for output, would be considerable; for the
organization whose costs were least would become the standard with
which all other types of organization would be compared.  The gain in
_morale_, which is also, absurd though it may seem, a condition of
efficiency, would be incalculable.  For industry would be conducted in
the light of day.  Its costs, necessary or unnecessary, the
distribution of the return to it, reasonable or capricious, would be a
matter of common knowledge.  It would be held to its purpose by the
mere impossibility of persuading those who make its products or those
who consume them to acquiesce, as they acquiesce now, in expenditure
which is meaningless because it has contributed nothing to the service
which the industry exists to perform.

The organization of industry as a profession does not involve only the
abolition of functionless property, and the maintenance of publicity as
the indispensable condition of a standard of professional honor.  It
implies also that those who perform its work should undertake that its
work is performed effectively.  It means that they should not merely be
held to the service of the public by fear of personal inconvenience or
penalties, but that they should treat the discharge of professional
{127} responsibilities as an obligation attaching not only to a small
_élite_ of intellectuals, managers or "bosses," who perform the
technical work of "business management," but as implied by the mere
entry into the industry and as resting on the corporate consent and
initiative of the rank and file of workers.  It is precisely, indeed,
in the degree to which that obligation is interpreted as attaching to
all workers, and not merely to a select class, that the difference
between the existing industrial order, collectivism and the
organization of industry as a profession resides.  The first involves
the utilization of human beings for the purpose of private gain; the
second their utilization for the purpose of public service; the third
the association in the service of the public of their professional
pride, solidarity and organization.

The difference in administrative machinery between the second and third
might not be considerable.  Both involve the drastic limitation or
transference to the public of the proprietary rights of the existing
owners of industrial capital.  Both would necessitate machinery for
bringing the opinion of the consumers to bear upon the service supplied
them by the industry.  The difference consists in the manner in which
the obligations of the producer to the public are conceived.  He may
either be the executant of orders transmitted to him by its agents; or
he may, through his organization, himself take a positive part in
determining what those orders should be.  In the former case he is
responsible for his own work, but not for anything else.  If he hews
his stint of coal, it is no business of his whether the pit is a {128}
failure; if he puts in the normal number of rivets, he disclaims all
further interest in the price or the sea-worthiness of the ship.  In
the latter his function embraces something more than the performance of
the specialized piece of work allotted to him.  It includes also a
responsibility for the success of the undertaking as a whole.  And
since responsibility is impossible without power, his position would
involve at least so much power as is needed to secure that he can
affect in practice the conduct of the industry.  It is this collective
liability for the maintenance of a certain quality of service which is,
indeed, the distinguishing feature of a profession.  It is compatible
with several different kinds of government, or indeed, when the unit of
production is not a group, but an individual, with hardly any
government at all.  What it does involve is that the individual, merely
by entering the profession should have committed himself to certain
obligations in respect of its conduct, and that the professional
organization, whatever it may be, should have sufficient power to
enable it to maintain them.

The demand for the participation of the workers in the control of
industry is usually advanced in the name of the producer, as a plea for
economic freedom or industrial democracy.  "Political freedom," writes
the Final Report of the United States Commission of Industrial
Relations, which was presented in 1916, "can exist only where there is
industrial freedom....  There are now within the body of our Republic
industrial communities which are virtually Principalities, oppressive
to those dependent upon them for a livelihood {129} and a dreadful
menace to the peace and welfare of the nation."  The vanity of
Englishmen may soften the shadows and heighten the lights.  But the
concentration of authority is too deeply rooted in the very essence of
Capitalism for differences in the degree of the arbitrariness with
which it is exercised to be other than trivial.  The control of a large
works does, in fact, confer a kind of private jurisdiction in matters
concerning the life and livelihood of the workers, which, as the United
States' Commission suggests, may properly be described as "industrial
feudalism."  It is not easy to understand how the traditional liberties
of Englishmen are compatible with an organization of industry which,
except in so far as it has been qualified by law or trade unionism,
permits populations almost as large as those of some famous cities of
the past to be controlled in their rising up and lying down, in their
work, economic opportunities, and social life by the decisions of a
Committee of half-a-dozen Directors.

The most conservative thinkers recognize that the present organization
of industry is intolerable in the sacrifice of liberty which it entails
upon the producer.  But each effort which he makes to emancipate
himself is met by a protest that if the existing system is incompatible
with freedom, it at least secures efficient service, and that efficient
service is threatened by movements which aim at placing a greater
measure of industrial control in the hands of the workers.  The attempt
to drive a wedge between the producer and the consumer is obviously the
cue of all the interests which are conscious that by themselves they
are unable to hold back {130} the flood.  It is natural, therefore,
that during the last few months they should have concentrated their
efforts upon representing that every advance in the demands and in the
power of any particular group of workers is a new imposition upon the
general body of the public.  Eminent persons, who are not obviously
producing more than they consume, explain to the working classes that
unless they produce more they must consume less.  Highly syndicated
combinations warn the public against the menace of predatory
syndicalism.  The owners of mines and minerals, in their new role as
protectors of the poor, lament the "selfishness" of the miners, as
though nothing but pure philanthropy had hitherto caused profits and
royalties to be reluctantly accepted by themselves.

The assumption upon which this body of argument rests is simple.  It is
that the existing organization of industry is the safeguard of
productive efficiency, and that from every attempt to alter it the
workers themselves lose more as consumers than they can gain as
producers.  The world has been drained of its wealth and demands
abundance of goods.  The workers demand a larger income, greater
leisure, and a more secure and dignified status.  These two demands, it
is argued, are contradictory.  For how can the consumer be supplied
with cheap goods, if, as a worker, he insists on higher wages and
shorter hours?  And how can the worker secure these conditions, if as a
consumer, he demands cheap goods?  So industry, it is thought, moves in
a vicious circle of shorter hours and higher wages and less production,
which in time must mean {131} longer hours and lower wages; and every
one receives less, because every one demands more.

The picture is plausible, but it is fallacious.  It is fallacious not
merely in its crude assumption that a rise in wages necessarily
involves an increase in costs, but for another and more fundamental
reason.  In reality the cause of economic confusion is not that the
demands of producer and consumer meet in blunt opposition; for, if they
did, their incompatibility, when they were incompatible, would be
obvious, and neither could deny his responsibility to the other,
however much he might seek to evade it.  It is that they do not, but
that, as industry is organized to-day, what the worker foregoes the
general body of consumers does not necessarily gain, and what the
consumer pays the general body of workers does not necessarily receive.
If the circle is vicious, its vice is not that it is closed, but that
it is always half open, so that part of production leaks away in
consumption which adds nothing to productive energies, and that the
producer, because he knows this, does not fully use even the productive
energy which he commands.

It is the consciousness of this leak which sets every one at cross
purposes.  No conceivable system of industrial organization can secure
industrial peace, if by "peace" is meant a complete absence of
disagreement.  What could be secured would be that disagreements should
not flare up into a beacon of class warfare.  If every member of a
group puts something into a common pool on condition of taking
something out, they may still quarrel about the size of the shares, as
children quarrel {132} over cake; but if the total is known and the
claims admitted, that is all they can quarrel about, and, since they
all stand on the same footing, any one who holds out for more than his
fellows must show some good reason why he should get it.  But in
industry the claims are not all admitted, for those who put nothing in
demand to take something out; both the total to be divided and the
proportion in which the division takes place are sedulously concealed;
and those who preside over the distribution of the pool and control
what is paid out of it have a direct interest in securing as large a
share as possible for themselves and in allotting as small a share as
possible to others.  If one contributor takes less, so far from it
being evident that the gain will go to some one who has put something
in and has as good a right as himself, it may go to some one who has
put in nothing and has no right at all.  If another claims more, he may
secure it, without plundering a fellow-worker, at the expense of a
sleeping partner who is believed to plunder both.  In practice, since
there is no clear principle determining what they ought to take, both
take all that they can get.

In such circumstances denunciations of the producer for exploiting the
consumer miss the mark.  They are inevitably regarded as an economic
version of the military device used by armies which advance behind a
screen of women and children, and then protest at the brutality of the
enemy in shooting non-combatants.  They are interpreted as evidence,
not that a section of the producers are exploiting the remainder, but
that a minority of property-owners, which is in opposition to {133}
both, can use its economic power to make efforts directed against those
who consume much and produce little rebound on those who consume little
and produce much.  And the grievance, of which the Press makes so much,
that some workers may be taking too large a share compared with others,
is masked by the much greater grievance, of which it says nothing
whatever, that some idlers take any share at all.  The abolition of
payments which are made without any corresponding economic service is
thus one of the indispensable conditions both of economic efficiency
and industrial peace, because their existence prevents different
classes of workers from restraining each other, by uniting them all
against the common enemy.  Either the principle of industry is that of
function, in which case slack work is only less immoral than no work at
all; or it is that of grab, in which case there is no morality in the
matter.  But it cannot be both.  And it is useless either for
property-owners or for Governments to lament the mote in the eye of the
trade unions as long as, by insisting on the maintenance of
functionless property, they decline to remove the beam in their own.

The truth is that only workers can prevent the abuse of power by
workers, because only workers are recognized as possessing any title to
have their claims considered.  And the first step to preventing the
exploitation of the consumer by the producer is simple.  It is to turn
all men into producers, and thus to remove the temptation for
particular groups of workers to force their claims at the expense of
the public, by removing the valid excuse that such gains as they may
get are {134} taken from those who at present have no right to them,
because they are disproportionate to service or obtained for no service
at all.  Indeed, if work were the only title to payment, the danger of
the community being exploited by highly organized groups of producers
would largely disappear.  For, when no payments were made to
non-producers, there would be no debatable ground for which to
struggle, and it would become evident that if any one group of
producers took more, another must put up with less.

Under such conditions a body of workers who used their strong strategic
position to extort extravagant terms for themselves at the expense of
their fellow-workers might properly be described as exploiting the
community.  But at present such a statement is meaningless.  It is
meaningless because before the community can be exploited the community
must exist, and its existence in the sphere of economics is to-day not
a fact but only an aspiration.  The procedure by which, whenever any
section of workers advance demands which are regarded as inconvenient
by their masters, they are denounced as a band of anarchists who are
preying on the public may be a convenient weapon in an emergency, but,
once it is submitted to analysis, it is logically self-destructive.  It
has been applied within recent years, to the postmen, to the engineers,
to the policemen, to the miners and to the railway men, a population
with their dependents, of some eight million persons; and in the case
of the last two the whole body of organized labor made common cause
with those of whose exorbitant demands it was alleged to be the victim.
But when these {135} workers and their sympathizers are deducted, what
is "the community" which remains?  It is a naïve arithmetic which
produces a total by subtracting one by one all the items which compose
it; and the art which discovers the public interest by eliminating the
interests of successive sections of the public smacks of the
rhetorician rather than of the statesman.

The truth is that at present it is idle to seek to resist the demands
of any group of workers by appeals to "the interests of society,"
because to-day, as long as the economic plane alone is considered,
there is not one society but two, which dwell together in uneasy
juxtaposition, like Sinbad and the Old Man of the Sea, but which in
spirit, in ideals, and in economic interest, are worlds asunder.  There
is the society of those who live by labor, whatever their craft or
profession, and the society of those who live on it.  All the latter
cannot command the sacrifices or the loyalty which are due to the
former, for they have no title which will bear inspection.  The
instinct to ignore that tragic division instead of ending it is
amiable, and sometimes generous.  But it is a sentimentality which is
like the morbid optimism of the consumptive who dares not admit even to
himself the virulence of his disease.  As long as the division exists,
the general body of workers, while it may suffer from the struggles of
any one group within it, nevertheless supports them by its sympathy,
because all are interested in the results of the contest carried on by
each.  Different sections of workers will exercise mutual restraint
only when the termination of the {136} struggle leaves them face to
face with each other, and not as now, with the common enemy.  The ideal
of a united society in which no one group uses its power to encroach
upon the standards of another is, in short, unattainable, except
through the preliminary abolition of functionless property.

Those to whom a leisure class is part of an immutable order without
which civilization is inconceivable, dare not admit, even to
themselves, that the world is poorer, not richer, because of its
existence.  So, when, as now it is important that productive energy
should be fully used, they stamp and cry, and write to _The Times_
about the necessity for increased production, though all the time they
themselves, their way of life and expenditure, and their very existence
as a leisure class, are among the causes why production is not
increased.  In all their economic plans they make one reservation,
that, however necessitous the world may be, it shall still support
them.  But men who work do not make that reservation, nor is there any
reason why they should; and appeals to them to produce more wealth
because the public needs it usually fall upon deaf ears, even when such
appeals are not involved in the ignorance and misapprehensions which
often characterize them.

For the workman is not the servant of the consumer, for whose sake
greater production is demanded, but of shareholders, whose primary aim
is dividends, and to whom all production, however futile or frivolous,
so long as it yields dividends, is the same.  It is useless to urge
that he should produce more wealth for the {137} community, unless at
the same time he is assured that it is the community which will benefit
in proportion as more wealth is produced.  If every unnecessary charge
upon coal-getting had been eliminated, it would be reasonable that the
miners should set a much needed example by refusing to extort better
terms for themselves at the expense of the public.  But there is no
reason why they should work for lower wages or longer hours as long as
those who are to-day responsible for the management of the industry
conduct it with "the extravagance and waste" stigmatized by the most
eminent official witness before the Coal Commission, or why the
consumer should grumble at the rapacity of the miner as long as he
allows himself to be mulcted by swollen profits, the costs of an
ineffective organization, and unnecessary payments to superfluous
middlemen.

If to-day the miner or any other workman produces more, he has no
guarantee that the result will be lower prices rather than higher
dividends and larger royalties, any more than, as a workman, he can
determine the quality of the wares which his employer supplies to
customers, or the price at which they are sold.  Nor, as long as he is
directly the servant of a profit-making company, and only indirectly
the servant of the community, can any such guarantee be offered him.
It can be offered only in so far as he stands in an immediate and
direct relation to the public for whom industry is carried on, so that,
when all costs have been met, any surplus will pass to it, and not to
private individuals.  It will be accepted only in so far as the workers
in each industry are not merely servants executing orders, but {138}
themselves have a collective responsibility for the character of the
service, and can use their organizations not merely to protect
themselves against exploitation, but to make positive contributions to
the administration and development of their industry.



[1] _Coal Industry Commission, Minutes of Evidence_, pp. 9261-9.



{139}

IX

THE CONDITION OF EFFICIENCY

Thus it is not only for the sake of the producers, on whom the old
industrial order weighed most heavily, that a new industrial order is
needed.  It is needed for the sake of the consumers, because the
ability on which the old industrial order prided itself most and which
is flaunted most as an argument against change, the ability to serve
them effectively, is itself visibly breaking down.  It is breaking down
at what was always its most vulnerable point, the control of the human
beings whom, with characteristic indifference to all but their economic
significance, it distilled for its own purposes into an abstraction
called "Labor."  The first symptom of its collapse is what the first
symptom of economic collapses has usually been in the past--the failure
of customary stimuli to evoke their customary response in human effort.

Till that failure is recognized and industry reorganized so that new
stimuli may have free play, the collapse will not correct itself, but,
doubtless with spasmodic revivals and flickerings of energy, will
continue and accelerate.  The cause of it is simple.  It is that those
whose business it is to direct economic activity are increasingly
incapable of directing the men upon whom economic activity depends.
The fault is not that of individuals, but of a system, of Industrialism
itself.  {140} During the greater part of the nineteenth century
industry was driven by two forces, hunger and fear, and the employer
commanded them both.  He could grant or withhold employment as he
pleased.  If men revolted against his terms he could dismiss them, and
if they were dismissed what confronted them was starvation or the
workhouse.  Authority was centralized; its instruments were passive;
the one thing which they dreaded was unemployment.  And since they
could neither prevent its occurrence nor do more than a little to
mitigate its horrors when it occurred, they submitted to a discipline
which they could not resist, and industry pursued its course through
their passive acquiescence in a power which could crush them
individually if they attempted to oppose it.

That system might be lauded as efficient or denounced as inhuman.  But,
at least, as its admirers were never tired of pointing out, it worked.
And, like the Prussian State, which alike in its virtues and
deficiencies it not a little resembled, as long as it worked it
survived denunciations of its methods, as a strong man will throw off a
disease.  But to-day it is ceasing to have even the qualities of its
defects.  It is ceasing to be efficient.  It no longer secures the
ever-increasing output of wealth which it offered in its golden prime,
and which enabled it to silence criticism by an imposing spectacle of
material success.  Though it still works, it works unevenly, amid
constant friction and jolts and stoppages, without the confidence of
the public and without full confidence even in itself, a tyrant who
must intrigue and cajole where formerly he commanded, a gaoler who, if
not yet {141} deprived of whip, dare only administer moderate
chastisement, and who, though he still protests that he alone can keep
the treadmill moving and get the corn ground, is compelled to surrender
so much of his authority as to make it questionable whether he is worth
his keep.  For the instruments through which Capitalism exercised
discipline are one by one being taken from it.  It cannot pay what
wages it likes or work what hours it likes.  In well-organized
industries the power of arbitrary dismissal, the very center of its
authority, is being shaken, because men will no longer tolerate a
system which makes their livelihood dependent on the caprices of an
individual.  In all industries alike the time is not far distant when
the dread of starvation can no longer be used to cow dissatisfied
workers into submission, because the public will no longer allow
involuntary unemployment to result in starvation.

And if Capitalism is losing its control of men's bodies, still more has
it lost its command of their minds.  The product of a civilization
which regarded "the poor" as instruments, at worst of the luxuries, at
best of the virtues, of the rich, its psychological foundation fifty
years ago was an ignorance in the mass of mankind which led them to
reverence as wisdom the very follies of their masters, and an almost
animal incapacity for responsibility.  Education and experience have
destroyed the passivity which was the condition of the perpetuation of
industrial government in the hands of an oligarchy of private
capitalists.  The workman of to-day has as little belief in the
intellectual superiority of many of those who direct industry as he has
in the morality of {142} the system.  It appears to him to be not only
oppressive, but wasteful, unintelligent and inefficient.  In the light
of his own experience in the factory and the mine, he regards the claim
of the capitalist to be the self-appointed guardian of public interests
as a piece of sanctimonious hypocrisy.  For he sees every day that
efficiency is sacrificed to shortsighted financial interests; and while
as a man he is outraged by the inhumanity of the industrial order, as a
professional who knows the difference between good work and bad he has
a growing contempt at once for its misplaced parsimony and its
misplaced extravagance, for the whole apparatus of adulteration,
advertisement and quackery which seems inseparable from the pursuit of
profit as the main standard of industrial success.

So Capitalism no longer secures strenuous work by fear, for it is
ceasing to be formidable.  And it cannot secure it by respect, for it
has ceased to be respected.  And the very victories by which it seeks
to reassert its waning prestige are more disastrous than defeats.
Employers may congratulate themselves that they have maintained intact
their right to freedom of management, or opposed successfully a demand
for public ownership, or broken a movement for higher wages and shorter
hours.  But what is success in a trade dispute or in a political
struggle is often a defeat in the workshop: the workmen may have lost,
but it does not follow that their employers, still less that the
public, which is principally composed of workmen, have won.  For the
object of industry is to produce goods, and to produce them at the
lowest cost in human effort.  {143} But there is no alchemy which will
secure efficient production from the resentment or distrust of men who
feel contempt for the order under which they work.  It is a commonplace
that credit is the foundation of industry.  But credit is a matter of
psychology, and the workman has his psychology as well as the
capitalist.  If confidence is necessary to the investment of capital,
confidence is not less necessary to the effective performance of labor
by men whose sole livelihood depends upon it.  If they are not yet
strong enough to impose their will, they are strong enough to resist
when their masters would impose theirs.  They may work rather than
strike.  But they will work to escape dismissal, not for the greater
glory of a system in which they do not believe; and, if they are
dismissed, those who take their place will do the same.

That this is one cause of a low output has been stated both by
employers and workers in the building industry, and by the
representatives of the miners before the Coal Commission.  It was
reiterated with impressive emphasis by Mr. Justice Sankey.  Nor is it
seriously contested by employers themselves.  What else, indeed, do
their repeated denunciations of "restriction of output" mean except
that they have failed to organize industry so as to secure the
efficient service which it is their special function to provide?  Nor
is it appropriate to the situation to indulge in full-blooded
denunciations of the "selfishness" of the working classes.  "To draw an
indictment against a whole nation" is a procedure which is as
impossible in industry as it is in politics.  Institutions must be
adapted to human nature, not {144} human nature to institutions.  If
the effect of the industrial system is such that a large and increasing
number of ordinary men and women find that it offers them no adequate
motive for economic effort, it is mere pedantry to denounce men and
women instead of amending the system.

Thus the time has come when absolutism in industry may still win its
battles, but loses the campaign, and loses it on the very ground of
economic efficiency which was of its own selection.  In the period of
transition, while economic activity is distracted by the struggle
between those who have the name and habit of power, but no longer the
full reality of it, and those who are daily winning more of the reality
of power but are not yet its recognized repositories, it is the
consumer who suffers.  He has neither the service of docile obedience,
nor the service of intelligent co-operation.  For slavery will work--as
long as the slaves will let it; and freedom will work when men have
learned to be free; but what will not work is a combination of the two.
So the public goes short of coal not only because of the technical
deficiencies of the system under which it is raised and distributed,
but because the system itself has lost its driving force--because the
coal owners can no longer persuade the miners into producing more
dividends for them and more royalties for the owners of minerals, while
the public cannot appeal to them to put their whole power into serving
itself, because it has chosen that they should be the servants, not of
itself, but of shareholders.

And, this dilemma is not, as some suppose, temporary, {145} the
aftermath of war, or peculiar to the coal industry, as though the
miners alone were the children of sin which in the last few months they
have been described to be.  It is permanent; it has spread far; and, as
sleeping spirits are stirred into life by education and one industry
after another develops a strong corporate consciousness, it will spread
further.  Nor will it be resolved by lamentations or menaces or
denunciations of leaders whose only significance is that they say
openly what plain men feel privately.  For the matter at bottom is one
of psychology.  What has happened is that the motives on which the
industrial system relied for several generations to secure efficiency,
secure it no longer.  And it is as impossible to restore them, to
revive by mere exhortation the complex of hopes and fears and ignorance
and patient credulity and passive acquiescence, which together made
men, fifty years ago, plastic instruments in the hands of
industrialism, as to restore innocence to any others of those who have
eaten of the tree of knowledge.

The ideal of some intelligent and respectable business men, the
restoration of the golden sixties, when workmen were docile and
confiding, and trade unions were still half illegal, and foreign
competition meant English competition in foreign countries, and prices
were rising a little and not rising too much, is the one Utopia which
can never be realized.  The King may walk naked as long as his
courtiers protest that he is clad; but when a child or a fool has
broken the spell a tailor is more important than all their admiration.
If the public, which suffers from the slackening of economic activity,
{146} desires to end its _malaise_, it will not laud as admirable and
all-sufficient the operation of motives which are plainly ceasing to
move.  It will seek to liberate new motives and to enlist them in its
service.  It will endeavor to find an alternative to incentives which
were always degrading, to those who used them as much as to those upon
whom they were used, and which now are adequate incentives no longer.
And the alternative to the discipline which Capitalism exercised
through its instruments of unemployment and starvation is the
self-discipline of responsibility and professional pride.

So the demand which aims at stronger organization, fuller
responsibility, larger powers for the sake of the producer as a
condition of economic liberty, the demand for freedom, is not
antithetic to the demand for more effective work and increased output
which is being made in the interests of the consumer.  It is
complementary to it, as the insistence by a body of professional men,
whether doctors or university teachers, on the maintenance of their
professional independence and dignity against attempts to cheapen the
service is not hostile to an efficient service, but, in the long run, a
condition of it.  The course of wisdom for the consumer would be to
hasten, so far as he can, the transition.  For, as at present
conducted, industry is working against the grain.  It is compassing sea
and land in its efforts to overcome, by ingenious financial and
technical expedients, obstacles which should never have existed.  It is
trying to produce its results by conquering professional feeling
instead of using it.  It is carrying not only its inevitable economic
burdens, but an ever increasing {147} load of ill will and skepticism.
It has in fact "shot the bird which caused the wind to blow" and goes
about its business with the corpse round its neck.  Compared with that
psychological incubus, the technical deficiencies of industry, serious
though they often are, are a bagatelle, and the business men who preach
the gospel of production without offering any plan for dealing with
what is now the central fact in the economic situation, resemble a
Christian apologist who should avoid disturbing the equanimity of his
audience by carefully omitting all reference either to the fall of man
or the scheme of salvation.  If it is desired to increase the output of
wealth, it is not a paradox, but the statement of an elementary
economic truism to say that active and constructive co-operation on the
part of the rank and file of workers would do more to contribute to
that result than the discovery of a new coal-field or a generation of
scientific invention.


The first condition of enlisting on the side of constructive work the
professional feeling which is now apathetic, or even hostile to it, is
to secure that when it is given its results accrue to the public, not
to the owner of property in capital, in land, or in other resources.
For this reason the attenuation of the rights at present involved in
the private ownership of industrial capital, or their complete
abolition, is not the demand of idealogues, but an indispensable
element in a policy of economic efficiency, since it is the condition
of the most effective functioning of the human beings upon whom,
though, like other truisms, it is often forgotten, {148} economic
efficiency ultimately depends.  But it is only one element.
Co-operation may range from mere acquiescence to a vigilant and zealous
initiative.  The criterion of an effective system of administration is
that it should succeed in enlisting in the conduct of industry the
latent forces of professional pride to which the present industrial
order makes little appeal, and which, indeed, Capitalism, in its war
upon trade union organization, endeavored for many years to stamp out
altogether.

Nor does the efficacy of such an appeal repose upon the assumption of
that "change in human nature," which is the triumphant _reductio ad
absurdum_ advanced by those who are least satisfied with the working of
human nature as it is.  What it does involve is that certain elementary
facts should be taken into account, instead of, as at present, being
ignored.  That all work is distasteful and that "every man desires to
secure the largest income with the least effort" may be as axiomatic as
it is assumed to be.  But in practice it makes all the difference to
the attitude of the individual whether the collective sentiment of the
group to which he belongs is on the side of effort or against it, and
what standard of effort it sets.  That, as employers complain, the
public opinion of considerable groups of workers is against an
intensification of effort as long as part of its result is increased
dividends for shareholders, is no doubt, as far as mere efficiency is
concerned, the gravest indictment of the existing industrial order.
But, even when public ownership has taken the place of private
capitalism, its ability to command {149} effective service will depend
ultimately upon its success in securing not merely that professional
feeling is no longer an opposing force, but that it is actively
enlisted upon the side of maintaining the highest possible standard of
efficiency which can reasonably be demanded.

To put the matter concretely, while the existing ownership of mines is
a positive inducement to inefficient work, public ownership
administered by a bureaucracy, if it would remove the technical
deficiencies emphasized by Sir Richard Redmayne as inseparable from the
separate administration of 3,000 pits by 1,500 different companies,
would be only too likely to miss a capital advantage which a different
type of administration would secure.  It would lose both the assistance
to be derived from the technical knowledge of practical men who know by
daily experience the points at which the details of administration can
be improved, and the stimulus to efficiency springing from the
corporate pride of a profession which is responsible for maintaining
and improving the character of its service.  Professional spirit is a
force like gravitation, which in itself is neither good nor bad, but
which the engineer uses, when he can, to do his work for him.  If it is
foolish to idealize it, it is equally shortsighted to neglect it.  In
what are described _par excellence_ as "the services" it has always
been recognized that _esprit de corps_ is the foundation of efficiency,
and all means, some wise and some mischievous, are used to encourage
it: in practice, indeed, the power upon which the country relied as its
main safeguard in an emergency was the professional zeal of the navy
and nothing else.  Nor is {150} that spirit peculiar to the professions
which are concerned with war.  It is a matter of common training,
common responsibilities, and common dangers.  In all cases where
difficult and disagreeable work is to be done, the force which elicits
it is normally not merely money, but the public opinion and tradition
of the little society in which the individual moves, and in the esteem
of which he finds that which men value in success.

To ignore that most powerful of stimuli as it is ignored to-day, and
then to lament that the efforts which it produces are not forthcoming,
is the climax of perversity.  To aim at eliminating from industry the
growth and action of corporate feeling, for fear lest an organized body
of producers should exploit the public, is a plausible policy.  But it
is short-sighted.  It is "to pour away the baby with the bath," and to
lower the quality of the service in an attempt to safeguard it.  A wise
system of administration would recognize that professional solidarity
can do much of its work for it more effectively than it can do it
itself, because the spirit of his profession is part of the individual
and not a force outside him, and would make it its object to enlist
that temper in the public service.  It is only by that policy, indeed,
that the elaboration of cumbrous regulations to prevent men doing what
they should not, with the incidental result of sometimes preventing
them from doing what they should--it is only by that policy that what
is mechanical and obstructive in bureaucracy can be averted.  For
industry cannot run without laws.  It must either control itself by
professional standards, or it must be controlled by officials who are
not of the {151} craft and who, however zealous and well-meaning, can
hardly have the feel of it in their fingers.  Public control and
criticism are indispensable.  But they should not be too detailed, or
they defeat themselves.  It would be better that, once fair standards
have been established, the professional organization should check
offenses against prices and quality than that it should be necessary
for the State to do so.  The alternative to minute external supervision
is supervision from within by men who become imbued with the public
obligations of their trade in the very process of learning it.  It is,
in short, professional in industry.

For this reason collectivism by itself is too simple a solution.  Its
failure is likely to be that of other rationalist systems.

  "Dann hat er die Theile in seiner Hand,
  Fehlt leider! nur das geistige Band."

If industrial reorganization is to be a living reality, and not merely
a plan upon paper, its aim must be to secure not only that industry is
carried on for the service of the public, but that it shall be carried
on with the active co-operation of the organizations of producers.  But
co-operation involves responsibility, and responsibility involves
power.  It is idle to expect that men will give their best to any
system which they do not trust, or that they will trust any system in
the control of which they do not share.  Their ability to carry
professional obligations depends upon the power which they possess to
remove the obstacles which prevent those obligations from being
discharged, and upon their willingness, when they possess the power, to
use it.

{152}

Two causes appear to have hampered the committees which were
established in connection with coal mines during the war to increase
the output of coal.  One was the reluctance of some of them to
discharge the invidious task of imposing penalties for absenteeism on
their fellow-workmen.  The other was the exclusion of faults of
management from the control of many committees.  In some cases all went
well till they demanded that, if the miners were penalized for
absenteeism which was due to them, the management should be penalized
similarly when men who desired to work were sent home because, as a
result of defective organization, there was no work for them to do.
Their demand was resisted as "interference with the management," and
the attempt to enforce regularity of attendance broke down.  Nor, to
take another example from the same industry, is it to be expected that
the weight of the miners' organization will be thrown on to the side of
greater production, if it has no power to insist on the removal of the
defects of equipment and organization, the shortage of trams, rails,
tubs and timber, the "creaming" of the pits by the working of easily
got coal to their future detriment, their wasteful layout caused by the
vagaries of separate ownership, by which at present the output is
reduced.

The public cannot have it both ways.  If it allows workmen to be
treated as "hands" it cannot claim the service of their wills and their
brains.  If it desires them to show the zeal of skilled professionals,
it must secure that they have sufficient power to allow of their
discharging professional responsibilities.  In order that workmen may
abolish any restrictions on output which {153} may be imposed by them,
they must be able to insist on the abolition of the restrictions, more
mischievous because more effective, which, as the Committee on Trusts
has recently told us, are imposed by organizations of employers.  In
order that the miners' leaders, instead of merely bargaining as to
wages, hours and working conditions, may be able to appeal to their
members to increase the supply of coal, they must be in a position to
secure the removal of the causes of low output which are due to the
deficiencies of the management, and which are to-day a far more serious
obstacle than any reluctance on the part of the miner.  If the workmen
in the building trade are to take combined action to accelerate
production, they must as a body be consulted as to the purpose to which
their energy is to be applied, and must not be expected to build
fashionable houses, when what are required are six-roomed cottages to
house families which are at present living with three persons to a room.

It is deplorable, indeed, that any human beings should consent to
degrade themselves by producing the articles which a considerable
number of workmen turn out to-day, boots which are partly brown paper,
and furniture which is not fit to use.  The revenge of outraged
humanity is certain, though it is not always obvious; and the penalty
paid by the consumer for tolerating an organization of industry which,
in the name of efficiency, destroyed the responsibility of the workman,
is that the service with which he is provided is not even efficient.
He has always paid it, though he has not seen it, in quality.  To-day
he is beginning to {154} realize that he is likely to pay it in
quantity as well.  If the public is to get efficient service, it can
get it only from human beings, with the initiative and caprices of
human beings.  It will get it, in short, in so far as it treats
industry as a responsible profession.

The collective responsibility of the workers for the maintenance of the
standards of their profession is, then, the alternative to the
discipline which Capitalism exercised in the past, and which is now
breaking down.  It involves a fundamental change in the position both
of employers and of trade unions.  As long as the direction of industry
is in the hands of property-owners or their agents, who are concerned
to extract from it the maximum profit for themselves, a trade union is
necessarily a defensive organization.  Absorbed, on the one hand, in
the struggle to resist the downward thrust of Capitalism upon the
workers' standard of life, and denounced, on the other, if it presumes,
to "interfere with management," even when management is most obviously
inefficient, it is an opposition which never becomes a government and
which has neither the will nor the power to assume responsibility for
the quality of the service offered to the consumer.  If the abolition
of functionless property transferred the control of production to
bodies representing those who perform constructive work and those who
consume the goods produced, the relation of the worker to the public
would no longer be indirect but immediate, and associations which are
now purely defensive would be in a position not merely to criticize and
oppose but to advise, to initiate and to enforce upon their own members
the obligations of the craft.

{155}

It is obvious that in such circumstances the service offered the
consumer, however carefully safeguarded by his representation on the
authorities controlling each industry, would depend primarily upon the
success of professional organizations in finding a substitute for the
discipline exercised to-day by the agents of property-owners.  It would
be necessary for them to maintain by their own action the zeal,
efficiency and professional pride which, when the barbarous weapons of
the nineteenth century have been discarded, would be the only guarantee
of a high level of production.  Nor, once this new function has been
made possible for professional organizations, is there any extravagance
in expecting them to perform it with reasonable competence.  How far
economic motives are balked to-day and could be strengthened by a
different type of industrial organization, to what extent, and under
what conditions, it is possible to enlist in the services of industry
motives which are not purely economic, can be ascertained only after a
study of the psychology of work which has not yet been made.  Such a
study, to be of value, must start by abandoning the conventional
assumptions, popularized by economic textbooks and accepted as
self-evident by practical men, that the motives to effort are simple
and constant in character, like the pressure of steam in a boiler, that
they are identical throughout all ranges of economic activity, from the
stock exchange to the shunting of wagons or laying of bricks, and that
they can be elicited and strengthened only by directly economic
incentives.  In so far as motives in industry have been considered
hitherto, it has usually been done {156} by writers who, like most
exponents of scientific management, have started by assuming that the
categories of business psychology could be offered with equal success
to all classes of workers and to all types of productive work.  Those
categories appear to be derived from a simplified analysis of the
mental processes of the company promoter, financier or investor, and
their validity as an interpretation of the motives and habits which
determine the attitude to his work of the bricklayer, the miner, the
dock laborer or the engineer, is precisely the point in question.

Clearly there are certain types of industry to which they are only
partially relevant.  It can hardly be assumed, for example, that the
degree of skill and energy brought to his work by a surgeon, a
scientific investigator, a teacher, a medical officer of health, an
Indian civil servant and a peasant proprietor are capable of being
expressed precisely and to the same degree in terms of the economic
advantage which those different occupations offer.  Obviously those who
pursue them are influenced to some considerable, though uncertain,
extent by economic incentives.  Obviously, again, the precise character
of each process or step in the exercise of their respective avocations,
the performance of an operation, the carrying out of a piece of
investigation, the selection of a particular type of educational
method, the preparation of a report, the decision of a case or the care
of live stock, is not immediately dependent upon an exact calculation
of pecuniary gain or loss.  What appears to be the case is that in
certain walks of life, while the occupation is chosen after a
consideration of {157} its economic advantages, and while economic
reasons exact the minimum degree of activity needed to avert dismissal
from it or "failure," the actual level of energy or proficiency
displayed depend largely upon conditions of a different order.  Among
them are the character of the training received before and after
entering the occupation, the customary standard of effort demanded by
the public opinion of one's fellows, the desire for the esteem of the
small circle in which the individual moves and to be recognized as
having "made good" and not to have "failed," interest in one's work,
ranging from devotion to a determination to "do justice" to it, the
pride of the craftsman, the "tradition of the service."

It would be foolish to suggest that any considerable body of men are
uninfluenced by economic considerations.  But to represent them as
amenable to such incentives only is to give a quite unreal and bookish
picture of the actual conditions under which the work of the world is
carried on.  How large a part such considerations play varies from one
occupation to another, according to the character of the work which it
does and the manner in which it is organized.  In what is called _par
excellence_ industry, calculations of pecuniary gain and loss are more
powerful than in most of the so-called professions, though even in
industry they are more constantly present to the minds of the business
men who "direct" it, than to those of the managers and technicians,
most of whom are paid fixed salaries, or to the rank and file of
wage-workers.  In the professions of teaching and medicine, in many
branches of the {158} public service, the necessary qualities are
secured, without the intervention of the capitalist employer, partly by
pecuniary incentives, partly by training and education, partly by the
acceptance on the part of those entering them of the traditional
obligations of their profession as part of the normal framework of
their working lives.  But this difference is not constant and
unalterable.  It springs from the manner in which different types of
occupation are organized, on the training which they offer, and the
_morale_ which they cultivate among their members.  The psychology of a
vocation can in fact be changed; new motives can be elicited, provided
steps are taken to allow them free expression.  It is as feasible to
turn building into an organized profession, with a relatively high code
of public honor, as it was to do the same for medicine or teaching.

The truth is that we ought radically to revise the presuppositions as
to human motives on which current presentations of economic theory are
ordinarily founded and in terms of which the discussion of economic
question is usually carried on.  The assumption that the stimulus of
imminent personal want is either the only spur, or a sufficient spur,
to productive effort is a relic of a crude psychology which has little
warrant either in past history or in present experience.  It derives
what plausibility it possesses from a confusion between work in the
sense of the lowest _quantum_ of activity needed to escape actual
starvation, and the work which is given, irrespective of the fact that
elementary wants may already have been satisfied, through the natural
disposition of ordinary men to maintain, and of extraordinary {159} men
to improve upon, the level of exertion accepted as reasonable by the
public opinion of the group of which they are members.  It is the old
difference, forgotten by society as often as it is learned, between the
labor of the free man and that of the slave.  Economic fear may secure
the minimum effort needed to escape economic penalties.  What, however,
has made progress possible in the past, and what, it may be suggested,
matters to the world to-day, is not the bare minimum which is required
to avoid actual want, but the capacity of men to bring to bear upon
their tasks a degree of energy, which, while it can be stimulated by
economic incentives, yields results far in excess of any which are
necessary merely to avoid the extremes of hunger or destitution.

That capacity is a matter of training, tradition and habit, at least as
much as of pecuniary stimulus, and the ability of a professional
association representing the public opinion of a group of workers to
raise it is, therefore, considerable.  Once industry has been liberated
from its subservience to the interests of the functionless
property-owner, it is in this sphere that trade unions may be expected
increasingly to find their function.  Its importance both for the
general interests of the community and for the special interests of
particular groups of workers can hardly be exaggerated.  Technical
knowledge and managerial skill are likely to be available as readily
for a committee appointed by the workers in an industry as for a
committee appointed, as now, by the shareholders.  But it is more and
more evident to-day that the crux of the economic situation is not
{160} the technical deficiencies of industrial organization, but the
growing inability of those who direct industry to command the active
good will of the _personnel_.  Their co-operation is promised by the
conversion of industry into a profession serving the public, and
promised, as far as can be judged, by that alone.

Nor is the assumption of the new and often disagreeable obligations of
internal discipline and public responsibility one which trade unionism
can afford, once the change is accomplished, to shirk, however alien
they may be to its present traditions.  For ultimately, if by slow
degrees, power follows the ability to wield it; authority goes with
function.  The workers cannot have it both ways.  They must choose
whether to assume the responsibility for industrial discipline and
become free, or to repudiate it and continue to be serfs.  If,
organized as professional bodies, they can provide a more effective
service than that which is now, with increasing difficulty, extorted by
the agents of capital, they will have made good their hold upon the
future.  If they cannot, they will remain among the less calculable
instruments of production which many of them are to-day.  The instinct
of mankind warns it against accepting at their face value spiritual
demands which cannot justify themselves by practical achievements.  And
the road along which the organized workers, like any other class, must
climb to power, starts from the provision of a more effective economic
service than their masters, as their grip upon industry becomes
increasingly vacillating and uncertain, are able to supply.



{161}

X

THE POSITION OF THE BRAIN WORKER

The conversion of industry into a profession will involve at least as
great a change in the position of the management as in that of the
manual workers.  As each industry is organized for the performance of
function, the employer will cease to be a profit maker and become what,
in so far as he holds his position by a reputable title, he already is,
one workman among others.  In some industries, where the manager is a
capitalist as well, the alteration may take place through such a
limitation of his interest as a capitalist as it has been proposed by
employers and workers to introduce into the building industry.  In
others, where the whole work of administration rests on the shoulders
of salaried managers, it has already in part been carried out.  The
economic conditions of this change have, indeed, been prepared by the
separation of ownership from management, and by the growth of an
intellectual proletariat to whom the scientific and managerial work of
industry is increasingly intrusted.  The concentration of businesses,
the elaboration of organization, and the developments springing from
the application of science to industry have resulted in the
multiplication of a body of industrial brain workers who make the old
classifications into "employers and workmen," which is still current in
common speech, an absurdly {162} misleading description of the
industrial system as it exists to-day.

To complete the transformation all that is needed is that this new
class of officials, who fifty years ago were almost unknown, should
recognize that they, like the manual workers, are the victims of the
domination of property, and that both professional pride and economic
interest require that they should throw in their lot with the rest of
those who are engaged in constructive work.  Their position to-day is
often, indeed, very far from being a happy one.  Many of them, like
some mine managers, are miserably paid.  Their tenure of their posts is
sometimes highly insecure.  Their opportunities for promotion may be
few, and distributed with a singular capriciousness.  They see the
prizes of industry awarded by favoritism, or by the nepotism which
results in the head of a business unloading upon it a family of sons
whom it would be economical to pay to keep out of it, and which,
indignantly denounced on the rare occasions on which it occurs in the
public service, is so much the rule in private industry that no one
even questions its propriety.  During the war they have found that,
while the organized workers have secured advances, their own salaries
have often remained almost stationary, because they have been too
genteel to take part in trade unionism, and that to-day they are
sometimes paid less than the men for whose work they are supposed to be
responsible.  Regarded by the workmen as the hangers-on of the masters,
and by their employers as one section among the rest of the "hands,"
they have the odium of capitalism without its power or its profits.

{163}

From the conversion of industry into a profession those who at present
do its intellectual work have as much to gain as the manual workers.
For the principle of function, for which we have pleaded as the basis
of industrial organization, supplies the only intelligible standard by
which the powers and duties of the different groups engaged in industry
can be determined.  At the present time no such standard exists.  The
social order of the pre-industrial era, of which faint traces have
survived in the forms of academic organization, was marked by a careful
grading of the successive stages in the progress from apprentice to
master, each of which was distinguished by clearly defined rights and
duties, varying from grade to grade and together forming a hierarchy of
functions.  The industrial system which developed in the course of the
nineteenth century did not admit any principle of organization other
than the convenience of the individual, who by enterprise, skill, good
fortune, unscrupulous energy or mere nepotism, happened at any moment
to be in a position to wield economic authority.  His powers were what
he could exercise; his rights were what at any time he could assert.
The Lancashire mill-owner of the fifties was, like the Cyclops, a law
unto himself.  Hence, since subordination and discipline are
indispensable in any complex undertaking, the subordination which
emerged in industry was that of servant to master, and the discipline
such as economic strength could impose upon economic weakness.

The alternative to the allocation of power by the struggle of
individuals for self-aggrandizement is its {164} allocation according
to function, that each group in the complex process of production
should wield so much authority as, and no more authority than, is
needed to enable it to perform the special duties for which it is
responsible.  An organization of industry based on this principle does
not imply the merging of specialized economic functions in an
undifferentiated industrial democracy, or the obliteration of the brain
workers beneath the sheer mass of artisans and laborers.  But it is
incompatible with the unlimited exercise of economic power by any class
or individual.  It would have as its fundamental rule that the only
powers which a man can exercise are those conferred upon him in virtue
of his office.  There would be subordination.  But it would be
profoundly different from that which exists to-day.  For it would not
be the subordination of one man to another, but of all men to the
purpose for which industry is carried on.  There would be authority.
But it would not be the authority of the individual who imposes rules
in virtue of his economic power for the attainment of his economic
advantage.  It would be the authority springing from the necessity of
combining different duties to attain a common end.  There would be
discipline.  But it would be the discipline involved in pursuing that
end, not the discipline enforced upon one man for the convenience or
profit of another.  Under such an organization of industry the brain
worker might expect, as never before, to come to his own.  He would be
estimated and promoted by his capacity, not by his means.  He would be
less likely than at present to find doors closed to him because of
poverty.  His {165} judges would be his colleagues, not an owner of
property intent on dividends.  He would not suffer from the perversion
of values which rates the talent and energy by which wealth is created
lower than the possession of property, which is at best their pensioner
and at worst the spend-thrift of what intelligence has produced.  In a
society organized for the encouragement of creative activity those who
are esteemed most highly will be those who create, as in a world
organized for enjoyment they are those who own.

Such considerations are too general and abstract to carry conviction.
Greater concreteness may be given them by comparing the present
position of mine-managers with that which they would occupy were effect
given to Mr. Justice Sankey's scheme for the nationalization of the
Coal Industry.  A body of technicians who are weighing the probable
effects of such a reorganization will naturally consider them in
relation both to their own professional prospects and to the efficiency
of the service of which they are the working heads.  They will properly
take into account questions of salaries, pensions, security of status
and promotion.  At the same time they will wish to be satisfied as to
points which, though not less important, are less easily defined.
Under which system, private or public ownership, will they have most
personal discretion or authority over the conduct of matters within
their professional competence?  Under which will they have the best
guarantees that their special knowledge will carry due weight, and
that, when handling matters of art, they will not be overridden or
obstructed by amateurs?

{166}

As far as the specific case of the Coal Industry is concerned the
question of security and salaries need hardly be discussed.  The
greatest admirer of the present system would not argue that security of
status is among the advantages which it offers to its employees.  It is
notorious that in some districts, at least, managers are liable to be
dismissed, however professionally competent they may be, if they
express in public views which are not approved by the directors of
their company.  Indeed, the criticism which is normally made on the
public services, and made not wholly without reason, is that the
security which they offer is excessive.  On the question of salaries
rather more than one-half of the colliery companies of Great Britain
themselves supplied figures to the Coal Industry Commission.[1]  If
their returns may be trusted, it would appear that mine-managers are
paid, as a class, salaries the parsimony of which is the more
surprising in view of the emphasis laid, and quite properly laid, by
the mine-owners on the managers' responsibilities.  The service of the
State does not normally offer, and ought not to offer, financial prizes
comparable with those of private industry.  But it is improbable, had
the mines been its property during {167} the last ten years, that more
than one-half the managers would have been in receipt of salaries of
under £301 per year, and of less than £500 in 1919, by which time
prices had more than doubled, and the aggregate profits of the
mine-owners (of which the greater part was, however, taken by the State
in taxation) had amounted in five years to £160,000,000.  It would be
misleading to suggest that the salaries paid to mine-managers are
typical of private industry, nor need it be denied that the probable
effect of turning an industry into a public service would be to reduce
the size of the largest prizes at present offered.  What is to be
expected is that the lower and medium salaries would be raised, and the
largest somewhat diminished.  It is hardly to be denied, at any rate,
that the majority of brain workers in industry have nothing to fear on
financial grounds from such a change as is proposed by Mr. Justice
Sankey.  Under the normal organization of industry, profits, it cannot
be too often insisted, do not go to them but to shareholders.  There
does not appear to be any reason to suppose that the salaries of
managers in the mines making more than 5/- profit a ton were any larger
than those making under 3/-.

The financial aspect of the change is not, however, the only point
which a group of managers or technicians have to consider.  They have
also to weigh its effect on their professional status.  Will they have
as much freedom, initiative and authority in the service of the
community as under private ownership?  How that question is answered
depends upon the form given to the administrative system through which
a public service is {168} conducted.  It is possible to conceive an
arrangement under which the life of a mine-manager would be made a
burden to him by perpetual recalcitrance on the part of the men at the
pit for which he is responsible.  It is possible to conceive one under
which he would be hampered to the point of paralysis by irritating
interference from a bureaucracy at headquarters.  In the past some
managers of "co-operative workshops" suffered, it would seem, from the
former: many officers of Employment Exchanges are the victims, unless
common rumor is misleading, of the latter.  It is quite legitimate,
indeed it is indispensable, that these dangers should be emphasized.
The problem of reorganizing industry is, as has been said above, a
problem of constitution making.  It is likely to be handled
successfully only if the defects to which different types of
constitutional machinery are likely to be liable are pointed out in
advance.  Once, however, these dangers are realized, to devise
precautions against them appears to be a comparatively simple matter.
If Mr. Justice Sankey's proposals be taken as a concrete example of the
position which would be occupied by the managers in a nationalized
industry, it will be seen that they do not involve either of the two
dangers which are pointed out above.  The manager will, it is true,
work with a Local Mining Council or pit committee, which is to "meet
fortnightly, or oftener if need be, to advise the manager on all
questions concerning the direction and safety of the mine," and "if the
manager refuses to take the advice of the Local Mining Council on any
question concerning the safety and health of the mine, such question
shall be referred to {169} the District Mining Council."  It is true
also that, once such a Local Mining Council is formally established,
the manager will find it necessary to win its confidence, to lead by
persuasion, not by mere driving, to establish, in short, the same
relationships of comradeship and good will as ought to exist between
the colleagues in any common undertaking.  But in all this there is
nothing to undermine his authority, unless "authority" be understood to
mean an arbitrary power which no man is fit to exercise, and which few
men, in their sober moments, would claim.  The manager will be
appointed by, and responsible to, not the men whose work he supervises,
but the District Mining Council, which controls all the pits in a
district, and on that council he will be represented.  Nor will he be
at the mercy of a distant "clerkocracy," overwhelming him with
circulars and overriding his expert knowledge with impracticable
mandates devised in London.  The very kernel of the schemes advanced
both by Justice Sankey and by the Miners' Federation is decentralized
administration within the framework of a national system.  There is no
question of "managing the industry from Whitehall."  The
characteristics of different coal-fields vary so widely that reliance
on local knowledge and experience are essential, and it is to local
knowledge and experience that it is proposed to intrust the
administration of the industry.  The constitution which is recommended
is, in short, not "Unitary" but "Federal."  There will be a division of
functions and power between central authorities and district
authorities.  The former will lay down general rules as to those
matters which must necessarily {170} be dealt with on a national basis.
The latter will administer the industry within their own districts,
and, as long as they comply with those rules and provide their quota of
coal, will possess local autonomy and will follow the method of working
the pits which they think best suited to local conditions.

Thus interpreted, public ownership does not appear to confront the
brain worker with the danger of unintelligent interference with his
special technique, of which he is, quite naturally, apprehensive.  It
offers him, indeed, far larger opportunities of professional
development than are open to all but a favored few to-day, when the
considerations of productive efficiency, which it is his special
_métier_ to promote, are liable to be overridden by short-sighted
financial interests operating through the pressure of a Board of
Directors who desire to show an immediate profit to their shareholders,
and who, to obtain it, will "cream" the pit, or work it in a way other
than considerations of technical efficiency would dictate.  And the
interest of the community in securing that the manager's professional
skill is liberated for the service of the public, is as great as his
own.  For the economic developments of the last thirty years have made
the managerial and technical _personnel_ of industry the repositories
of public responsibilities of quite incalculable importance, which,
with the best will in the world, they can hardly at present discharge.
The most salient characteristic of modern industrial organization is
that production is carried on under the general direction of business
men, who do not themselves necessarily know anything of productive
processes.  "Business" {171} and "industry" tend to an increasing
extent to form two compartments, which, though united within the same
economic system, employ different types of _personnel_, evoke different
qualities and recognize different standards of efficiency and
workmanship.  The technical and managerial staff of industry is, of
course, as amenable as other men to economic incentives.  But their
special work is production, not finance; and, provided they are not
smarting under a sense of economic injustice, they want, like most
workmen, to "see the job done properly."  The business men who
ultimately control industry are concerned with the promotion and
capitalization of companies, with competitive selling and the
advertisement of wares, the control of markets, the securing of special
advantages, and the arrangement of pools, combines and monopolies.
They are preoccupied, in fact, with financial results, and are
interested in the actual making of goods only in so far as financial
results accrue from it.


The change in organization which has, to a considerable degree,
specialized the spheres of business and management is comparable in its
importance to that which separated business and labor a century and a
half ago.  It is specially momentous for the consumer.  As long as the
functions of manager, technician and capitalist were combined, as in
the classical era of the factory system, in the single person of "the
employer," it was not unreasonable to assume that profits and
productive efficiency ran similarly together.  In such circumstances
the ingenuity with which economists proved {172} that, in obedience to
"the law of substitution," he would choose the most economical process,
machine, or type of organization, wore a certain plausibility.  True,
the employer might, even so, adulterate his goods or exploit the labor
of a helpless class of workers.  But as long as the person directing
industry was himself primarily a manager, he could hardly have the
training, ability or time, even if he had the inclination, to
concentrate special attention on financial gains unconnected with, or
opposed to, progress in the arts of production, and there was some
justification for the conventional picture which represented "the
manufacturer" as the guardian of the interests of the consumer.  With
the drawing apart of the financial and technical departments of
industry--with the separation of "business" from "production"--the link
which bound profits to productive efficiency is tending to be snapped.
There are more ways than formerly of securing the former without
achieving the latter; and when it is pleaded that the interests of the
captain of industry stimulate the adoption of the most "economical"
methods and thus secure industrial progress, it is necessary to ask
"economical for whom"?  Though the organization of industry which is
most efficient, in the sense of offering the consumer the best service
at the lowest real cost, may be that which is most profitable to the
firm, it is also true that profits are constantly made in ways which
have nothing to do with efficient production, and which sometimes,
indeed, impede it.

The manner in which "business" may find that the methods which pay
itself best are those which a truly {173} scientific "management" would
condemn may be illustrated by three examples.  In the first place, the
whole mass of profits which are obtained by the adroit capitalization
of a new business, or the reconstruction of one which already exists,
have hardly any connection with production at all.  When, for instance,
a Lancashire cotton mill capitalized at £100,000 is bought by a London
syndicate which re-floats it with a capital of £500,000--not at all an
extravagant case--what exactly has happened?  In many cases the
equipment of the mill for production remains, after the process, what
it was before it.  It is, however, valued at a different figure,
because it is anticipated that the product of the mill will sell at a
price which will pay a reasonable profit not only upon the lower, but
upon the higher, capitalization.  If the apparent state of the market
and prospects of the industry are such that the public can be induced
to believe this, the promoters of the reconstruction find it worth
while to recapitalize the mill on the new basis.  They make their
profit not as manufacturers, but as financiers.  They do not in any way
add to the productive efficiency of the firm, but they acquire shares
which will entitle them to an increased return.  Normally, if the
market is favorable, they part with the greater number of them as soon
as they are acquired.  But, whether they do so or not, what has
occurred is a process by which the business element in industry obtains
the right to a larger share of the product, without in any way
increasing the efficiency of the service which is offered to the
consumer.

Other examples of the manner in which the control of {174} production
by "business" cuts across the line of economic progress are the wastes
of competitive industry and the profits of monopoly.  It is well known
that the price paid by the consumer includes marketing costs, which to
a varying, but to a large, extent are expenses not of supplying the
goods, but of supplying them under conditions involving the expenses of
advertisement and competitive distribution.  For the individual firm
such expenses, which enable it to absorb part of a rival's trade, may
be an economy: to the consumer of milk or coal--to take two flagrant
instances--they are pure loss.  Nor, as is sometimes assumed, are such
wastes confined to distribution.  Technical reasons are stated by
railway managers to make desirable a unification of railway
administration and by mining experts of mines.  But, up to the war,
business considerations maintained the expensive system under which
each railway company was operated as a separate system, and still
prevent collieries, even collieries in the same district, from being
administered as parts of a single organization.  Pits are drowned out
by water, because companies cannot agree to apportion between them the
costs of a common drainage system; materials are bought, and products
sold, separately, because collieries will not combine; small coal is
left in to the amount of millions of tons because the most economical
and technically efficient working of the seams is not necessarily that
which yields the largest profit to the business men who control
production.  In this instance the wide differences in economic strength
which exist between different mines discourage the unification which is
economically desirable; naturally the {175} directors of a company
which owns "a good thing" do not desire to merge interests with a
company working coal that is poor in quality or expensive to mine.
When, as increasingly happens in other industries, competitive wastes,
or some of them, are eliminated by combination, there is a genuine
advance in technical efficiency, which must be set to the credit of
business motives.  In that event, however, the divergence between
business interests and those of the consumers is merely pushed one
stage further forward; it arises, of course, over the question of
prices.  If any one is disposed to think that this picture of the
economic waste which accompanies the domination of production by
business interests is overdrawn, he may be invited to consider the
criticisms upon the system passed by the "efficiency engineers," who
are increasingly being called upon to advise as to industrial
organization and equipment.  "The higher officers of the corporation,"
writes Mr. H. L. Gantt of a Public Utility Company established in
America during the war, "have all without exception been men of the
'business' type of mind, who have made their success through
financiering, buying, selling, etc....  As a matter of fact it is well
known that our industrial system has not measured up as we had
expected....  _The reason for its falling short is undoubtedly that the
men directing it had been trained in a business system operated for
profits, and did not understand one operated solely for production_.
This is no criticism of the men as individuals; they simply did not
know the job, and, what is worse, they did not know that they did not
know it."

{176}

In so far, then, as "Business" and "Management" are separated, the
latter being employed under the direction of the former, it cannot be
assumed that the direction of industry is in the hands of persons whose
primary concern is productive efficiency.  That a considerable degree
of efficiency will result incidentally from the pursuit of business
profits is not, of course, denied.  What seems to be true, however, is
that the main interest of those directing an industry which has reached
this stage of development is given to financial strategy and the
control of markets, because the gains which these activities offer are
normally so much larger than those accruing from the mere improvement
of the processes of production.  It is evident, however, that it is
precisely that improvement which is the main interest of the consumer.
He may tolerate large profits as long as they are thought to be the
symbol of efficient production.  But what he is concerned with is the
supply of goods, not the value of shares, and when profits appear to be
made, not by efficient production, but by skilful financiering or
shrewd commercial tactics, they no longer appear meritorious.  If, in
disgust at what he has learned to call "profiteering," the consumer
seeks an alternative to a system under which product is controlled by
"Business," he can hardly find it except by making an ally of the
managerial and technical _personnel_ of industry.  They organize the
service which he requires; they are relatively little implicated,
either by material interest or by psychological bias, in the financial
methods which he distrusts; they often find the control of their
professions by business men who are {177} primarily financiers
irritating in the obstruction which it offers to technical efficiency,
as well as sharp and close-fisted in the treatment of salaries.  Both
on public and professional grounds they belong to a group which ought
to take the initiative in promoting a partnership between the producers
and the public.  They can offer the community the scientific knowledge
and specialized ability which is the most important condition of
progress in the arts of production.  It can offer them a more secure
and dignified status, larger opportunities for the exercise of their
special talents, and the consciousness that they are giving the best of
their work and their lives, not to enriching a handful of uninspiring,
if innocuous, shareholders, but to the service of the great body of
their fellow-countrymen.  If the last advantage be dismissed as a
phrase--if medical officers of health, directors of education,
directors of the co-operative wholesale be assumed to be quite
uninfluenced by any consciousness of social service--the first two, at
any rate, remain.  And they are considerable.

It is this gradual disengagement of managerial technique from financial
interests which would appear the probable line along which "the
employer" of the future will develop.  The substitution throughout
industry of fixed salaries for fluctuating profits would, in itself,
deprive his position of half the humiliating atmosphere of predatory
enterprise which embarrasses to-day any man of honor who finds himself,
when he has been paid for his services, in possession of a surplus for
which there is no assignable reason.  Nor, once large incomes from
profits have been extinguished, need his salary be large, {178} as
incomes are reckoned to-day.  It is said that among the barbarians,
where wealth is still measured by cattle, great chiefs are described as
hundred-cow men.  The manager of a great enterprise who is paid
$400,000 a year, might similarly be described as a hundred-family man,
since he receives the income of a hundred families.  It is true that
special talent is worth any price, and that a payment of $400,000 a
year to the head of a business with a turnover of millions is
economically a bagatelle.  But economic considerations are not the only
considerations.  There is also "the point of honor."  And the truth is
that these hundred-family salaries are ungentlemanly.

When really important issues are at stake every one realizes that no
decent man can stand out for his price.  A general does not haggle with
his government for the precise pecuniary equivalent of his contribution
to victory.  A sentry who gives the alarm to a sleeping battalion does
not spend next day collecting the capital value of the lives he has
saved; he is paid 1/- a day and is lucky if he gets it.  The commander
of a ship does not cram himself and his belongings into the boats and
leave the crew to scramble out of the wreck as best they can; by the
tradition of the service he is the last man to leave.  There is no
reason why the public should insult manufacturers and men of business
by treating them as though they were more thick-skinned than generals
and more extravagant than privates.  To say that they are worth a good
deal more than even the exorbitant salaries which a few of them get is
often true.  But it is beside the point.  No one has any business to
{179} expect to be paid "what he is worth," for what he is worth is a
matter between his own soul and God.  What he has a right to demand,
and what it concerns his fellow-men to see that he gets, is enough to
enable him to perform his work.  When industry is organized on a basis
of function, that, and no more than that, is what he will be paid.  To
do the managers of industry justice, this whining for more money is a
vice to which they (as distinct from their shareholders) are not
particularly prone.  There is no reason why they should be.  If a man
has important work, and enough leisure and income to enable him to do
it properly, he is in possession of as much happiness as is good for
any of the children of Adam.



[1] The Coal Mines Department supplied the following figures to the
Coal Industry Commission (Vol. III, App. 66).  They relate to 57 per
cent. of the collieries of the United Kingdom.

  Salary, including bonus and                Number of Managers
  value of house and coal                      1913     1919

  £100 or less ...............................    4        2
  £101 to £200 ...............................  134        3
  £201 to £300 ...............................  280       29
  £301 to £400 ...............................  161      251
  £401 to £500 ...............................  321      213
  £501 to £600 ...............................   57      146
  £601 and over ..............................   50      152



{180}

XI

PORRO UNUM NECESSARIUM

So the organization of society on the basis of function, instead of on
that of rights, implies three things.  It means, first, that
proprietary rights shall be maintained when they are accompanied by the
performance of service and abolished when they are not.  It means,
second, that the producers shall stand in a direct relation to the
community for whom production is carried on, so that their
responsibility to it may be obvious and unmistakable, not lost, as at
present, through their immediate subordination to shareholders whose
interest is not service but gain.  It means, in the third place, that
the obligation for the maintenance of the service shall rest upon the
professional organization of those who perform it, and that, subject to
the supervision and criticism of the consumer, those organizations
shall exercise so much voice in the government of industry as may be
needed to secure that the obligation is discharged.  It is obvious,
indeed, that no change of system or machinery can avert those causes of
social _malaise_ which consist in the egotism, greed, or
quarrelsomeness of human nature.  What it can do is to create an
environment in which those are not the qualities which are encouraged.
It cannot secure that men live up to their principles.  What it can do
is to establish their social order upon principles to which, if they
please, they can {181} live up and not live down.  It cannot control
their actions.  It can offer them an end on which to fix their minds.
And, as their minds are, so, in the long run and with exceptions, their
practical activity will be.

The first condition of the right organization of industry is, then, the
intellectual conversion which, in their distrust of principles,
Englishmen are disposed to place last or to omit altogether.  It is
that emphasis should be transferred from the opportunities which it
offers individuals to the social functions which it performs; that they
should be clear as to its end and should judge it by reference to that
end, not by incidental consequences which are foreign to it, however
brilliant or alluring those consequences may be.  What gives its
meaning to any activity which is not purely automatic is its purpose.
It is because the purpose of industry, which is the conquest of nature
for the service of man, is neither adequately expressed in its
organization nor present to the minds of those engaged in it, because
it is not regarded as a function but as an opportunity for personal
gain or advancement or display, that the economic life of modern
societies is in a perpetual state of morbid irritation.  If the
conditions which produce that unnatural tension are to be removed, it
can only be effected by the growth of a habit of mind which will
approach questions of economic organization from the standpoint of the
purpose which it exists to serve, and which will apply to it something
of the spirit expressed by Bacon when he said that the work of man
ought to be carried on "for the glory of God and the relief of men's
estate."

{182}

Viewed from that angle issues which are insoluble when treated on the
basis of rights may be found more susceptible of reasonable treatment.
For a purpose, is, in the first place a principle of limitation.  It
determines the end for which, and therefore the limits within which, an
activity is to be carried on.  It divided what is worth doing from what
is not, and settles the scale upon which what is worth doing ought to
be done.  It is in the second place, a principle of unity, because it
supplies a common end to which efforts can be directed, and submits
interests, which would otherwise conflict, to the judgment of an
over-ruling object.  It is, in the third place, a principle of
apportionment or distribution.  It assigns to the different parties of
groups engaged in a common undertaking the place which they are to
occupy in carrying it out.  Thus it establishes order, not upon chance
or power, but upon a principle, and bases remuneration not upon what
men can with good fortune snatch for themselves nor upon what, if
unlucky, they can be induced to accept, but upon what is appropriate to
their function, no more and no less, so that those who perform no
function receive no payment, and those who contribute to the common end
receive honourable payment for honourable service.

  Frate, la nostra volontà quieta
  Virtù di carità, che fa volerne
  Sol quel ch'avemo, e d'altro non ci asseta.
  Si disiassimo esse più superne,
  Foran discordi li nostri disiri
  Dal voler di colui che qui ne cerne.
     *     *     *     *     *

{183}

  Anzi è formale ad esto beato esse
  Tenersi dentro alla divina vogli,
  Per ch'una fansi nostre vogli e stesse.
     *     *     *     *     *
  Chiaro mi fu allor com' ogni dove
  In Cielo è paradiso, e sì la grazia
  Del sommo ben d'un modo non vi piove.

The famous lines in which Piccarda explains to Dante the order of
Paradise are a description of a complex and multiform society which is
united by overmastering devotion to a common end.  By that end all
stations are assigned and all activities are valued.  The parts derive
their quality from their place in the system, and are so permeated by
the unity which they express that they themselves are glad to be
forgotten, as the ribs of an arch carry the eye from the floor from
which they spring to the vault in which they meet and interlace.

Such a combination of unity and diversity is possible only to a society
which subordinates its activities to the principle of purpose.  For
what that principle offers is not merely a standard for determining the
relations of different classes and groups of producers, but a scale of
moral values.  Above all, it assigns to economic activity itself its
proper place as the servant, not the master, of society.  The burden of
our civilization is not merely, as many suppose, that the product of
industry is ill-distributed, or its conduct tyrannical, or its
operation interrupted by embittered disagreements.  It is that industry
itself has come to hold a position of exclusive predominance among
human interests, which no single interest, and least of all the
provision of the {184} material means of existence, is fit to occupy.
Like a hypochondriac who is so absorbed in the processes of his own
digestion that he goes to his grave before he has begun to live,
industrialized communities neglect the very objects for which it is
worth while to acquire riches in their feverish preoccupation with the
means by which riches can be acquired.

That obsession by economic issues is as local and transitory as it is
repulsive and disturbing.  To future generations it will appear as
pitiable as the obsession of the seventeenth century by religious
quarrels appears to-day; indeed, it is less rational, since the object
with which it is concerned is less important.  And it is a poison which
inflames every wound and turns each trivial scratch into a malignant
ulcer.  Society will not solve the particular problems of industry
which afflict it, until that poison is expelled, and it has learned to
see industry itself in the right perspective.  If it is to do that, it
must rearrange its scale of values.  It must regard economic interests
as one element in life, not as the whole of life.  It must persuade its
members to renounce the opportunity of gains which accrue without any
corresponding service, because the struggle for them keeps the whole
community in a fever.  It must so organize industry that the
instrumental character of economic activity is emphasized by its
subordination to the social purpose for which it is carried on.



{185}

INDEX


  Abolition of private ownership, 147
  Absenteeism, 152
  Absolute rights, 50-51
  Absolutism in industry, 144
  Acquisitive societies, 29-32
  Administration, 115-116
  Allocation of power, 163-164
  American Constitution, 18-19, 52
  Annuities, 74
  Arbitration, compulsory, 101

  Bacon, quoted, 58, 181
  Bentham, 16, 52, 55
  Brain workers, position of the, 161-171
  British Coal Industry, reorganization of, 166-171
  Building Guilds, 103
  Building Trade Report, 106-110
  Bureaucracy, 116, 149

  Capitalism, and production, 173-176; downward thrust of, 154;
    in America, 101; losing control, 141-142, 148
  Cecil, Lord Hugh, 23, 58
  Cecil, Robert, 59
  Cecil, William, 59
  Church and State, 10-13
  Coal Industry Commission, 71, 126, 137, 143; report of, 166-167
  Coal Mines Committees, 152
  Combinations, 125, 130
  Committee on Trusts, 153
  Competition, 27
  Compulsory arbitration, 101
  Confiscations, 103
  Conservatism, the New, 28
  Consumer, exploitation of the, 133-134
  Co-operative Movement and cost of coal, 125

  Dante, quoted, 182-183
  Death Duties, 22
  Democratic control, 116
  Dickenson, Sir Arthur Lowes, 71
  Directorate control, 129
  Duckham, Sir Arthur, 119
  Duke of Wellington, quoted, 123

  Economic confusion, cause of, 131-132
  Economic discontent, increase of, 5
  Economic egotism, 27,
  Economic expansion, 9
  Efficiency, the condition of, 139-160; through _Esprit de Corps_, 149-150
  Employer, waning power of the, 140
  England, and natural right, 15-16; and France contrasted, 16-17;
    Industrialism in, 44-47; Liberal Movement in, 18;
    over-crowding of population in, 37; proprietary rights in,
    64 _et seq._
  English landlordism, 22-23
  Englishmen, characteristics of, 1-3; vanity of, 129
  English Revolution of 1688, 52
  Esch-Cummins Act, 118
  Expediency, rule of, 16

  Feudalism, 18
  Fixed salaries, 177-178
  Forced labor, 102
  France, social and industrial conditions in, 16-17;
    Feudalism in, 18; Revolution in, 15, 65, 69
  French Revolution, 15, 65, 69
  Function, definition of, 8; as a basis for remuneration, 41-42;
    as a basis of social reorganization, 180; Function and Freedom, 7
  Functional Society, 29, 84-90
  Functionless property-owners, 79, 86; abolishment of, 87-88;
    an expensive luxury, 87

  Gainford, Lord, quoted, 26, 111
  Gantt, H. L., 175
  Government control in war time, 25-26
  Ground-rents, 89-90, 91

  Hobson, Mr., 63
  "Hundred-Family Man," 178

  Imperial Tobacco Company, 116
  Incomes, 41
  Income Tax, 22
  Income without service, 68
  Individualism, 48-49
  Individual rights, 9
  Individual rights _vs._ social functions, 27
  Industrial problems, 7
  Industrial reorganization, 151, 155
  Industrial revolution, 9
  Industrial societies, 9
  Industrial warfare, cause of, and remedy for, 40-42
  Industrialism, 18; a poison, 184; compared to Militarism, 44-46;
    exaggerated estimate of its importance, 45-46; failure of present
    system, 139-141; nemesis of, 33-51; spread of, 30; tendency of,
    31-32
  Industry, and a profession, 94, 97; as a profession, 91 _et seq._,
    125-126; deficiencies of, 147; definition of, 6; how private
    control of may be terminated, 103-104; and the advantages of such
    a change, 106; Building Trades' Plan for, 108, 111; motives in,
    155-159; nationalization of, 104, 114-118; present organization
    of intolerable, 129; purpose of, 8, 46, 181; right organization
    of, 6-7; the means not the end, 46-47
  Inheritance taxes, 90
  Insurance, 74

  Joint control, 111-112
  Joint-stock companies, 66
  Joint-stock organizations, 97

  Labor, absolute rights of, 28; and capital, 98-100, 108; compulsory,
    100; control of breaking down, 139 _et seq._; degradation of, 35;
    forced, 102
  League of Nations, 101
  Liberal Movement, 18
  Locke, 14, 52, 55

  Management divorced from ownership, 112-113
  Mann, Sir John, 126
  Militarism, 44-45
  Mill, quoted, 89
  Mine managers, position of, 162, 166-168
  Mining royalties, 23-24, 88

  Nationalism, 48-49
  Nationalization, 114, 117; of the Coal Industry, 115, 165, 168-169
  Natural right in France, 15; in England, 15-16; doctrine of, 21

  Officials, position under the present economic system, 162
  Old industrial order a failure, 139; its effect on the consumer, 144
  Organization, for public service instead of private gains, 127
  Over-centralization, 121
  Ownership, a new system of, 112-114

  Pensioners, 34
  Poverty a symptom of social disorder, 5
  Private enterprise and public ownership, 118-120
  Private ownership, 120; abolition of, 147; of industrial capital,
    105-106
  Private rights and public welfare, 14-15
  Privileges, 24
  Producer, obligation of the, 127-128; responsibility of, 128
  Production, increased, 5; large scale and small scale, 87;
    misdirection of, 37-39; why not increased, 136
  Productivity, 4, 46
  Professional Spirit, the, 149-150
  Profits, and production, 173-176; division of, 133
  Proletariat, 19, 65
  Property, absolute rights of, 52, 80; and creative work, 52 _et seq._;
    classification of, 63, 64; complexity of, 75; functionless, 76-77, 81;
    in land, 56-60; in rights and royalties, 62; minority ownership
    of, 79; most ambiguous of categories, 53-54; passive ownership of,
    62; private, 70-72; protection of, 78-70; rights, 50-51; security in,
    72-73; socialist fallacy regarding, 86
  Proudhon, 54
  Publicity of costs and profits, 85, 123-124, 126, 132

  Redmayne, Sir Richard, 149
  Reformation the, 10-13; effect on society, 12-14
  Reform Bill of 1832, 69
  Religion, 10; changes in, 11-12
  Report of the United States Industrial Commission, 1916, 128-129
  Riches, meaning of, 98
  Rights of Man, French Declaration of, the, 16, 52
  Rights, and Functions, 8-19; doctrine of, 21 _et seq._, 43-44; without
    functions, 61
  Rights of the shareholder, 75
  Royalties, 23-24, 62
  Royalties, and property, 70; from coal mining properties, 88; a tax
    upon the industry of others, 89

  Sankey, Justice, 115, 117, 143, 165, 167, 168, 169
  Security of income, 73-75
  Service as a basis of remuneration, 25, 41-42, 85, 133
  Shareholders, 91-92
  Shells, cost of making, 124-125
  Smith, Adam, 15, 52, 95
  Social inequality, 36-37
  Social reorganizations, schemes for, 5
  Social war, 40
  Socialism, 53
  Society, duality of modern, 135
  Society, functional organization of, 52
  State management, 116, 117
  Steel Corporation, 116
  Supervision from within, 151
  Syndicalism, 130

  Taxation, 22
  Trusts, Report on, 23

  United States, transformation in, 65
  Utilitarians, the English, 17
  Utility, 16-17

  "Vicious Circle," the, 43, 123-138
  Voltaire, quoted, 55

  Wages and costs, 131
  Wages and profits, 78
  Wealth, acquisition of, 20 _et seq._; as foundation for public esteem,
    35-36; distribution of on basis of function, 77; fallacy of increased,
    42-45; how to increase output of, 147; inequality of, 37-38;
    limitation of, 36-37; output of, 37-38; production and consumption
    of--a contrast, 77-78; waste of, 37-39
  Whitley Councils, 110
  Women self-supporting, 74
  Worker and Spender, 77-78
  Workers, collective responsibility of, 154
  Workers' control, 128
  Workmen, as "hands," 152; present independence of, 145-146;
    responsibility of destroyed, 153-154; servants of shareholders,
    136-137; treatment of, 152-153





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