Bisocialism, the reign of the man at the margin

Front matter

DUKE

UNIVERSITY

LIBRARY

Preface

When a boj thirteen years of age residing on a farm in central Illinois, I one day read in a Chicago paper a diseussion concerning the hard times of 1873, in which some reference was made to "the present conflict between capital and labor.'' I do not remember any other part of the discussion, but these words attracted my attention and became fixed in my memory. At that time I had never seen a work on Political Economy, and it is doubtful if I had ever heard the term political economy used. However, I set myself to work upon the question of the seeming conflict between capital and labor referred to in the newspaper discussion. I do not know just how long I pondered over it, without any guidance but my own limited experience, but while still a boy I came to a decision upon the subject and formulated it in these words: "Naturally there is, and logically there can be, no conflict between capital and labor." From this conclusion I have never departed.

Some time after this I began to have access to books upon the subject of Political Economy and read even the

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() PREFACE

(Iryest of them with avidity. In the summer of 1883 I read Henry George's Progress and Poverty, an original work of great power and clearness, in which was first elaborated the doctrine of taking ground rent for public revenue. In 1893 I became acquainted, through translations and reviews, with the works of the Austrian economists. From them I received the suggestion that primarily value is not a matter of labor cost, but of utility. Their discussions, while purely theoretical and in many ways unsatisfactory and incomplete, led me to develop and apply to economic conditions the theory of value presented in the following pages. The illustrations used in Chapter IV of Part I in the analysis of utility and disutility are taken largely from the writings of the Austrian school.

I began WTiting this book ten and a half years ago. For a long time I clung to many of the terms and definitions, and to som^ of the doctrines of standard Political Economy, but was finally forced to abandon nearly all of them and to invent terms and to formulate definitions as well as doctrines distinctively my own. For this I offer no apology. It was not done merely in order to present something new, or something old in a new form, but because new thoughts and principles were necessary and could not be stated adequately with the old terms and in

PREFACE 7

the old way. Of about one hundred economic terms specifically defined or definitely used in these pages, nearly one-half are original in nomenclature and practically all in definition or application. All of the new terms, however, are such as tend to explain or define themselves.

To those friends who have so cheerfully and loyally assisted me in the preparation of this work, I desire to express my heartfelt thanks and appreciation.

July 4, 1903. Oliver R. Trowbridge.

Part I Economics

CHAPTER. PAGE.

I. Of the Economic Problem 13

II. Of Coxflicting Theories 23

III. Of Utility and Disutility 34

IV. Of the Marginal Labor-Form 46

V. Of IxorsTRY and Exchange 59

VI. Of the Marginal Pair 73

VII. Of Value and Cost 87

VIII. Of the Socialization of Utility 98

IX. Of Measurable Utility and Disutility 104

X. Of the PosITI^'E Theory of Value 114

XI. Of the Origin of Values 127

XII. Of Marginal and Differential Values 142

XIII. Of Ground Rent and Ground Value 157

XIV. Of Land Tenure 171

XV. Of Ground Rent, Wages and Interest 184

XVI. Of the Economic Standard of Valute 193

PABT II POLITICAL EC0N03IY

I. Of the Medium of Esch.vnge 201

II. Of Current Credit-Forms 213

III. Of Monopoly and Franchise Values 228

IV. Of the Socialization of Values 246

10 CONTENTS

CHAPTER. PAGE.

V. Of the Economic Imperative 258

VI. Of the Established Order 264

VII. Of Omnisocialism 279

VIII. Of Bisocialism 293

IX. Of Equality of Opportunity 307

X. Of Compensation 319

XI. Of Public Utilities 333

XII. Of Economic Evolution 345

XIII. Of the Individualization of Values 363

XIV. Of Inadequate Reforms and Remedies 380

XV. Of Social Disutilities 394

XVI. Of Social Solidabity 409

PART I

ECONOMICS

Make for thyself a definition or description of the thing which is presented to thee, so as to see distinctly what kind of a thing it is in its substance, in its nudity, in its complete entirety, and tell thyself its proper name, and the names of the things of which it has been compounded, and into which it will be resolved. For nothing is so productive of elevation of mind as to be able to examine methodically and truly every object which is presented to thee in life, and always to look at things so as to see at the same time what kind of universe this is, and what value everything has with reference to the whole, and what with reference to man.

Marcus Aurelius.

BISOCIALISM

PART I

ECONOMICS

Chapter I. Of The Economic Problem

My soul is sick with every day's report

Of wrong and outrage with which earth is filled.

Cowper.

A new and fair division of the goods and rights of this world should be the main object of those who conduct human affairs. De TocqiieviUe.

The young man of to-day who stands upon the threshold of business life is confronted by a serious problem. If he chooses a professional career, he sees before him a long and expensive course of preparation which, as a rule, only those can take who have unusual advantages of education or financial support. Yet when he completes this preparation he finds himself to be only one of a multitude, apparently, of young men for whom there seem to be no available opportunities. If he chooses a commercial career, he sees but small chance for a man of no means or of only moderate means to engage in any pursuit with reasonable hope of success. Statisticians of repute tell him that of all business enterprises undertaken over 95 per cent ultimately fail. If he has no financial means or but small means at his command, his only prospect seems to be a life of salaried service in the employment of another — probably in the employment of a great corporation. If he turns from these professional and commercial prospects to till the soil, he is met, where farming is most profitable, by a demand for approximately one-half of all he can earn, one year with another, for the privilege of tilling a given piece of ground — for the mere privilege of living and working upon the earth.

The problem which faces the average man of middle age is almost as serious as that which confronts the man who is just beginning to meet life's responsibilities. If a man in middle life has a profession, he sees the field becoming crowded with young men just out of school; and while these competitors themselves scarcely live, they secure enough business to cut down his income, or at least to prevent it from increasing as formerly. If he is a merchant, he sees his trade gradually dwindling away because of the department store and the mail order house with which he must compete with odds against him. If he is a small manufacturer, he sees himself giving way little by little before the merciless competition of the trust. If a tenant farmer, he sees his rents rising year by year, while the increase in the price of lands makes it more difficult for him to secure even a small farm of his own. If he is a wage earner, he realizes that his position be-

OF THE ECONOMIC PROBLEM 15

comes more precarious every day, and that to lose his employment is a calamity most fearful for himself and those dependent upon him to contemplate.

But of all persons who must live by their labor from year to year the man who is approaching old age has most to dread. In the economy of the present day there is no place for the old man. Although he may have served faithfully for thirty or even forty years, he fears more and more as the weeks go by that with the next pay envelope he will receive the notice, becoming well nigh inevitable, that his services are no longer needed. He looks forward to the time when, like an old horse, he will be turned out to die.

In such circumstances it is not strange that men are discussing as never before the evils which now befall the masses, and that they ask of Economic Science some explanation of the origin of these evils and demand of it a remedy. In vain has workman delved, inventor planned, and scientist sought the laws of force and life; in vain has patriot died and statesman wrought unless the economist shall solve the problem which confronts him. People see readily enough that the miseries of the established order can not be for lack of sufficient property for all, because while many are in want, or in dire fear of want, a few persons are possessed of fortunes beyond the dreams of avarice.

The conviction is growing among all the classes we have considered that the trouble lies in the laws which affect the distribution of property. But when they turn to Economic Science for a satisfactory solution of this t; bisocialism— economics

matter, they are confronted by so many divergent and conflicting theories upon every phase of every question tliat they are likely to become discouraged and to conclude that a clear and complete solution of economic problems is impossible. They find not only that different writers uphold different theories, but, with one or two notable exceptions, given writers upon economic subjects uphold theories upon various phases of their themes which are iitterly inconsistent with one another. It seems impossible to take the writings of any writer or school of writers upon economic subjects, and from such writings frame a complete treatise of Economic Science consistent in all its parts. Yet when fully analyzed all theories which have been or m'ay hereafter be advanced along economic lines may be classified as supporting one of three schools of thought. All such theories are either anarchistic in their tendencies, or they tend to support the established order substantially as it exists, or they tend to support some form of socialism.

In a later chapter we shall ascertain the proper scope of Economic Science, and define and distinguish its two branches — Economics and Political Economy. For the present it is sufficient to say that the general subject which we are to pursue has to do with the question. What should be the policy of the State with reference to the institution of property? This is the economic problem. By the "State" we mean throughout this discussion the body politic commonly called the Government, whether this body politic manifests itself in the nation, the political division called a state, or territory, or prov-

OF THE ECONOMIC PROBLEM 17

ince, or any subdivision of these, such as county, city or other municipality. By the "institution of property" we mean property with reference to its legal status — ^the sum total of what we usually call property rights under the law. The State determines what shall be deemed property, fixes and regulates the tenure by which it is held, and undertakes to protect the owner of property in the enjoyment thereof.

Viewed as a whole, Economic Science presents a double aspect. Upon the one hand it raises questions concerning the nature, the proper sphere and functions of government, and even of its raison d'etre (reason for existence). Upon the other hand it raises two fundamental questions concerning the legal status of property; first, What things are rightfully the subject of property? and, second, "What should be the policy of the State with reference to the individualization or socialization, or both, of those things which are rightfully the subject of property?

From the first point of view the most fundamental question raised by our inquiry is that of the raison d'etre of government. Upon this question all men are divided into two classes; they are either anarchists or governmentalists.

Were it not for the mistaken notions which prevail even among persons generally well informed concerning anarchists and anarchism, we should pass these people and their doctrines without discussion. As it is, we are impelled to say that anarchists themselves are divided into two classes as different from each other as light from darkness. They all see the e^^ls of misgovernment, past and present, and conclude that these evils are inherent attributes of every form of government, and that the only remedy is the abolition of all government. They agree, also, that all government is based solely upon physical force. But here they part. One class believes in opposing force with force, and some individuals even believe in removing rulers by assassination. These anarchists of the sanguinary type we shall call revolutionary anarchists. They are comparatively few in number, but their occasional deeds of violence, especially against the heads of governments, give them and their doctrines great prominence, and all anarchists are indiscriminately condemned along with them in the public mind.

The other class of anarchists take an exactly opposite view of the situation. Being opposed to government because it is based, as they maintain, upon physical force, they do not deem it consistent to oppose it with force, and do not advocate resort to force in any circumstances. They are even less participant in government than the Quakers. An anarchist of this philosophic type — an evolutionary as distinguished from a revolutionary anarchist — not only refuses to oppose government with force, but he refuses voluntarily to uphold it even with his vote. He not only has conscientious scruples against being a soldier, but against being a part of the civil machinery of government in any way. Yet in matters in which he has no choice he yields peaceably to the government. He will not vote, because voting is not compulsory. But he will pay taxes and do other similar things under compulsion without any show or even thought of physical resistance.

OF THE ECONOMIC PROBLEM lir

In this attitude of peaceableuess he has no superior. He talks against the existence of government even where speech is not free; hut he favors the abolition of government by peaceable means. The mode of procedure which he advocates is the abolition of the exercise, one after another, of the various functions of government as now constituted. This, if carried out, will bring about a state of non-government in which every man, according to this doctrine, will do as he sees fit, without injury or hindrance to any other man in the enjoyment of equal freedom. This is the ideal of evolutionary anarchy. Unless Economic Science can refute the claim of the anarchist that such a consummation is possible in the absence of government (and only in the absence of government), the police power of the State will struggle with him in vain.

The theory of the evolutionary anarchists does not imply that under an anarchistic regime every man would isolate himself, and that there would be nothing of the cooperation of modern life. Quite the contrary. Such anarchists believe in cooperation; they would live and work together in communities, but their cooperation as well as their communism would be purely voluntary. There would be no body politic to say to any man "thou shalt" and "thou shalt not." Nor could any man say these things to another with authority.

It is conceded by evolutionary anarchists that under the system which they advocate great cities with their skyscraping buildings, myriads of luxuries, and gigantic business enterprises would not exist. But neither, they claim, would there be any jails, penitentiaries, poorhouses, insane asylums or suicides. These things, say the anarchists, are the price which we now pay for the so-called advantages of a false civilization.

Opposed to the anarchists are all persons who advocate the maintenance of government. Such persons we have called governmentalists. All persons, therefore, favor either anarchism or governmentalism.

Anarchism is that condition of society which prevails in the absence of all forms of governmental polity.

Governmentalism is that condition of society which prevails under any form of governmental polity.

A distinction must be made between anarchism and individualism. Individualism does not imply an entire negation of government, but simply a limitation upon its activities in certain directions and especially in the matter of its polity toward property, property values and industrial enterprises. Individualism, while distinctly negative in character, constitutes a form of governmental polity.

Individualism is that form of governmental polity by virtue of which the State leaves property, property values and industrial enterprises to individual ownership, operation and control.

The doctrines of all governmentalists tend either to uphold the established order substantially as it exists, simply increasing its individualism a little here or its socialism a little there; or to substitute for the established order, or for some material part of it, a form of systemic socialism.

Socialism is that form of governmental polity by virtue of which the State takes unto itself property, property

OF THE ECONOMIC PROBLEM 31

values and industrial enterprises for the common use and benefit of all the people.

In the established order there are several socialistic features, but they are unrelated to one another and do not constitute essential parts of a distinctively socialistic system. The postoffice department of our national government is such a socialistic feature; the public schools maintained in the several states furnish another illustration. Yet there is at present no well-defined economic relation between these socialistic features; either might exist without the other. Such examples of socialism in present conditions are purely sporadic. The governments v/hich maintain them disclaim any intent to establish systemic socialism to any degree in any of their departments.

Sporadic Socialism is that form of socialism in which the various socialistic features of government are unrelated to one another and do not constitute essential parts of a distinctively socialistic system.

Systemic Socialism is that form of socialism in which the various socialistic features of government are related to one another and constitute essential parts of a distinctively socialistic system.

The fact that the established order maintains purely socialistic features without committing itself to socialism as a system in any degree is the result of the individualistic conceptions which pervade the common thought. These conceptions are expressed in such aphorisms as these: "That government is best which governs least." "The less government the better, provided the end be attained."

22 BISCK^IALISM— ECONOMICS

Such conceptions of individualism are strongly impregnated with truth, but the)' are as sporadic in their inception and application as are the conceptions of sporadic eocialism. Individualism as it is manifested to-day as a governmental polity is simply a negation. It acts merely ari a check upon the tendency toward sociali-sm; it has no definite and complete doctrine, working plan or program of its own; nor does it point to any distinct line of demarcation between those things which are within the proper sphere and purview of government and those which are not.

Those persons whose doctrines tend to uphold present conditions we shall call standard economists. Some of their doctrines are socialistic and others are individualistic in their tendencies. Indeed, in one respect the standard economists agree with the anarchists, for like the anarcliists they believe that government — the body politic — is an evil. Like the socialists, on the other hand, they believe that government is necessary. According as the standard economists incline toward one or the other of these inconsistent doctrines, they advocate the curtailment or the increase, respectively, of governmental powers and functions, but not to the extent of anarchy upon the one hand nor of systemic socialism upon the other.

CHAPTEE II.

OF CONFLICTING THEORIES.

Hate not each other because you differ in opinion — rather love each other; for it is impossible that in such a variety of sentiments there should not be some fixed point on which all men ought to unite. Zoroaster.

Anarchy is based upon the theory that government is both evil and unnecessary, and that, being an unnecessary evil, it should be abolished. The established order is based upon the conception that while government is an evil, it is a necessary evil, and must be maintained at whatever cost. In his "Politics for Young Americans" Charles Nordhoff expressed the current theory of government as follows: "Governments may be said to be necessary evils, their necessity arising out of the selfishness and stupidity of mankind."

The conception of socialism concerning the nature and necessity of government differs wholly from that of anarchy, and also, upon one point, from that expressed by Mr. Xordhoff. Socialism regards government not only as necessary, but as a necessary good. It regards government as arising not out of the stupidity, but out of the intelligence of mankind; and not out of their selfishness, but rather out of their common desire for more complete cooperation. The conceptions of these different schools with reference to the proper sphere and functions of government will be left for discussion in a future chapter; it being understood, of course, that all anarchists deny to the State any proper sphere or function with reference either to persons or property. The remainder of our discussion will have to do chiefly with those who are governmentalists of one school or the other; either upholders of the established order — standard economists— or socialists. Each of these schools is divided into two classes or factions. The theories of one faction of the standard economists tend to uphold the established order substantially without change; the members of this faction constitute the conservatives of modern politics. The theories of the other faction tend to change the established order in certain details or along certain lines, but without fundamentally attacking any existing institution. The members of this faction m'ay be distinguished in a general ■way as the liberals of modern politics.

Upon the question as to what may rightfully be made the subject of private property the standard economists say, in substance, that all things which are now treated as such property are rightfully so treated. No distinction is made by them between things which are the gifts of nature and things which are distinctively the result of the mental and physical exertion of man. They unqualifiedly uphold private property in natural opportunities as well as in labor products. There is nothing outside of our fellow men which we can succeed in appropriating that is not recognized as a fit subject of private property under the present system. If air and sunshine were susceptible of private and exclusive appropriation, they would also be treated as private property under the theory of the standard economists. Indeed, both air and sunshine are susceptible of private appropriation and control to a slight degree, and just to that degree they are made the subject of private property. Suits at law sometimes arise in our courts which involve nothing except a claim upon one side to uninterrupted use of light and air in a given locality, and upon the other side a claim to the legal right to intercept such use by the improvement of adjoining realty or otherwise.

Upon the question of the individualization or socialization of property standard economists also tend to maintain that whatever is, is substantially right. In some of its features the established order tends strongly towards individualism; in others it upholds and maintains features which are purely socialistic. The postoffice and the public school are excellent examples of socialism. Yet the general trend of the established order may be said to be towards individualism. While supporting both of these tendencies so far as they are exemplified in present conditions, standard Political Economy indicates no clear line of demarcation between them. It points out no criterion by which it may be definitely and positively determined whether a certain kind of property or a certain kind of business should or should not be socialized.

While the theories of standard Political Economy may be divided into those which are conservative and those which are more or less liberal, the persons who accept the standard doctrines can not be so classified with any approach to accuracy. The reason of this is that standard Political Economy furnishes no central truth by which its adherents may at all times be guided and by which economic doctrines may at all times be tested. The same man is often very conservative upon one question and liberal almost to radicalism upon another, so that the classification of conservative and liberal must be applied to doctrines rather than to individuals.

The advocates of systemic socialism are divided into two classes, and by a clear line of demarcation. One faction of this school is in favor of the socialization of all forms of property in so far as they may be used in economic production and distribution. For this reason we shall call them omnisocialists and their doctrines omnisocialism.* Like the standard economists, they make no distinction between natural bounties and the products of labor. But unlike the standard economists, they would, in the first instance, socialize them both. Nothing would be individualized under a regime of omnisocialism until it had passed through the hands and ownership of the State and had reached the hands of its final consumer.

Under this form of socialism there would be a collective ownership of all the means of production and distribution. This would involve the collective ownership of all land used productively and all capital. There would be no production whatever on private account or with private means of any kind. There would be no market — no buying or selling between individuals — and no money. There would be no lending of capital nor payment of interest. The State would be the only employer in productive or distributive enterprises. Payment would be made in social

* Omni, from Latin omnis, all.

labor-time checks, and prices would be put upon goods in the public storehouse according to the social labor necessary for their production. As between the State and the citizen labor-time checks would be the only medium of exchange. As between individuals there would be no medium of exchange and no use for any. There would be no chance for the making of a profit by the individual, and to the omnisocialist this is the great desideratum. The private ownership of capital and the making of private profits are two of the things most condemned by socialists of this type. They would eliminate from social life all forms of commercial comj3etition, for it is to competition that they attribute the great evils of modern life, and especially the spoliation of the laborer of all of his product except a bare living according to the accepted standard at any given time. For a bare living, they claim, is all that the laborer receives in present conditions, and he must constantly struggle against the tendencies of the existing system in order to get even his living and to maintain its standard.

The underlying principle of omnisocialism with reference to production is sufficiently stated in its demand for the collective ownership of all means of production and distribution. Dr. Schaflle has called this demand the "quintessence of socialism." Upon the question of the collective ownership of all the means of distribution omnisocialists agree. But as to the principle which should govern distribution by the State of the collective product, omnisocialists are divided into three classes, each of which is distinguished by its formula concerning the rightful distributive share of the individual worker. The formula concerning the contribution of each worker to the State is the same for all; they are all to contribute according to their ability. The first class, which we may designate as the Christian socialists, use the following formula:

From each according to his ability; to each according to his needs.

The second class, which we may designate as the Bellamy socialists, use this formula:

From each according to his ability; to all equally.

The third class, known as the Marxian socialists, present the following:

From each according to his ability; to each according to his deeds.

According to some writers of the standard school the formula of the Marxian socialists is ciso the formula which governs distribution in present conditions. It is maintained by them that under our much berated competitive system men share in the product according to the efficacy of their respective efforts. But this the socialist denies. He maintains that, however it may be in theory, in practice the distributive process under the present system is a mere substitution of legal power for the physical force of ancient times in the appropriation by some of the earnings of others, and that both the ancient and modern regimes conform to the plan described in Wordsworth's Rob Roy's Grave:

"For why? Because the good old rule Sufficeth them; the simple plan, That they should take who have the power, And they should keep who can."

There is not so much difference between the ideals of the Marxian and the Bellamy socialists as their formulas would indicate. The principles of Marxian socialism, while gauging individual rewards by individual deeds, would tend, so it is said, to induce all men to put forth substantially the same effort, measured in labor-time, and thus to realize substantial equality of reward.

Opposed to the omniaocialists are those socialists who would limit the State to the socialization of but two things, viz., natural opportunities — ^represented by ground values — and public utilities. These persons we shall call bisocialists, and their doctrine bisocialism.* They make a positive distinction between things which are the gifts of nature and things which are the products of man's mental and physical exertion. This distinction is of vital importance to their theory. They contend that what a man creates is rightfully his own as against the world. But that natural opportunities are the bounties of nature to all men and can not rightfully be made the private property of some men to the exclusion of all others, except upon the annual payment into the public treasury of the differential value of such natural opportunities. This plan would allow private possession and exclusive use of natural opportunities in the same manner and by the same legal titles as under the present order; and yet such natural opportunities would be effectively socialized by the socialization of their differential rental values. The socialization of these values would supply the State with revenue, so