The cooperative commonwealth in its outlines

Front matter

THE

COOPERATIVE COMMONWEALTH

LV ITS OUTLINES

Contents

Chapter. Page.

To the Header 7

I. The Profit System 12

Chapter I. The Profit System

4 4 The working class is the only class which is not a class. It is the nation. It represents, so to speak, the body as a whole, of which the other classes only represent special organs. These organs, no doubt, have great and indispensable functions, but for most purposes of government the State consists of the vast laboring majority. Its welfare depends on what their Jives are like." — Frederic Harrison*

u They (Political Economists) are men of only one idea — Wealth, how to procure and increase it. Their rules seemed infallibly certain to that supreme end. What did it signify that a great part of mankind was made meanwhile even more wretched than before, provided wealth on the whole increased?" — Catholic Quarterly Beview, Jan. 1880.

"That the masses of men are robbed of their fair earnings — that they have to work much harder than they ought to work for a very much poorer living than they ought to get, is to my mind clear." — Henry George.

THE PROFIT SYSTEM.

We shall commence with an object lesson ; it will consist chiefly of figures, and figures are tiresome things ; — but the lesson will be a short one. Here are four diagrams, — ucakes" let us call them :

Wages for

$ 437,000,000.

Wages foi

Surplus,

1,300,000

63 per cent.

" hands."

$ 805,000,000.

Wages for

Surplus,

2,000,000

53 per cent.

" hands. "

$ 1,310,000,000.

Wages for ,

Surplus,

2,739,000

48 1-3 per cent.

« hands."

$ 1,834,000,000.

These "cakes " represent the net produce of all manufacturing

THE PROFIT SYSTEM.

industries of the United States for the respective years ; mark! not the gross value of the products on leaving the factories, but only that value which has been given to them in the factories minus the wear and tear of machinery. That is to say, we have arrived at the above figures by first adding the value of the raw materials and the depreciation of all machinery, implements and buildings together, and then deducting that sum from the value of the finished products. The value of the raw-materials used, and the gross value we have gathered from the respective U. S. Census Reports, but for the estimate of the wear and tear of machinery &c there are absolutely no data anywhere to be had. We have taken five per cent, of all the capital invested in all manufactures in the respective years as probably a fair estimate of such wear and tear, as but a small part of all capital is invested in machinery and implements, where most of the wear and tear occurs. Supposing that we are somewhat out of the way on one side or the other in this guess, it will not materially affect the conclusions of this chapter.

Observe, first, that these " cakes" grow at an even and a very great rate ;

The cake of 1850 has a value of $ 437 million dollars ; that of 1860 " u " " 805 " " that of 1870 (reduced to gold) 1310 U " that of 1880 a value of 1834 " "

Observe, next, that these •fc cakes " are divided by a vertical line into two very nearly equal portions. That to the left was paid to the workers in the form of wages; that to the right we shall, for the time being, call the " Surplus."

Note, also, — for we do not want to make facts, but simply to declare and explain them — that the portion: wages, increases both absolutely and relatively in proportion to the number of workers :

The average wage in 1850 was 248 dollars ; u u u u 1860 u 292 "

The portion : surplus grows at a great rate :

THE PROFIT SYSTEM.

In 1850 it amounted to 200 million dollars;

" 1880 it rose to 886 44 44 The average 44 surplus," that is, when divided by the number of establishments, was as follows : In 1850 it was $1,500. 44 1860 44 44 3,000.

44 1870 it fell to 2,736, because the number of establishments had nearly doubled.

In 1880 it rose to 3,490, the number of establishments being nearly the same as in 1870.

Here ends the lesson. It was all figures ; but we should say that to a reflective mind these figures are not dumb, but speaking.

The central point of interest seems to us to be this "surplus." How does this surplus originate ? For to know what a thing is, we must know the process of its origin. How come these cakes — the net results of our industrial production — to be divided that way? In order to answer these questions we shall have to dissect the system of production which now prevails.

Take a number of moneyed men who agree to invest their superfluities in some industrial enterprise. They come together, form themselves into a joint-stock company and elect officers ; such companies, in fact, now own and operate some of our largest establishments, and the tendency is that all industries of any consequence in time will be carried on by them. Suppose then our moneyed men engaged in the cotton, or woolen, or iron and steel industry ; either one of these will serve our purpose equally well, as the 4 surplus ' was in 1880 about the same in proportion in all of them. Suppose they engage in the making of cotton cloth. None of these men need have any knowledge whatever of the work to be done, and as a matter of fact the stockholders of existing joint-stock companies have no such knowledge. They need not know anything, indeed, except to add and divide — this is not added impertinently, but simply to emphasize a fact most pertinent to our subject. All that they need do is to hire a manager at a

THE PEOFIT SYSTEM.

stated salary and place their funds at his disposal.

This manager then rents a factory — a cotton-" mill ^ — or has one built; goes then into the market and buys spindles, bales of cotton, and other machinery and raw materials. All that low is wanting is Labor ; but that is also to be found in the market — plenty of it. The manager buys as much as he wants of it. Note, however, here a difference. The machinery and raw material he has to pay for on, or a short time after, delivery ; not quite so with Labor. With that a contract is made to employ it for a week or a month at an agreed price, and then to pay for it after having used it.

All these wares — machinery, cotton and Labor — are now taken to the cotton mill, where our men with money may, if they think fit, look on while Labor spins and weaves the cotton into cloth, using up in that process a certain small portion of the machinery and factory. Everybody now knows, that this cloth is not made for the personal use of these moneyed men or their families — and we shall see in another chapter that this fact is a truly distinguishing mark ol the era we are living in — but that it is manufactured wholly for other people whom these men never saw or heard of. This cloth is made for the express purpose of being taken into and disposed of in the market of the world. For there, all wares, from guano to gold, from rags to silk, have one quality in common; that of possessing value.

Now, please mark that nothing can so effectually kill our cause as the successful impeachment of the answer we shall give to the question : What is value? or the deductions we shall draw from it. Our explanation of what this "surplus " is and what Capital is, hinges on this question, which is, indeed, u Videe mere" — the umother idea" of Socialism. We shall,theref ore, suspend our sketch of the present mode of production, in order first to answer it.

But mark again, our exposition of u value" is none other than that of David Kicardo. Socialists regard Ricardo as the last political economist who made any substantial addition to the science ; the one who, in regard to value and wages, advanced it to its highest plane. And it was only after the sup-

THE PEOFIT SYSTEM.

porters of the present social order found out, what use could be made of his teachings, that Bastiat and his disciples came to their succor and tried to impugn these teachings. We build on Eicardo as our foundation.

To the question then. By" value " we mean value in exchange; we do not mean value in use, or utility, or, what seems to us a more luminous name, and what Locke called it : worth. The worth or utility o f shoes is their capacity to protect the feet; their value is what they will fetch in the market, Their value is their relation to other wares, in some way or other; is another name for equivalence.

But relation in what way? Not relation of worths. Worth, or utility, is undoubtedly presupposed, but it does not determine the value. That will be seen from the following illustrations :

The reason why a man wants to purchase a pair of shoes, is that he needs them, that they are useful, that they possess " worth" to him. But their usefulness is not at all the reason why he p#ys $2.00 for them He does not pay twenty times as much for them as for a ten cent loaf of bread, because they are twenty times as useful to him. Why not ? Because the two " worths " or two usefulnesses are just as incomparable as a pound of butter and a peck of apples would be. Again, a loaf of bread is c* worth" infinitely more to a man who has not eaten anything for fortyeight hours than to one who just comes from a hearty dinner; yet the former can buy the loaf just as cheaply as the latter. Value, then, is no relation of " worths," of usefulnesses.

Nor has money anything to do with determining values. Wares would have value, the same as they have now, if all money of all kinds were suddenly annihilated. In order to eliminate that disturbing factor : money, we shall suppose an exchange of goods for goods — pure barter.

Assume, then, a shoemaker to exchange one pair of boots for a coat, another similar pair for a table, a third pair for one hundred pounds of bread, a fourth pair for forty bushels of coal, and a fifth pair for a book. All these articles are said to be equal in value.

THE PROFIT SYSTEM.

But equality presupposes comparison. We only compare such articles with each other that are similar. In what respect, then, are the above, articles similar, except that of being useful, which we saw was no point of comparison? They are dissimilar in regard to the material, out of which they are made and the purposes for which they are made. They are, on the other hand, similar in this respect t;hat they have been produced by human labor, working on natural products, which, again, have been won by human labor. They have, then, this property in common, that they have sprung from Nature, and contain in them a certain amount of human labor. Labor is their father and Nature is their mother.

Nature, however, performs her work gratuitously. It must, then, be human labor which gives these various articles their value.

That is, also, the teaching of Ricardo. He lays it down as a fundamental principle, that the exchange values of wares the supply of which*nay be indefinitely increased, (as is the case with these articles we enumerated) depend, exclusively, on the quantities of labor, necessarily required to produce them and bring them to market, in all states of society. In another place he says : *4 In all cases, wares rise in value, because more labor is expended."

These various articles, however, have not only value; they were supposed to have equal value, consequently they must • contain an equal amount of human labor. And so it is.

These amounts are first measured by the time devoted to produce these articles. Thus, it is easy enough to say, how much bakenng labor is contained in the bread; how much tailoring labor in the coat &c. t

These various labors, however, are very different in kind, you will say. Undoubtedly. But the difference consists simply in being more or less complicated. It takes, simply, more time to learn the one than the other. The most complicated kind of work can always be reduced to ordinary unskilled labor, may always be considered as multiplied common labor. Thus digging is easier to learn than type sotting. There is contained in every hour's work of the carpenter a part of the time he devoted to learning his trade. This is still more apparent in the literary labor contained in a book. Years may be requisite for the preliminary work, months or even years may have to be devoted to special studies, while the mere writing of the manuscript may take but a few months. One hour of writing may thus, be equivalent to twelve, or many more, hours of common labor.

In this connection Ricardo very pertinently remarks UI am not inattentive to the difficulty of comparing one hour's labor in one employment with the same duration of labor in another. But the estimation of different qualities of Labor comes soon to be adjusted in the market with sufficient precision for all practical purposes **

But we are not yet ready to define what Value is. Suppose one man required twice as much time to make a pair of boots as is usually required, and suppose he should then want from the tailor two coats in exchange, instead of one, be probably would get some such answer as this : " I don't care how long time it takes you to make such a pair of boots. I know, that on an average, an average shoemaker can make them in half that time, and therefore your labor is of no more value." Value is not then determined by the time which this or that worker may need.

Again. Suppose tomorrow a machine is invented and generally introduced which will make two pair of boots in the same time that now is required for one pair, Then the Value will be reduced one-half.

We, then, define Value as : the quantity of common human labor, measured by time, which on an average is requisite, by the implements generally used, to produce a given commodity.

We should now go on with our illustration and state the deduction which Socialists draw from the definition just given, were it not for some misunderstandings that very likely already have arisen in many a reader's mind.

Thus, one may object: Suppose I find a diamond in the highway. Its value is, certainly, far above the trouble of picking it up. Does not this show that Bastiat's definition of Yal-

THE PROFIT SYSTEM.

tie : that its measure is " the service done to the buyer, in saving him a certain amount of effort," is the more correct one. We answer : People are not in the habit of finding diamonds in the highways. If they were, diamonds would soon be as cheap as pebbles. Diamonds will come to the finder dear enough, if he were to seek them in Hindostan or Brazil, where they are usually found. Remember that the average amount of labor is a part of our definition.

A word more in regard to that theory of " service," which so many reformers in our country have got into their heads without knowing to whom they owe it. Bastiat it was who invented that term in order to get over the apparent mischief Ricardo's theory worked ; who expressly selected it because its meaning was equivocal. Its efficacy lies entirely in the shifting uses of an ambiguous term. Bastiat's definition really amounts to saying, that the value of a railroad-ticket from Boston to Worcester is measured by the time, trouble and expense which I may \fc save " in not walking or driving that distance ! Why, our progress depends on exactly the reverse ! On this, that values of articles become constantly less and less in proportion to the trouble I should have to undergo in producing them by my own efforts ! So that, finally, values and troubles of mine bear no relation at all to each other.

Again, we shall, of course, be charged with having disregarded the law of Demand and Supply. And yet, we distinctly mentioned, that we, so far, only spoke of articles that may be indefinitely increased. Wares, that cannot be thus increased, like rare pictures and wines, and other wares in times of scarcity, have what is called, a ki monopoly value," that is, their value is not measured by the labor contained— crystalized — in them at all, but by Demand and Supply, exclusively. And even with regard to wares that may be indefinitely increased (the vast majority of all wares) we, with Ricardo, do not deny that 4* there are accidental and temporary deviations of the actual market from their primary, and natural price."

That which we lay stress upon is, that the labor expended on wares measures, and i's, their primary and natural value. Labor expended constitutes, so to speak, their level value. De-

THE PEOFIT SYSTEM.

mand and Supply have, as to those wares, simply the effect of making their price (that is, their value expressed in money — in gold and silver) vibrate, now a little above, now a little below that level value of theirs; exactly as the wind raises and depresses the waves in respect to the level of the sea.

We claim, then :— First, in the words of Ricardo : "Nature by the aid of machinery adds to utilities (to " Worths ") by making society richer; but the assistance which it affords, adds nothing to Values, but always makes the latter fall." And, on the other hand, that Human Labor and Scarcity create all Values. But since it is evident, that Scarcity cannot create anything real, we must conclude that the Values which are due to it, are unreal ones ; and that it is human Labor alone that creates all real values. [This of course, does not imply, that there is not much Labor which does not create any Values at all.] So it is not only now, but so it has always been. So it will always be under any industrial system.

We can now return to our sketch. We left the manager having taken the cotton cloth into the world's market for sale. Suppose one hundred hours of common labor (that is, the unskilled labor to which, as we have seen, all skilled labor can be ultimately reduced) necessary, under the prevailing mode of production, to make this cloth, and another hundred hours of common labor requisite to produce the bales of cotton and that part of the machinery which has been used up, then the value of the finished cotton cloth is two hundred hours of common labor. That is, they will exchange with that amount of labor crystallized in any other ware. Suppose they are exchanged (disregarding for the moment the oscillating influence of Demand and Supply) for an amount of gold, embodying two hundred hours of common labor. That gold is then taken to the office of our company.

But, since equal amounts of labor are exchanged, why do these moneyed men engage in this operation? Do they do it for fun?

Not a bit of it. We have now arrived at the Social* 1st deduction which is drawn from our definition of value,

THE PROFIT SYSTEM.

and which made it so important, that it should be thoroughly understood. Our moneyed men first deduct from that heap of gold lying before them their outlay for raw materials and the wear and tear of machinery. The balance — the " cake" in fact — they divide into two, let us say, equal portions. The one portion they give to Labor, and the other — ?

Remember that we stated, that there is plenty of labor in the market. Labor now-a-days is a ware. Being a ware it possesses both Worth and Value. Its worth is its ability to produce our u cakes " — Values. Labor creates these. And its (labor's) Value is precisely what the value of other wares is : the amount of common human labor, necessary to u raise " and maintain a laborer, in the manner customary at a given time and in a given country.

Labor as Bicardo says, " has its natural value — depending on the price of necessaries — and its market price," vibrating above and below the former. The laborer, in other words, must sell his labor for wages, now a little above, now a little below what it costs him to live and bring up his family.

That which we have hitherto called "the surplus," then arises, because the laborer gets only about half of what he produces. And what becomes of it? Fancy these moneyed men reasoning to themselves : u True, this surplus is the product of our Labor, but didn't we agree to pay a stated price for that; and haven't we paid it? True, also, that we have done nothing but going through the effort of hiring our manager and looking on. Never mind! we call it profit." That name they give it and put it into their pockets.

From this point we have no more use for the vague word " Surplus " ; we are now entitled to call it by the appropriate name : Fleecings. If there was an English word for the process of abstracting honey from the bees, we should prefer that, for the process of pocketing the proceeds of Labor is also a stealthy one. Let it, however be distinctly understood that in adopting this word 4W fieecings" we have not the remotest idea of reflecting upon persons; we use it, and shall use it repeatedly, to condemn as impressively as possible the system which allows and sometimes compels one class of men virtu-

THE PROFIT SYSTEM.

ally to say to another class : u If you will work five hours a clay for us gratuitously, we will enable you to work the othef five hours for yourselves " — that is, to condemn the Profit Sys* tem, the Wage-System. Observe that we said " one class of men." For, while in our illustration we assumed that the owners of the cotton mill had all the means, needed for their enterprise, we know that in many cases employers have to rent land on which to build their factories and to borrow money to defray their expenses. Such employers, of course, do not put all the fleecings into their own pockets, but have to divide with land owners, bankers and other u gentlemen at large." But the fact is — and on that it is we lay stress — that the workers receive only about half of what they produce, just enough to keep up life and strength and bring up a new generation of laborers, while the other half stealthily passes into the pockets of quite another class of men.

Now we can illustrate our " cakes," so that they present this appearance :

Values for i860.

Values for 1850.

Interest.

Wages.

Profit.

n o

$ 437,000,000.

Product of Labor.

Rent.

$ 805,00^,000. Product of Labor,

Values for 1870.

Interest.

Wages .

Profit.

Rent.

THE

PROFIT

SYSTEM.

Values for 1880,

Interest.

Wages.

Profit.

Rent.

Here also is the place to note the answer to another question which the object-lesson may suggest: What is the average amount which the employing class fleeced from each worker during the respective census years?

By the way, we ought here to remark that it will not do to trust implicitly these or other calculations that might be made on figures in the Census Reports (remember it is the employers who have furnished all data) ; especially is a comparison of one census year with another liable to be very misleading, since one Report differs materially from another both in method and accuracy. But these Reports are of great service, when only, as here, a rough, approximate idea of the reality is required.

We then find that in 1880 — a fairly prosperous year, as all the above census years were, compared with our years of dis« tress — the employer paid the worker on an average $346 in wages and fleeced, on an average, from him the sum of $324. That, perhaps, to many does not seem extravagant.

THE PROFIT SYSTEM.

But he who employed 10 workmen gained $3,240

* " " " 500 " " 162,000

" " " " 1000 " " 324,000.

TTiree Hundred and Twenty-four Thousand dollars this latter employer gained, fleeced, u accumulated " (mark) ! in one year ! For what ? what had the workers in return? The privilege each to earn three hundred and forty-six dollars ! The privilege to use the soil, the machinery and all the resources of our civilization, which this employer possesses !

It is on purpose that we so far in our exposition have avoided to use the word " Capital." Political Economists have surrounded this category with such a hazy atmosphere that the word now denotes a good many things. Yet, the question : What is Capital? is of fundamental importance and relates to the whole structure of our present Social order. We want that question answered, and the preceeding pages, indeed, have been written for that purpose. But we are not concerned about the meaning of the word — throughout this work we care for the essence of things and not for the definition of words. By " Capital" we mean what in popular speech is meant.

He is called a u capitalist" who possesses wealth which brings him an income without any work on his part. True, many capitalists do some work of one kind or another, but the remuneration they receive for that work has nothing to do with their incomes as "capitalists" ; these latter are something over and above such remuneration. We, therefore, mean by kt Capital " : that part of wealth which yields its possessors an income without work. But we are just as willing to adopt the definition of some Economists, that Capital is u the part of wealth which is employed productively with a view to profit by sale of the produce," for it is only by being thus employed, that it yields an income.

The question, then, which we are now intent upon finding an answer to is : What is the nature, the essence of that which

THE PROFIT SYSTEM.

we have agreed to call u Capital '1? We want to Iznow it, and therefore must learn the process of its origin. That is a comparatively easy thing to us who already know the origin of the " Surplus." Simply observe what our moneyed men. the operators of the cotton mill, are doing. They add their fleecings to what wealth they had already, and make that increased wealth pass through such another operation as we already have described. The oftener they do that and the more operatives they employ, the more surplus labor their wealth absorbs. Now we have u Capital" and u Capitalists." It is these fleecings which, absorbed by wealth, turns it into a Capital," and the pocketing these fleecings turns wealthy men into " capitalists."

Note, u Surplus " is the same as u fleecings," is the difference between the price of Labor and the price of Labor's produce, is the latter minus ( — ) the former.

Capital is the original little amount of wealth with which our employers start — which they may and may not have earned — plus (+) the sum of surplus values; is accumulated fleecings — accumulated withheld wages.

Therein consists, really, the so-called " productivity " of Capital: in possessing the spongy capacity of steadily going on absorbing surplus labor. This capacity distinguishes it from all other wealth (which other wealth the old Economists called, very happily Bevenue.) Far be it from us to deny the invaluable assistance which Capital renders to Labor. But Capital produces no Values whatever ; it enables Labor to be immensely more productive, that is all.

We have now reached the very core, the grand secret of the present mode of production. This fact, that such a thing as " Capital" exists, that it is acquired and increases, legitimately, by fleecing those in its employ by the wage-system — a fact, unknown to all former periods — is the one characteristic mark of this era ; wherefore it may with propriety be designated : the Capitalist era.

We took our illustration from the manufacturing industries. The same lesson however, might have been equally well drawn from agriculture, to the extent that the cultivator of the farm

THE PROFIT SYSTEM.

or plantation employs wage-laborers. And we arrive at the same results, if we clireet our attention to the legitimate commercial enterprises. For commerce, — legitimate commerce — is an industry, and a productive industry. The labor of those engaged in causing the cloth of the cotton mills of New England to be transported to the heart of our continent and in their handing it out in small pieces to consumers creates an additional value in these pieces as fully as the labor of the operatives creates value. But here, also, the profits which swell the fortunes of our merchant i% princes'' are not the result of their labor, but fleecings, exactions, from the labor of their employees. The scores of millions of an A. T. Stewart were the result of the work of thousands of his fellow men — fleeced from them by the process, already described.