The social commonwealth (a plan for achieving industrial democracy)

Preface

The inductive method is now such an important factor in all scientific work, that it has become fashionable to regard with contempt any discussion in economics and politics that is not based on elaborate statistics and the citation of numerous individual cases. The author yields to no one in his high regard for the valuable work of painstaking scholars, who have given us important scientific laws, based upon many years of research work in the laboratory. And yet, our point of view has been perverted by an exclusive adherence to the forms of inductive reasoning — we have so accustomed ourselves to scrutinize the individual trees that we lose ourselves in a dense forest of economic and political life. Without disregarding the inductive method, this book is an attempt to free our minds from a citation of instances until the general principles are obscured in a maze of figures and "repeated observations."

We are concerned here with basic considerations, with fundamental analyses, and not with extended arguments and long-drawn-out "proofs" for theories that another inductive scholar will tear to shreds within a decade. We are told that the great jurist, Chief-Justice John Marshall, would often deliver the most momentous decisions, relying solely on logic and the general principles of law for the support of his judgments,

with the remark that "Mr. Justice will

furnish the citation of cases and precedents." It is time that we inject in our discussions in political science some of the spirit of the "Expounder of the American Constitution." We can leave to others, and perhaps to persons better qualified for that purpose, a careful presentation of all facts necessary to the full scientific justification of all the conclusions reached in this treatise. Let us be satisfied with having awakened sufficient interest to make these conclusions the subject of practical political discussion, and we may be sure that enough scholars will be found to agree with our views and to expound the philosophy of our "Industrial Democracy."

The author will be fully compensated for his labor if this book will enable us to adopt a new point of view in economic problems — a new method for achieving "social justice." For, after all, the point of view and the method are of primary importance, while suggestions for isolated reforms are secondary, in any comprehensive program for social readjustment.

Let this small volume be viewed, therefore, as the presentation of a method for achieving industrial liberty step by step, even as society prepares itself for each ascent on the ladder of progress. Without endorsing any pet theories, or tacitly accepting any brand of political philosophy, we shall endeavor to fix the true relation between competition and co-operation in economic life, and to show how far, and in what manner, both of these forces can be made to> serve in the creation of the Social Commonwealth. We shall define a Social Commonzvealth as a group in which the individual is assured of the necessities of life and the community is enabled to secure an economic surplus that nitty be\ utilized for social progress and a better communal life.

I take full responsibility for the views herein presented as well as for the method of treatment. And yet, I feel that a few words of grateful acknowledgement are due my faithful friends who have inspired what may be of value in my work and aided me in the

PREFACE 13

difficult task of criticism. First and foremost, my respected teacher in Social Science, Professor Franklin H. Giddings of Columbia University, deserves particular mention, for he has strengthened my opposition to social injustice, and has filled me with a desire for handling fundamentals, rather than details, principles rather than individual cases. To Professors Henry R. Seager, Samuel McCune Lindsay, Joel E. Spingarn and Dr. E. Stagg Whitin, I owe many thanks for suggestions based upon the reading of large portions of the manuscript. Finally, I owe more than words can express to my friend, Max J. Herzberg, of the Department of English of the Newark High School, and to my brother, William Rosenblatt, for numerous suggestions, and the painstaking reading of proofs. New York City, January 5th, 19 14.

Bernard A. Rosenblatt.

PART I.

THE LABOR COMMONWEALTH. (A Plan for Insurance Against Unemployment)

CHAPTER I Free Land and Free Labor

Students of Economics assure us that we have an immense country capable of supporting many times the inhabitants of present-day America. Visitors from Europe marvel at the large tracts of undeveloped agricultural soil, and are amazed that Americans, who are deemed the most progressive of nations, allow fertile lands, in the West and South, yes, even in the East, at the very threshold of our large cities, to remain idle or only partially developed by old-fashioned methods.

This country has opportunities for industrial expansion and promotion of the material welfare of its inhabitants unequalled by any other nation on earth. We are the heirs to an estate of incalculable value, and we would prove unfaithful to our trust if we should permit fertile lands (like the rich agricultural soil of the Mississippi Valley) to lie unused, while poverty oppresses our countrymen and unemployment strikes terror into the hearts of our wage-earners.

The truth is that in the West and South and in some portions of the East we have a land without a people, while in the congested cities of our sea-coast we have a people without a land. If we could but unite the two — bring the "jobless'' man to mother earth and let him earn his living by 'the sweat of his brow — we would automatically solve the problem of unemployment.

In the early period of American history, the unemployed, by moving to the unexplored fields of the West, constituted themselves into small self-sufficient economic units — and, thereby, effectively regulated the labor market. Our manufacturing establishments and our commercial enterprises before 1880 had to compete with the open fields of the West in securing their supply of labor. As a result, this free land not only solved the problem of the unemployed, but also secured the establishment of a relatively high standard of living and the "American wage" corresponding thereto. The free lands of the West automatically fixed a rough minimum wage for labor by placing a limit below which the wage-earner would prefer to work as a squatter or free-settler in the unoccupied country of the West.

But we are now rapidly appropriating all the available lands, and we will soon be face to face with the problem not only of unemployment but also of a "living wage" for the laborer. Can we find an adequate substitute to-day to take the place of the free lands of the West for the solution of the problem of unemployment and a minimum wage? Unless we discover such an effective method in the near future, we shall have to face a condition which is the breeder of revolutions and atrocities — when able-bodied and willing workers would be starving because of the lack of opportunities for work.

It is not our purpose here to enter into a discussion of the extent of unemployment. It is sufficient for us to grasp this important fact : on the one hand, we have many thousands of honest and loyal citizens ready and willing to work, but deprived of the opportunity of earning their living because they have no control over the land or machinery necessary for production ; while, on the other hand, fields capable of producing a large food supply and capital (in the form, of machinery and tools) lie unused because it is "unprofitable" to work them.

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The investigations of Charles Booth among the poor of London show that about 30% of the population arc constantly in poverty, i. e., in a condition in which they do not earn sufficient for the maintenance of physical well-being. Rowntree, after a careful study of the conditions in York, England, estimates the proportion of those in poverty as 27.84% — somewhat less than the London average. He concludes that "we are face to face with the startling probability that from 25% to 30% of the town population of the United Kingdom are living in poverty." Robert Hunter, in "Poverty," states: "And yet from the facts of distress, as given, and from opinions formed, both as charity agent and as settlement worker, I should not be at all surprised if the number of those in poverty in New York, as weil as in other large cities and industrial centres, rarely fell below 25% of all the people." The same writer offers a vivid picture which connects the problem of poverty with the danger underlying our whole competitive system — the problem of unemployment. In "Poverty" (on page 295), he says :

"The tragedy which results from this surplus of labor was strikingly shown in the work of a sculptor, exhibited at the World's Fair in Chicago. It is the custom in some places, in England for instance, for the foremen of the great factories to go out in the morning to the gate where the workmen, seeking employment, are gathered, and to throw out tickets to the number of employees needed. The group represents an intense struggle to obtain one of these tickets. The man fortunate enough to get it is the central figure. He holds it high above his head, resistant, but looks with compassion upon the struggling ones about him. A withered old man clings to him, begging for the ticket; a youth behind is plotting to seize it; a woman with babe in arms, trampled under the feet of the others, strives to protect the child; a tiny lad, with a wolfish hunger in his face, endeavors to clamber tip on others in the hope of seizing the ticket. Let him, who will, go about the factory districts of the country and see this thing enacted in real life, not so obviously dramatical but with agony that is actual."

Many economists agree with Charles Booth that "our modern system of industry will not work without some unemployed margin, some reserve of labor," and another economist has declared that "for long periods of time large stagnant pools of adult effective labor power must lie rotting in the bodies of their owners, unable tG become productive of any form of wealth, because they cannot get access to the material of production," and "facing them in equal idleness are unemployed or under-employed masses of land and capital, mills, mines, etc., which taken in conjunction with labor power, are theoretically competent to produce wealth for the satisfaction of human wants." John Hobson delivers this strong plea for the unemployed : "Modern life has no more tragical figure than the gaunt, hungry laborer wandering about the crowded centres of industry and wealth, begging in vain for permission to share in that industry, and to contribute to that wealth; asking in return not the comforts and luxuries of civilized life, but the rough food and shelter for himself and family, which would be practically secured to him in the rudest form of savage society." Is our competitive system of industry inseparable from a condition of degrading unemployment coupled with the waste of natural resources, which, if utilized, might eliminate unemployment and solve the problem of poverty?

FREE LAND AXD FREE LABOR 21

The ancient Hebrews had one peculiar institution which might serve as a valuable lesson for us to-day. The old tribal feeling was so strong among them that the murder of a kinsman had to be avenged by his comrades, even though the dead man may have been killed accidentally. In order to mitigate the hardships of this tribal custom — common to many and diverse peoples — "cities of refuge" were provided by Hebraic Law to which any man who was free from the taint of criminal wrong-doing might flee for safety, and escape the revenge of the victim's kinsmen. The men charged with homicide, but guiltless of any murderous intentions, would remain as "voluntary prisoners" in these cities of refuge.

To-day, we discard annually thousands of men from the fields of industry and labor, and cast them into the slums reserved for the so-called "unfit." Is it possible for us to construct new "Cities of Refuge" for those thousands of honest workers who do not find a place in our cumbersome economic system? Industry has often taken from these men their vitality and earning power, as their contribution to the world's progress, before they were assigned to the scrap-heap of civilization. Can w r e offer them some haven of safety where they may earn at least sufficient to* support life? Can our industrial system offer them new cities of refuge where the harsh competitive system cannot overtake them — where they will not be forced to pay the penalty of poverty for the crime of unemployment?

In the olden days, religion stepped in and saved the innocent from the barbarism of tribal life. To-day, conditions demand that we create some institution, whether religious, political or economic, to protect the guiltless from the ravages of a harsh competitive system of industry. We need such an institution not so much for the unfortunates who have been rejected by modern industry. Their lives are hard, but conditions tend to make that life short, and they pass rapidly from the world stage. It is not to the charitable feelings of mankind that we ought to appeal for the relief of those who have been crippled in the merciless industrial battle, for they have earned their rewards as honestly as pensioned veterans of old wars. It is not, primarily, for the sake of the unemployed that we should create an institution which would eliminate unemployment. But if we find that their condition is bound up with the welfare of a large mass of human beings, that their sufferings tend to force down the standard of living of all and pull down the level of the whole economic struggle for existence, then, indeed, the problem of the unemployed becomes the problem of our whole civilization.

Just so long as we have a large class of men who are forced into the ranks of the unemployed, without the opportunity of earning a decent livelihood, so long will they act as a handicap on our industrial system. Having been dismissed from the regular industrial army, they become the scum of the labor market, accepting the lowest wages sufficient to hold body and soul together. By their unwholesome competition with the more reliable labor force, they tend to force down the wages of all. The mere presence, in the industrial market, of a large class of "jobless" men, who must, somehow, find food, clothing and shelter, is a destructive force that operates to reduce the wages of all.

In short, enlightened self-interest, rather than any charitable considerations, should lead us to devise some method for eliminating unemployment. Let us create "Cities of Refuge for the Unemployed/' and we take the

FREE LAND AND FREE LABOR 23

most important step in establishing a minimum wage, below which none will compete in the industrial struggle. We establish a proper standard of living that shall be self -regulative, and install an automatic safety device to protect the citizen-body from the unhealthful competition of the "unfit" Accordingly, by protecting the unemployed from the uncertainties of our competitive system of industry, we unite the considerations of idealism, for the welfare of the poor and the oppressed, with self-interest for safeguarding our economic system. Such a unified force working for progress is irresistible, for to the charitable instincts of mankind are added the more potent agencies of self-defense.

A scholastic philosopher of the Mediaeval Church might have made some important deductions from certain acts of Jehovah as recorded in the Old Testament. When the children of Israel went forth from Egypt, they wandered for forty years in the desert, supported directly from the bounty of the Lord. The All -Wise understood that a nation of slaves can be converted into freemen only after they have become independent of the tyranny of physical wants.

In His beneficent wisdom, Ke sent them manna from the heavens to satisfy the craving for food, so that the chosen people might have leisure and the inclination to pursue higher things. God knew that the Exodus, in itself, did not convert slaves into freemen; that liberty means more than emancipation, than the mere negative process of breaking old chains. True liberty is a positive concept: and only after the countrymen of Moses had been freed from the inexorable physical needs were they really free to follow the laws of the Almighty. From such facts, a Church philosopher might have justly concluded that the supreme function of government, as revealed to us through the works of God, should be to endeavor continually and persistently to provide for the physical wants of the citizens. Only after we have removed the despotism of physical needs can we succeed in building a higher self, a better and nobler type of man. With less strained reasoning, we of the Twentieth Century might agree with the conclusion that government should be utilized as an instrument for making man free in his industrial life as well as in his political life.

CHAPTER II. Scientific Management and the Distribution of

Wealth.

i — Permanent Oversupply of Labor.

An eminent economist has declared, with an apparent show of reason, that whatever faults we may attribute to our present-day economic system, it has, at least, one redeeming feature — namely, "it works," while all socialistic schemes are mere dreams. But if the competitive system of industry works like a squeezing machine that accumulates a by-product of a submerged tenth, interspersed with strikes, lockouts, ruinous tradewars and political bribery, might we not expect even Socialism to prove, at least, equally beneficent? Any doctrine that a thing works because it exists would forestall progress, since existence is made synonymous with efficiency. Most grievous wrongs would be sanctioned because of their existence, and every upward step in civilization would be decreed "unworkable."

Much has been written on the evils of an unregulated competition with the unnecessary duplication of plants, the consequent extra expense on useless advertisements for attracting trade, and the waste due to the maladjustment of labor. But there is a far stronger indictment against the competitive system of industry than economic waste — than mere money loss. I refer to the waste of human life and the ceaseless grinding of the so-called "unfit." These unfit, who constitute the "submerged tenth" of civilization, while they happen to be the unemployed and underpaid portion of the population under the present economic system, may not be the scum of the earth. Who knows how many an artist, scientist or thinker is lost to the world because he is unfitted for the economic system of his day?

Socrates was utterly useless for Athenian industry, and he would probably prove a failure in the modern economic world. Copernicus was so ill-fitted to the social system of his day that very effective means had to be employed to separate him from his environment. We must not be so hard on the "unfit" — for, after all, it means simply that a particular individual is unsuited for a particular industrial system in which he happens to occupy a certain unattractive position.

Scientists tell us that even a machine of great efficiency will lose a large proportion in transforming one form of energy into another. Even so, it seems that our economic system, in spite of its boasted scientific achievements, allows an enormous amount of energy to dissipate. If we resolve this fact into terms of human life, it means that the hopes, aspirations and yearnings of countless human beings are crushed, and mankind is denied the benefits that their labor might bring. Furthermore, the increase in scientific knowledge and the multiplicity of inventions, while generally raising the standard of living, have done very little to decrease the number of unemployed or alleviate the condition of the underpaid or "jobless" man.

The numerous inventions and the application of scientific management in the industrial world, however beneficial and profitable for manufacturers and consumers alike, often aggravate the difficulties in the problem of unemployment. We cannot sanction the fallacy that an increase in output by individual employees always means the loss of a job to some fellow wx>rkingman, for other employment, created by the

SCIENTIFIC MANAGEMENT 27

new wants of a progressive age, may be awaiting the discharged man. But the fact is that, because of maladjustments in our economic system, we are rapidly coming to a point when we shall have a permanent oversupply of labor — just as we now often have temporary overproduction (of materials). That this contention is not fallacious can be ascertained from a close examination of the tendency in economic activity at the present time. We have heard a great deal, not so long ago, about the numerous benefits secured by "scientific management." It has been heralded even as a new philosophy. Without attempting to disparage the good work of the pioneers in scientific methods of doing the world's work, let us remember that they concern themselves only with the problem of production.

Like the economists of the old school, they neglect the problem of distribution, but without a proper distribution even production itself can never be efficient.

Do you question the truth of the last statement? Then analyze an analogous case, which is clearly in point. Let us examine the status of a definite community of two thousand families that is economically self-sufficient and in which the theories of scientific management have triumphed and are rigidly applied. Of the two thousand able bodied workers, it is found that five hundred will suffice to furnish all the food necessary for the community, besides leaving a sufficiently large surplus; that another five hundred can do all the manufacturing demanded for a high standard of living; and that five hundred more are amply sufficient as teachers, artists, scientists and traders. In short, instead of two thousand workers, we find that fifteen hundred will be able to do all the necessary labor, including the production of a sufficiently large surplus. Now if the community should be a co-operative commonwealth, it would find work for the remaining five hundred either in the accumulation of a larger economic surplus or in extraordinary work for beautifying the land and developing the artistic side of the inhabitants. But under a competitive system such an expenditure for the support of five hundred men, for labor that is not readily negotiable in profits, is unthinkable. The state, the community or a mutual protective association might undertake such a task, but any idealistic promoter who should be so unfortunate as to attempt it, under the competitive system of industry, would speedily be put out of business by his more thrifty competitors. In an industrial democracy, if three men out of every four can do all the work to supply the needs of four (with a sufficient economic surplus), the fourth man would be employed in some labor for the increase of the economic surplus or for the edification and enlightenment of the first three. But under the competitive system, the fourth man is discarded as a useless encumbrance on the economic fabric. Fortunately, the theories of scientific management have not yet taken deep root, so that instead of three men being able to do the work of four, it may take about nine men to do the work of ten. What do we do with the tenth man ? We send him to the recruiting station called the "submerged tenth" — the ground for volunteers in the service of vice and crime. This tenth man does manage to exist, somehow, thanks to the charities and philanthropies of the great and the ingenuity of the criminal class and the skill of the vicious. In the end, the community pays the bill for the support of the "submerged tenth," in some form or

SCIENTIFIC MANAGEMENT 29

another, as truly as if it offered pensions — with this immense difference : that instead of earning their livelihood by the sweat of their brows, these persons arc often induced to pay for their existence by^bartering their souls, by corrupting- their fellow- men, or by assuming the repellent attitude of the beggar.

Furthermore, since the support of the submerged tenth is rendered precarious, they are of no consequence in the economic life of the nation. Living on the crumbs that fall from the well-filled table of civilization, they are not economic consumers and cannot be of much importance in estimates for production and industry.

On the contrary, they curtail production; instead of producing for ten-tenths of the population, we are producing only for nine-tenths because of the economic insignificance of the "submerged tenth"; and I make bold to say that if we institute a system of scientific management in which three men will do the work of four, without solving, at the same time, the problem of unemployment, we shall only have enlarged the underworld and transformed the "submerged tenth" into a "submerged fourth." Furthermore, production will have to be curtailed 25% instead of 10% to correspond with the decreased demand, because of the inability of one- fourth of the population to pay the price of a decent livelihood.

It must not be forgotten, likewise, that every curtailment of production means a reduction in the number of wage-earners, who are added, automatically, to the unemployed class — demanding a still further decrease in production.

2 — Surplus Labor Value and the Struggle for Markets

The central feature of the Socialist program has been declared to be the principle that : Socialism demands for each worker the full value of his labor, whereas, under the competitive system a large surplus of his labor value is appropriated by capitalists in the form of rent, interest and profits. It is immaterial for us at this point whether we regard such appropriation as robbery (in conformity with the contention of Socialists) or as the rewards of skill, abstinence and merit (as the defenders of the competitive system would have us believe), but the fact remains that there is a surplus value produced by each individual workingman which the latter does not consume — whether it be classified as profit or surplus labor value. The surplus may be one-half or one-tenth of the entire value of his produce, but that there is such an excess is indisputable. Science and proper management tend to increase this surplus, which might be of inestimable value to civilization and progress. It might be used to increase the comfort of the working class and to store up economic goods and capital for future generations. But under the competitive system of industry the most important function is the disposal, rather than the accumulation, of such surplus products — to increase consumption for the purpose of gathering larger profits. On the one hand our competitive system aims to reduce the expense of production, to eliminate useless laborers; while on the other hand it endeavors to increase consumption of the products so produced. What is the result? A large part of the population — the unemployed — have not the money equivalent for purchasing the goods that are so well advertised. Our haphazard competition, failing to

SCIENTIFIC MANAGEMENT 31

make any proper connection between demand and supply, endeavors to produce as much as possible as cheaply as possible, without giving due heed to fostering a class of consumers. Accordingly, we have unemployment and low wages going hand in hand with overproduction and panics.

We may now understand the significance of the enormous trade struggles of recent history. Free trade, protection, reciprocity, the open door policy (as in China ) and the "most favored nation" clauses are not mere shibboleths for political parties. They represent the feelings and convictions — the full portent of which is appreciated less by the masses than by the masters in finance — that we must have an outlet for surplus products or the nation will choke to death with a surplus of products which cannot be consumed in domestic commerce, because the vast masses of unemployed and underpaid have not the necessary money equivalent. So long as three-fourths or four-fifths of the nation can supply the needs of the entire nation, we must have this economic struggle for foreign markets as an outlet for surplus goods — at least so long as we maintain the present economic system of competition for profit. Let that foreign market fail us for any length of time, and we shall discern the signs of the deluge — for the present capitalistic system of production. We shall then be compelled to readjust our economic system and find a place for the unemployed.

At the present day, the unemployed class is a necessary supplement to the capitalistic system, for it furnishes the recruiting ground for enlisting laborers to under-sell their comrades in the labor market. True to the rule of economics, the capitalist needs a large supply of labor so that the demand may not exceed the supply, and so that the price of labor may not be prohibitive of profits. Yet when this labor supply becomes too large, we have "dangerous discontent/' the growth of "demagogues," and "conditions that are subversive of social order/' "and the established rights of property." Accordingly, we must obtain markets in order "to give employment to our people/' and keep conditions in statu quo. The Huns under Attila sought for new lands, because middle Asia was, literally, drying up for lack of a proper water-supply. The English settlers in America displaced the Indians because England was too small a country to produce enough to feed its own people. But we are seeking new fields for our commerce because we are producing too much — which, under our present economic system, we cannot consume. And what will "scientific management" do for us? It will make us more efficient, enable us to produce more, to have a larger unemployed class, and force us to seek still other markets. All credit is due to our scientists and inventors for their splendid achievements in industry and commerce. But we are rapidly approaching a point, where we cannot afford the luxury of improvements in science without improvements in economic organisation. We need scientific management in distribution and inventions of methods of economic re-organization to go hand in hand with the steps for increasing production. In short, we need a union between the workers in the field of political science and the inventors in the domain of natural science. And the most pressing problem which they, working together, must solve in the near future is the problem of unemployment.