The Case for Capitalism

Front matter

The Case for Capitalism

By Hartley Withers Author of "The Meaning of Money," "Poverty and Waste," etc.

"For men, and not walls, make a city."

Introductory

It is easy in these times to put the case against any existing institution. Most of us are in a highly critical mood, because we feel that during the last few years things have happened which ought never to have happened, and that these earth-shaking events were not well met and handled, especially on their economic side. We have seen the whole fabric of civilization in danger and a desperate battle raging to save it, and we have felt that, if civilization had been better, and the governors of the nations had been more worthy of their charge, it could never have contained the seeds of such danger, or the seeds ought never to have been allowed to sprout and blossom. During the contest we have seen the best men in all the countries concerned—the best in strength of body, courage and devotion—suffering untold hardships, wounds and death, while the next best and the worst have stayed at home and have in many cases made large fortunes, or greatly increased their wealth. A world crisis which ends in enormous destruction of life and property, and at the same time in the enriching of many of those who were not good enough, in mind and body, to risk their lives to meet it, seems to be a piece of sheer stupidity and injustice. It is no wonder that many impatient minds are driven to the conclusion that every institution which existed at the time when these crimes and absurdities were perpetrated should be cut down, rooted out and cast upon the dust heap.

Is this state of mind a good one in which to set out on the task of mending the breaches that have been made in the walls of the building in which we have lived? Is it wise, because the building has been found not to be proof against the weather, to pull it down in disgust and start making a new one to a new plan and on a new system of mechanics which has never been tested and may turn out a home that will not even stand up? Might it not be better to improve the old one? The need for amendment is now admitted by the great majority. The only question to be decided is whether the changes made are to be on lines that have produced a working result; or to be based on imaginative dreams which tell us how much better everything might be if we worked under a new system, which has only been sketched in hazy outline, about which its advocates have shown much unanimity in disagreeing. They want to see a world in which every one will have a fair chance of a real life; so do most of us. They want to turn everything upside down in order to get it; and they may be right. But, if they are wrong, their experiment will work disaster. If we can get the same result along lines that have been tried, is it not safer to work along them and avoid this risk?

The present system under which we work and exchange our work for that of others is that commonly described as Capitalism. Under it each one, male or female, can choose what work he will try to do and what employer he will try to serve; if he does not like his job or his employer, he can leave it or him and try to get another. He cannot earn unless he can do work that somebody wants to buy, and so he competes with all other workers in producing goods or services that others want and will pay for. His reward depends on the success with which he can satisfy the wants of others. Whatever money he earns in return for his labour he can spend as he chooses on the purchase of goods and services for his own use or for that of his dependents, or he can invest it in opening up a business or industry on his own-account, or in shares and debts of public companies, and debts of Governments or public bodies; these securities will pay him a rate of profit or interest if the companies or debtors prosper and are solvent. Whatever money he earns by labour or by investment he can, after paying such taxes on it as the State demands, hand on to any heirs whom he may name.

The system is thus based on private property, competition, individual effort, individual responsibility and individual choice. Under it, all men and women are more or less often faced by problems which they have to decide, and, according as their decision is right or wrong, their welfare and that of their dependents will wax or wane. It is thus very stimulating and bracing, and might be expected to bring out the best effort of the individual to do good work that will be well paid so that he and his may prosper and multiply. If only every one had a fair start and began life with an equal chance of turning his industry and powers to good account, it would be difficult to devise a scheme of economic life more likely to produce great results from human nature as it now is; by stimulating its instincts for gain and rivalry to a great output of goods and services and by sharpening its faculties, not only for exercise in this purely material use, but also for solving the bigger problems of life and human intercourse that lie behind it.

In fact, however, this system of Capitalism is at present perhaps more widely criticized and abused than any other human institution. And with some reason, for many of its results have been bad, and there is room for great improvement which criticism can help. But criticism that is bad-tempered and unreasonable will do more harm than good. The people who are working on this great business of producing, distributing and consuming the world's wealth are, in the mass, ordinary human beings, with the good and bad qualities of ordinary folk. The ordinary man and woman is an honest, good-natured person who, though not too eager to work very hard, does not want to rob anybody else. If this were not so, society could not exist, and progress would have been impossible. If it be true—as some advocates of Socialism maintain—that Capitalists live by robbing workers of goods which they have produced, it is also true that the average Capitalist does not know that he is doing any such thing, and that if once this crime can be brought home to him, and he can be not only convicted but convinced, he will be quite ready to give up methods by which he has been preying on society.

The test of an economic system is its success in providing us with a good world to live in. In what sort of a world would it be really pleasant to live? To begin with, there would have to be plenty of good things and nice people. Upto a point, the good things come first, because we cannot live without them. But after our needs have been met in the matter of necessaries and comforts, up to a very moderate extent, the necessity of pleasant people in order to lead a pleasant life among them becomes overwhelming. And people are pleasant to live with who are kindly, generous, honest, unselfish, healthy, keen and fully developed in mind and body. To get such people we evidently need a great increase in the output of material goods, It is, of course, very easy to find many examples of bad-tempered people who are well off, and of others who, leading lives of straitened penury, set an example of saintly behaviour. But it is a safe working rule that if the average human being can have a better supply of commodities and comforts, he is more likely to be pleasant to live with and to help us to get the world that we are looking for than if he is living under conditions of scarcity and discomfort, and for real development we must have leisure and opportunity for education. Moreover, we want not only good things, but beautiful things. Beautiful things and beautiful houses and beautiful cities require more time and better materials in their making than the shoddy goods, sordid houses and dirty and insanitary towns which are so evil a blot on our so-called civilization. If we want a world in which every article we use is well and beautifully made, every house that we live in is well and beautifully built, and every town in which we gather is as beautiful as Oxford or Canterbury, and more so—because modern ugliness has put some foul blots upon these once beautiful centres—if we want all these things we must spare the time to make things well. We must not only be ready to maintain in comfort a large number of people who will give no thought to anything else but the production of beauty in some line or other of industry, we must also light in everybody's mind the fire of desire for beauty.

In old days a tyrant or a wealthy class or a church was able to produce buildings and works of art full of a beauty or a grandeur which still astonishes us, by means of slave labour or by the devotion of members of a church who built, for example, the mediaeval cathedrals to the glory of God and for the sheer pleasure of building Him a noble house. In these days, economic power is much more widely spread and will be spread still more widely as wealth is better distributed; and we cannot expect to have a really beautiful country unless the greater number of the people know what beauty is and try to arrive at it. It is an open question whether this desire for beauty is a thing that can be taught, but we may be quite sure that we are not likely to get it as long as most of us are concerned only with the narrow problems of making a living, and have no chance of full development of our minds and perceptions. In other words, we want education and facilities for travel on a scale that we have not yet dreamt of. We want everybody with whom we come in contact to be really well taught and really well informed, not necessarily in the way of schooling and book-learning. Many of the most interesting people whom we come across are very deficient in both, but they have been able to have had wide and varied experience, to have seen "many men and cities," and to have exchanged ideas with dwellers in many distant lands.

Here again it is easy to counter the argument with examples of homely folk who have never been ten miles from their native village and yet, owing to their powers of observation and sympathy, have made themselves masters of all that life means within a small compass. But these examples of genius working under circumstances of great difficulty do not make it any the less true that it is good for the average human being to roam about the world and submit to the process by which men knock sparks out of one another by personal impact. For all this—education in a much wider sense than has yet been attempted and improvements in human intercourse of which we can hardly yet dream—a great increase is needed in the output of good and services that mankind enjoys.

It will not be enough, of course, unless those to whom these advantages are given make the right use of them. Travel, as it is at present granted to a comparatively small class, often seems to fail lamentably in widening their outlook. The young English Philistine who goes to Switzerland only for skung and tobogganing, and regards the natural beauties of his own country chiefly from the point of view of their adaptability to the purposes of golf links, is not a good example of mental development stimulated by travel. All this has to be granted; but even those who, when travelling, confine themselves most carefully to the hotels and resorts in which they will meet no one but the most aggressively national spirits of their own nation, do get something from change of air and scene. Plenty of arguments can be brought forward against any attempt at trying to get at a better world in which everybody will be pleasanter and more sensible, but there is no need to despair. In spite of all that has happened in the last few years, there are most encouraging signs of an improvement in the outlook of mankind upon its duties to itself.

Little more than two hundred years ago a Te Deum was sung in St. Paul's, specially composed by Handel for the occasion, to celebrate the Peace of Utrecht which gave England a practical monopoly in the slave trade from West Africa to America. About a hundred years ago, at the end of a war which had shaken and strained England almost as much as the one which we have just gone through, the Income Tax, on the declaration of peace, was immediately abolished, and the whole burden of a heavy debt-charge was thrown on to indirect taxation of articles of consumption, which pressed most wickedly upon the poorer classes. Our ancestors who committed this economic crime were at least as good, according to their lights, as the statesmen of to-day, but they did not understand what they were doing. Probably there are many to-day who would like to repeat the proceeding now; but they could not even suggest it, because public opinion would not hear of it, quite apart from the fact that the widened suffrage would make it politically impossible. On all sides we see evidence of great improvement in what is thought about the manner in which one set of men should be treated by another. Great strides have been made under the Capitalistic era in the direction of making the world a pleasanter place to live in, and though some of them have involved the development of new forms of suffering and disgrace, we can still maintain that the movement has been forward on the whole.

It need hardly be said that this progress that we seek must not be confined to a small class. A really good world to live in implies, not only that we live there pleasantly among a set of pleasant people, but that there is no horrible suffering and destitution in the next street or anywhere else, which we have to forget before we can be happy. Wealth in the sense of ordinary welfare and comfort must be not only abundant but well distributed before the world can be a pleasant place to live in for those who have any sympathy with human suffering.

Thus we see that material output, though it is very far from being the end of all things, is of very great assistance in helping to produce the sort of world at which we want to arrive. A certain amaqunt of it is essential to existence, and a great increase in it will help very much, as human nature is at present, to make everybody pleasant to live with in the truest sense of the word, to make the world and all the conditions under which we live beautiful and noble, and to enable all to be educated in the truest and widest sense of the word. It follows, therefore, that in order to get at the world that we want, an increase in material output and a great improvement in its diffusion among all classes, are essential. When we consider the economic system under which we live and alternatives to it which are suggested by its critics, the first question that we have to ask is, How far it and these alternatives are likely to be efficient in this matter of material output. We cannot get a really good world, full of good and noble people, unless we can greatly increase man's power to produce.

The Weakness and Strength of Capitalism

Among the many drawbacks that mar the system of private ownership of capital, as it has been hitherto developed, an obvious blot has already been noted, when it was observed, some pages ago, that if only every one had a fair start it would be difficult to devise a more stimulating arrangement for human nature as it is with its instinct for acquisition and rivalry. Under private ownership of capital this fair start has not been given. Capitalism, as now understood, is usually regarded as dating from about the middle of the eighteenth century, when what is called the Industrial Revolution began. Before then, the tools of industry were primitive and cheap, and it was comparatively easy for the worker to own his own capital, in the shape of tools and raw material. When machinery came and brought with it production on a great scale in large factories, a great capital was necessary to success, and so the worker and his capital were divorced from one another. Some individual or body had to be found, prepared to provide the necessary equipment, and to hire those who had strength and skill to work it.

In the past the position of the owner of capital has been strong, because capital has been generally, if not always, scarce as compared with labour, and, until labour organized itself, the bargaining power of the owner of capital was greater than that of those who had little or no resources behind them. This advantage in the hands of the capitalist, however, is not a necessary part of a capitalistic system. Capital without labour and labour without capital are under modern conditions equally powerless, and in these days labour, with its growing political influence and the sympathy of public opinion whenever it can show a real grievance, is fully able to take care of itself. Moreover there is no reason why the sharp division between the owners of capital and those who work its machinery should be maintained. Under an ideal capitalistic system every worker would be a capitalist and every capitalist would be a worker. And this is an ideal that is quite within the bounds of possibility.

But this is not the only inequality that made the race for material success an unfair contest. The owning class not only controls the equipment of industry, but also, by its greater individual wealth, can give its sons, daughters and dependents a better and longer education and bring them up under conditions—in the matter of food, clothing and access to good air—that give them a long start in life's race. Convention and custom increase the inequality. Certain jobs and positions are actually reserved for those who have had an education that can usually be afforded only by the children of the well-to-do. For instance, only a boy of exceptional cleverness can rise from a primary school to the university degree that is necessary for entry into the learned professions. And many other positions, though there is no such definite bar, are practically reserved by custom and prejudice to those who speak acertain kind of English, wear a certain kind of clothes, and behave with a certain kind of assurance and confidence; all which gifts are only to be acquired at a certain kind of school, or in a certain kind of home surroundings. Luck or ability sometimes enables exceptional persons to overcome these bars. Fleet Street tradition whispers of an unsuccessful plumber who made a great mark as a journalist and a great fortune as a newspaper proprietor, but the story of his failure as a plumber was probably a slander prompted by envy. There is, however, no need to be libellous in order to find scores of men who have risen from the bottom to the top of the ladder of wealth, beginning life with nothing behind them but their wits and their good luck and ending it great owners of capital.

Nevertheless there the handicap is. The well-to-do, under the private ownership of capital, can live, if they have enough of it, on the toll that it takes from production without doing any work at all, and if they want to work have everything made easy for them in the shape of specially reserved posts, and the connections and influence that are so great a help in making a start. It must be a very great temptation to those who are rich enough to be able to idle through life, to do so; and the fact that very few succumb to it shows that some sort of activity is a natural want of a healthy and normal human being. There has been a noticeable change in this respect even within the memory of the middle-aged. The graceful idleness which used to be thought so gentlemanly is now much less popular than it was, and young men of the class that used to go to the university as to a social, sporting and athletic club were approaching life from a much more serious point of view even before the war. It is curious to note that in America the tendency seemed to be in the other direction. There opinion was apparently growing in favour of the creation of a leisured class which would do something in life besides pursuing dollars. A leisured class that uses its leisure to do public work that is otherwise done ill or left undone is certainly a national asset, but it cannot be denied that under the capitalistic system there has existed a class of most unamiable folk who lived narrow, selfish lives on wealth that they had inherited, grumbled at paying taxes, forgetting that if the Government did not protect them and their property they would be quite unable to earn a living, and seemed to expect the whole world to be managed for their convenience and comfort. Most of us have suffered from such people, who are apt to gather at such resorts as residential hotels. They were generally quite unable to amuse themselves, and lived lives of unprofitable boredom, a nuisance to themselves and to most people whom they met.

This handicap of inequality was thus in many cases bad for those who enjoyed it. For those who started with it against them it must have often been a daunting influence if it affected them seriously. But how far did it do so? The average man surely aims at being moderately successful in the conditions under which he starts. One can, in these matters, only judge from one's own experience. To myself, born into the circumstances of an ordinary middle-class family, it never occurred that I was handicapped by the fact that many people were born with much easier chances of much greater success. There was a road clearly marked out for me. Somehow I had to make a living, and the fact that some people were not under that necessity was not a thing that influenced me one way or the other in approaching the problem. But this may only have been because I was thoughtless or unimaginative, and I remember when I was at Oxford hearing a very brilliant man of my year remark that it made him "feel Socialistic" when he was starting off to an early morning lecture and saw other men setting out for a day's hunting. In this case at any rate the early recognition of what seemed to be economic injustice had no practical effect in checking effort. My old friend may have felt Socialistic, but he went off to his lecture and did his day's work, and is now a shining ornament of the Indian Civil Service.

But we of the middle class, of course, have no right to talk as if we had any real grievance under the capitalist system. We had quite as much as was good for us, and got an education and tradition that generally stimulated us to make fairly good use of the powers with which we were born. The question must look very different to those who view it when born under conditions of destitution, and have imagination enough to see how great are the disadvantages which this accident brings with it. In this case it must often happen that despairing apathy is a very real clog to effort, and there is small reason to wonder if many of those so born not only feel Socialistic, but put much energy and bitterness into working for schemes to reconstruct society on a new basis. If a new basis of society were really going to produce a better life for the community as a whole, most of us would sympathize strongly with this ambition; but doubt on this point is the reason why this book is being written.

It seems, however, that the inequality only has to be lessened in order to modify very greatly its adverse effect on those who suffer from it most. In America Capitalism has grown with a vigorous and perhaps ruthless strength, unchecked by the many feudal and social restrictions which have in this country turned the edge of its power. But owing to the circumstances there ruling—the wealth of the country and the unlimited power of expansion that its undeveloped resources have placed in the hands of its citizens—the way from the bottom to the top has been more open. The traveller there seemed to find himself in a country in which there were no bars between class and class. Those at the bottom looked on those farther up as people who had gone ahead but might be caught up and would be. There was no sense of a heavy handicap. I came in contact in a curious way with this cheerful sentiment when in a hotel in Denver in 1911. A Swedish chambermaid when I was leaving was good enough to say that she was sorry I was going because I was "nice and clean in my room." I asked her if she would like to come and be a maid in my home in England. She declined on inquiring into the possibilities of the position, but added: "I tell you what; I won't come and be a maid in your home, but I'll marry some fellow who'll make a pile, and then I'll come and stay with you." I gave her my card, and I hope and fully expect that some day she will arrive, with the husband and the pile in her train.

It thus seems that the drawbacks of inequality are bad for a limited number, both of those who are apparently benefited by them, and of those to whom they are a handicap, but that their adverse effect on the latter can be greatly reduced, if the inequalities of birth and fortune are not allowed to be a serious bar to success in life. When we have granted all this, we have next to consider what are the advantages that the capitalistic system carries with it. In the first place, there is the moral advantage involved by individual choice and responsibility which make men and women of us, while grandmotherly regulations under State or Guild monopoly would make us into machines. In the second, it is clear that the ordinary man will work harder and better if he knows that the result of his work is going to be an improvement in his economic position and in that of his dependents. For every man to work for all the rest just as hard as he will now work for his own hand is an ideal to which human nature may some day attain; but we have not yet arrived there, and if we try to make things better by assuming that we have, we may put back the clock of progress by a century or two. The incentive to effort that is given by the power of acquisition is at present the great driving-force that constantly improves man's control over nature. If we took it away we might find not only that the improvement ceased, but that there was a very serious decline in the output of any country that tried the experiment; and we always have to remember that a country's output is all that it has to live on, apart from the accumulations out of past output, which would very soon be exhausted.

From a purely economic point of view the advantage of a reward for effort in proportion to its success seems to be overwhelming. It is true that, as things are, success in production or organization often comes from forcing very questionable goods or services on a stupid and ignorant public. But that is the public's fault for being stupid and ignorant, and what is the alternative? Either an equal reward for everybody whatever the effort made and whatever the work produced—a system that would, as things are, simply mean that an ever-increasing body of sluggards would live on an ever-dwindling and more disgusted body of workers; or else some new device for a reward in proportion to what is called the "social value" of the work done. What this social value really means it is hard to say. What is the social value of Mr. Charlie Chaplin as compared with a coal-hewer? And who is to decide the question? If, as seems most likely, it is to be a popularly elected body, their election would be a pretty picture of glib promise-makers competing for the suffrages of those whose power to help themselves out of the general store of wealth they were going to decide. If the deciding body is to be composed of Government officials the results, though less obviously disgusting, would probably be still more unsatisfactory in the end.