Back Aa

Book of Life, The

<h2>CHAPTER LVI THE CAPITALIST PROCESS</h2> <div class="blockquot">(How profits are made under the present industrial system and what becomes of them.) </div> We have next to examine the structure of the capitalist order, basing our argument on facts which are admitted by everyone, including the most ardent defenders of the present system. All men have to have certain material things which we describe as goods. As these goods do not produce themselves, it is necessary that some should work. The workers must have tools; also they must have access to the land and the sources of raw materials. These means of production are owned by some individuals in the community, and this ownership gives them power to direct the work of the rest. Those who own the land and the natural sources of wealth we call capitalists, or business men, and those who do not own these things, or whose share in them is insignificant, are the proletariat, or working class. If you state to the average American that there is a capitalist class and a proletariat in this country, he will point out that many who are now members of the capitalist class were originally members of the proletariat; they have worked hard and saved, and accumulated property. But this is merely confusing the issue. The fact that some proletarians turn into capitalists and some capitalists into proletarians is important to the individuals concerned, but it does not alter the fact that there are two classes, capitalist and proletarian. Consider, by way of illustrating, a field with trees growing on it; we have earth, and we have trees, and the distinction between them is unmistakable. The roots of the trees go down into the earth, and take up portions of the earth and turn it into tree. The leaves and the dead branches fall, and in the course of time are turned once more to earth. There are all sorts of stages between earth and tree, and between tree and earth; but you would not therefore say that the word "earth" and the word "tree" are misnomers. The working men go to the business man and apply for work. The business man gives them work, and takes their product, and offers it in the market at a price which allows him a profit above cost. If he can sell at a profit, he repeats the process, and the worker has a job. If he cannot sell at a profit, the worker is out of a job. Here and there may be a benevolent business man who, rather than turn his workers out of a job, will sell his goods at cost, or even for a short time at a loss; but if he keeps the factory going simply for the benefit of his workers, and with no expectation of ever making a profit, that is a form of charity, and not the common system under which our business is now carried on. So it appears that the worker is dependent for his wages upon the ability of the business man to make a profit. The worker's life is inextricably bound up with the profit of the capitalist—no profit for the capitalist, no life for the worker. The capitalist, going out to look for markets for his goods, is seeking, not merely profit for himself, but life for his workers. Now, the business man pays a certain percentage of his total receipts for labor, another percentage for raw materials, another percentage for his overhead charges, and the rest is profit in various forms, rent to the landlord, interest to the bondholder, dividends to the stockholder. All this total sum goes to human individuals, and each has thus a certain amount of money to spend. They pay it over to other individuals for goods or services, and so the money keeps circulating, and business keeps going. That is as deep as the average mind probes into the process. But let us probe a little deeper. It is evident that, in the course of all this exchanging of goods, some individuals get a larger share than other individuals. Our government collects an income tax, and thus we have statistics representing what people are willing to admit about the share they get. In 1917 it appeared that, speaking roughly, one family out of six had an income of over $1,000 a year, and one family out of twelve had an income of over $2,000. But there were 19,000 families which admitted incomes of over $50,000 a year, and 300 with over $1,000,000 a year. Now the families that get less than a thousand dollars a year obviously have to spend the greater part of their income upon their immediate living expenses. But the families that get $50,000 a year do not need to spend everything, and most of them take the greater part of their income and reinvest it—that is, they spend it upon the creating of new machinery of production, railroads, mills, factories, office buildings, the whole elaborate structure of capitalist industry. Exactly what proportion of the total product of industry is thus taken and reinvested no one can say; but this we know, our cities are growing at an enormous rate, our manufacturing power is increasing by leaps and bounds, we are perfecting processes which enable one man to do the work of a hundred men, which increase the product of one man's labor a hundredfold. All this goes on blindly, automatically; a Niagara of goods of all sorts is poured out, and we call it "prosperity." But then suddenly a strange and bewildering thing happens. All at once, and without warning, orders fall off, values begin to drop, business collapses, factories are shut down, and millions of men are thrown out of jobs. Merchants look at one another with blanched faces; each one has been counting on paying his bills with the profits he was going to make, and now his profits are gone, and he can't pay. The newspapers and magazines keep insisting that it can't be true, that business is going to revive next week, that prosperity is just ahead. But the factories stay shut, and the millions of men stay idle. This is the condition in which we find ourselves as I write this book. It has been happening regularly in our history every ten years or so, ever since America started; we have had a hundred years to reflect upon it and to probe into the causes of it, and such is business intelligence in the most enlightened country in the world, you may search the pages of our newspapers from the first column of millionaire divorce suits to the last column of "situations wanted," and nowhere can you find one word to explain this mysterious calamity of "hard times"—how it comes to happen to our social system, or what could be done to prevent it! To supply this deficiency in present day thinking is our next task. <h2>CHAPTER LVII HARD TIMES</h2> <div class="blockquot">(Explains why capitalist prosperity is a spasmodic thing, and why abundant production brings distress instead of plenty.) </div> Let us picture a small island inhabited by six men. One of these men fishes, another hunts, another gathers cocoanuts, another raises goats for clothing, and so on. The six men among them produce by their labor all the necessities of their lives, and they exchange their products with one another. The island is productive, and each of the men is free, and makes his exchanges on equal terms; on that basis the industry of the island can continue indefinitely, and there will never be any trouble. There may sometimes be over-production, but it will not cause anyone to starve. If the fisherman is unusually lucky one day, he will be able to take a vacation for a few days, living on his fish and the products he exchanges for his fish. For the sake of convenience in future reference, I will describe this happy island as a "free" society; meaning that each of the members of this society has access on equal terms to the sources of wealth, and each owns the product of his own labor, without paying tribute to any one else for the right to labor, or to exchange his products. But now let us suppose that one of the men on the island is strong and aggressive; he takes a club and knocks down the other five men, and compels them to sign a piece of paper agreeing that hereafter he is the president of the land development company of the island, the chief stockholder in the goat-raising company, and owner of the fishing concession and the cocoanut grove; also, that hereafter goods shall not be bartered in kind, but shall be exchanged for money, and that he is the banker, and also the government, with the right to issue money. In this society you will find that the real work, the actually productive work, is done by five men, instead of by six, and these five do not get the full value of their labor. The fisherman will fish, but his product will no longer belong to himself; he will get part of it as wages, while the "business man" takes charge of the balance. So when there is a lucky day, there will be prosperity in the fishing industry, but this prosperity will not benefit the fisherman; he will have only his wage, and when he has caught too many fish, he will not have a few days' vacation, but will be out of a job. And exactly the same thing will happen to the goat-herd. He will probably have work all the year round, because goats have to be tended, but he will get barely enough to keep him alive, and the surplus skins and milk will go to the owner of the no-longer-happy island. Perhaps it will occur to the owner that the man who raises cocoanuts might also keep an eye on the goats, and so the goat-herd will be permanently out of a job, and will turn into what is called a tramp, or vagrant. Inasmuch as everything to eat on the island belongs to the owner, the ex-goat-herd will be tempted to become a criminal, and so it will be necessary for the owner to arm the cocoanut man with a club and make him into a policeman; or perhaps he will organize the fisherman and the hunter into a militia for the preservation of law and order. They will be glad to serve him, because, owing to the extreme productivity of the island, they will be out of jobs a great part of the time, and but for the generosity of the business man, would have no way of earning a living. But suppose that the cocoanut man should invent a machine for gathering a year's supply of nuts in a week; suppose the fisherman should devise a scheme to fill his boat with fish in a few minutes; and suppose that as a result of these inventions the business man got so rich that he moved to Paris, and no longer saw his workers, or even knew their names. Under these conditions you can see that overproduction and unemployment might increase on the island; and also the business man might seem less human and lovable to his wage slaves, and might need a larger police force. It might even happen that he would discover the need of a propaganda department, in order to keep his police force loyal, and a secret service to make sure that agitators did not get into the schools. The five islanders, having filled all the barns and storehouses, would be turned out to starve; and when they asked the reason, they would be told it was because they had produced a surplus of food. This may sound grotesque, but it is what is being said to 5,000,000 men in America as I write. There are clothing-workers who are going about in rags, and they are told it is because they have produced too much clothing. There are shoe-workers whose shoes are falling off their feet, and they are told it is because they have produced too many shoes. There are carpenters who have no homes, and they are told that a great many homes are needed, but unfortunately it doesn't pay the builders to go ahead just now. This may sound like a caricature, but it happens to be the most prominent single fact in the consciousness of 5,000,000 Americans at the close of the year 1921. No wonder they are discontented with the present order. The solution of the mystery is so simple that the 5,000,000 unemployed cannot be kept permanently from understanding it. The reason the five men on the island are starving is because one man owns the island and the others own nothing. If the island were community property, the five men would each own a share of the contents of the barns and storehouses, and would not be starving. If the 100,000,000 people of America owned the productive machinery of America, then instantly the unemployment crisis would pass like an evil dream. The farm-workers who need shoes would exchange their food with the starving shoe-workers, and the starving shoe-workers would have jobs. They would want clothing, and so the clothing-makers would start to work; and so on all the way down the line. There is only one thing necessary to make this possible, and that is the thing which we have agreed to call the social revolution. <h2>CHAPTER LVIII THE IRON RING</h2> <div class="blockquot">(Analyzes further the profit system, which strangles production, and makes true prosperity impossible.) </div> We have seen that in an exploiting society there is a surplus which is taken by the exploiter; and that under the modern system this surplus must be sold at a profit before production can continue. The vital fact in such a society is that the worker has not the money to buy back all that he produces; therefore it is inevitable that a surplus product should accumulate. When this happens, production must be cut down, and during that period the worker is without a job, and without means of living. The fact that he needs the product does not help him; the point is that he has not the money to buy it. In such a society the productive machinery is never used to the full. The machinery is controlled by a profit-seeking interest, seeking an opportunity to make sales, and restricting production according to the prospect of sales. So the actual product bears no relationship to the possible product, and people who live in an exploiting society can form no conception of true prosperity. For, you see, the market is limited by the competitive wage system. We have seen that in our own rich, prosperous country only one family out of six has more than $1,000 a year income; only one family out of twelve has $2,000 a year. It does not make any difference that the warehouses are bursting with goods; a family constitutes a market of so many dollars a year, and then, so far as the profit system is concerned, that family is non-existent; that family stops consuming, and the productive machinery is halted to that extent. I have been accustomed to portray the profit system under the simile of an iron ring riveted about the body of a baby. That ring would cause the baby some discomfort at the beginning, but it would not be serious, and the baby would get used to it. But as the baby grew the trouble caused by the ring would increase, and finally there would come a time when the baby would be suffering from a whole complication of troubles, and for each of these troubles there would be but one remedy—break the ring. Does the baby cry all the time? Break the ring! Is its digestion defective? Break the ring! Is it threatened with convulsions or with blood poisoning? Break the ring! Here is our industrial society, growing at a rate never equalled by any human baby; and here is this iron ring riveted about its middle. Here is poverty, here is unemployment, here is graft, here is crime, here is war and plague and famine; and for all these evils there is but one cause, and but one remedy. Break the ring! Set production free from the strangulation of the profit system. I will admit that there may have been a time in the history of the social infant when this ring was necessary. I admit that if the great industrial machine was to be constructed, it was necessary that the mass of the people should consume only part of what they produced, and should allow the balance to be reinvested as capital. But now it has been done, and the process is complete. We have a machine capable of producing many times more than we can consume; shall we still go on building that machine? Shall we go on starving ourselves, to save the money, to multiply over and over again the products, in order that we may be thrown out of work, and be starved even more completely? A few generations ago we had in colonial America a society that in part at least was "free." In that society everybody got the necessities of life. They did not have the modern Sunday supplement and the moving picture show, but they had bread and meat and good substantial clothing, and furniture so well made that we still preserve it. The children in those days grew up to be strong and sturdy men and women, who would have seen nothing to envy in the bodies or minds of the slum population of New York and Chicago. In short, they had all the true necessities of life; and yet their work was done by hand, the power process was unknown and undreamed of. Now comes modern machinery, and multiplies the productive power of the hand laborer by five, by ten, sometimes by a hundred. Here, for example, is the "Appeal to Reason" selling millions of cheap books for ten cents apiece, and making a profit on it; installing a gigantic press which takes paper, sheet after sheet, prints 128 pages of a book at one impression, and folds and stitches and binds the books, all in one process, and turns them out complete at the rate of 10,000 copies per hour. Here is a factory which turns out 100,000 automobiles a month. Here is a mill which turns out many millions of yards of cloth a month. If our colonial ancestors had been told about these marvels, they would have said instantly: "Then, of course, everybody in that society will have all the books they want, and all the clothing they want, and all the automobiles. Everybody in that society will have five or ten or one hundred times as much goods as we have." Imagine the bewilderment of our colonial ancestor if he had been told: "The majority of the people in that society will not have so much of the real necessities of life as you have. They will have a few cheap trinkets, designed to tickle their senses; they will have cheap newspapers, carefully contrived to keep their minds vacant and to keep them contented with their lot; they will have moving picture shows constructed for the same purpose; but all their material things will be flimsy, put together for show and not for permanence; their food will be adulterated, their clothing will be shoddy, everything they have will be made, not for their service, but for the profit of some one who lives by selling to them. The average wage earned by those who do the work of this new machine civilization will be less than half the amount necessary to purchase the necessities of a decent life, and one-tenth of the total population will be living in such poverty that they are unable to maintain physical fitness, or to rear their children into full sized men and women." <div style="break-after:column;"></div>

1 of 2

2 of 2

Update Required To play the media you will need to either update your browser to a recent version or update your Flash plugin.