CORLISS LAMONT
Way nF LiFfi For IMnilnrn \hiii
L4. . '- *
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From the collection of the z n
«r m o Prelinger
v Ijibrary
San Francisco, California 2006
The Book and the Author
The author of this book whose back- ground, both social and financial, represents the top strata of American society is a graduate of Harvard, a Doctor of Philosophy, and member of a prominent banking family. He is married and has three children. Corliss Lamont holds views which are in strong opposition to those of his relatives and many of his friends. In this book he explains why he is a radical, why he believes that Socialism is a better system under which to live than Capitalism, and what he thinks will be the course of transition in this country to a planned socialized order. It is plain that Mr. Lamont is not an advocate of violence, nor is his criticism of existing institutions and individuals intemperate or merely theoretical. He does explain the nature of the
present order, of which he has an intimate understanding, and he does insist that an expanding economy which can provide more of the good things of life, both material and cultural, to all of the people is only possible through the establishment of a socialist system.
This book carries a challenge that is not to be ignored, however con- troversial may be its content. Nor can the convictions of one of the ablest young philosophers of our time be set aside lightly. Both those who favor, and those who oppose Socialism as a way of life, have much to gain from the reading of a book which presents the issues in sharp relief and presents them fairly and objectively to all who care to examine the nature and possibilities of a future society*
Corliss Lamont
You
Might Like Socialism
A Way of Life for Modern Man
Modern Age Books New York
COPYRIGHT 1939 by CORLISS LAMONT
PUBLISHED BY MODERN AGE BOOKS, INC.
All rights in this book are reserved, and it may not
be reproduced in whole or in part without
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address the publishers.
60 PRINTED IN THE UNITED STATES OF AMERICA
To
My friends in the Harvard Class of 1924
Preface
My purpose in this book is to give, in simple and understandable lan- guage, an inclusive survey of the main reasons that prompt contem- porary Americans from every walk of life, including members of the upper and middle class, to adopt Socialism as the way out for this country and the world. As the title indicates, I invite the reader in the spirit of free and undogmatic discussion to consider the case for a Socialist society and to reach his own conclusions.
It would of course be impossible, simply for reasons of space, to include the many different strands of study, discussion and personal experience which over a number of years have gradually led me to become a radical. Nor could I even recall all the impressions, some of them trivial in themselves alone, which have entered into my intel- lectual and emotional processes to stimulate and reinforce my Socialist position. A number of significant questions I have naturally not been able to treat very fully, and many matters of detail I have not been able to take up at all. Other volumes, classics in the field, perform these tasks.
My indebtedness is obvious and far-reaching to writers on Socialism such as Robert W. Dunn, L. E. Hubbard, Leo Huberman, George Soule, Sidney and Beatrice Webb, Albert Rhys Williams and, above all, John Strachey. But the opinions expressed in this book are my own and I alone bear the responsibility for them.
I wish to thank especially the following individuals for their inval- uable co-operation and counsel in the writing and publication of this book: Theodore Bayer, Alice W. Field, Henrietta Weigel, Josephine White, and my wife, Margaret I. Lament, whose sharing of common social aims and ideals with me is a steady source of strength and in- spiration.
vii
Vl'ii PREFACE
Since throughout this volume and particularly in the last chapter I have dealt to a considerable extent with contemporary affairs, it is quite possible that by the time this study is published, events, which move so swiftly these days, will have swept ahead of or contradicted me on one point or another. Hence it is necessary to say that this book went to press on August 18, 1939.
C.L.
Contents
PAGE
Chapter 1 Why Members of the Upper Class Go Left I
1 . Why I Am a Radical I
2. The Voice of Democracy and Reason 4
3. Critique of Well-to-do Radicals 9
Cha-pter II Capitalism Fails Mankind 1 9
1. An Independent Analysis 19
2. The Profit System and Lalssez-Falre 20
3. Poverty Amid Potential Plenty 31
4. The Central Contradiction of Capitalism 37
5. Solutions Superficial and Retrogressive 47
Chapter III Socialist Planning for Abundance 60
1. Everyone Can Live Well 60
2. The Principles of Planning 62
3. Socialist Planning for America 73
4. Some Objections Answered 87
5. International Planning 96
Chapter IV Socialism in Soviet Russia 99
1. The Russian Background 99
2. The Five-Year Plans 105
3. Soviet Cultural Progress 116
4. Democracy and Peace 124
5. Some Criteria of Judgment 134
ix
X CONTENTS
PAGE
Chapter V The Road to Peace 142
1. The Awful Malady of War 142
2. False Theories of War 145
3. The Economic Causes of War 152
4. The Fascist Menace 163
5. The Cure for War 174
Chapter VI Toward Greater Democracy 186
1. What Democracy Is and Is Not 186
2. The Violation of Civil Liberties 194
3. The Preservation of Civil Liberties 2IO
4. The Transition to Socialism 216
5. Socialist Democracy 225
Chapter VII The Culture and Philosophy of Socialism 229
1. Culture and Capitalism 229
2. Culture under Socialism 238
3. The Transformation of Motives 246
4. The Philosophy of Socialist Humanism 257
5. Religion and Radicalism 265
Chapter VIII The Prospects for Socialism 271
1. General Considerations 271
2. The Effects of War and Fascism 277
3. The Non-Fascist Countries 283
4. Mexico and South America 288
5. The United States 293
Index 303
You
Might Like Socialism
Chapter I
Why Members of
the Upper Class
Go Left
I. Why I Am a Radical
"How does it happen, Mr. Lament, that a person with your back- ground is a radical?" I have been asked this question an infinite num- ber of times during the past few years and by all manner of people, from incredulous workers coming up to speak with me after a lecture in some Midwestern city to perplexed plutocrats taking me aside for a confidential chat after a formal Manhattan dinner. Needless to say, I have never been able, in a brief conversation, to give a very satisfactory reply. But I have always realized that it was a legitimate and impor- tant question. And in this book I want to try to answer it simply, honestly and thoroughly.
Yes, I am a radical. I am on the side of labor. I sympathize in general with the achievements of the Soviet Union. I am against Fascism. I want to see a life of abundance for all of the people. And I believe that Socialism can do the job both in America and the world at large.
At the same time there can be no doubt that in origin I come from America's so-called upper class. I mean "upper" only in an economic sense : that top I per cent of American individuals and families whose incomes are $10,000 a year or more. From early childhood I have
I
2 YOU MIGHT LIKE SOCIALISM
enjoyed certain undeniable advantages that wealth is able to assure. Two members of my immediate family are partners in the banking firm of J. P. Morgan and Company. And since coming of age, I myself have possessed considerably more than average economic security.
I betray no state secrets in citing these facts. And I mention them at the outset, not with any intention of embarking on a series of per- sonal "confessions," but simply because they represent the truth and because they are objectively necessary for an understanding of what I have to say. I think we can take it as settled, therefore, that in the year 1902 I was born into what became soon afterward a prominent capitalist family. It was and is, I may add, a very congenial family. And in democratic, sometimes fiery, but always friendly discussion with its various members I have worked out much of the material which appears in this volume.
Why are persons from the capitalist class with backgrounds similar to mine today joining the ranks of the radicals? Though I can speak only for myself, I believe that I can throw light on this matter by telling the story of my own transition to a Socialist point of view. And perhaps I can clear up to some extent what seems to be an endless source of amazement and alarm to so many of our fellow-citizens. They cannot understand how anyone who is normal, "Nordic" and economically privileged can become a sincere supporter of radicalism in economics and politics.
But even a cursory glance at the world at present ought to dispel any appearance of mystery in the fact that an increasing number of well-to-do Americans are following a leftward course. Here we are twenty-five years after the start of the Great War and ten years after the start of the Great Depression and we face once more, both na- tionally and internationally, an economic and political situation over- whelming in its extent and gravity. A vast and bloody conflict is raging in the East; the Second World War is an ever-present pos- sibility; while behind the facade of so-called peace the brute force of Fascism is rampant and bludgeons its way to power in country after country.
MEMBERS OF THE UPPER CLASS
And Capitalism in general has become so capricious, so utterlA undependable, that even the wealthy cannot be too sure of their future \ and that of their children. The stock market reaches the heights one \ day and sinks to the depths the next ; businesses, both large and small, quickly go from boom to bankruptcy; great fortunes rise and fall; whole nations suddenly verge on economic collapse. Who is really secure ? Businessmen and capitalist theoreticians more and more openly acknowledge that they do not know any way in which the ever- recurring cycle of boom and crash can be halted. They piously hope that the next depression will not be so bad as the last, but beyond this they have nothing to offer a harassed and long-suffering humanity. /
Now I definitely refuse to accept as the fate of mankind the \ defeatist attitude which condemns us to an unending repetition of the very processes that have brought about such overwhelming catastrophe and misery durinjg the past quarter-century. I have only one life to live and I want to make it count for social aims that reach down to fundamentals. I do not want to waste my time by helping to bring about little improvements here and there and letting the big things go. I know of few greater personal tragedies than those of well-meaning men and women who have devoted their lives to the achievement of some ideal only to find at the end that they were dealing with surface causes and cures. Such are the peace workers who think that war can \ be eliminated by governments formally agreeing to renounce aggres- \ sion ; such are the charity workers who think that poverty can be over- come by private contributions to the needy; such are all those who think that depressions can be avoided by tinkering with the capitalist system.
Reforms within the structure of Capitalism can result in genuine \ amelioration, but I do not believe that they can ever resolve our major j dilemmas. One severe depression or one widespread international con- flict can overnight do ten-fold more harm than all the good accom- plished in the reformist gains of decades. I was once asked why I did not give over my entire energies to the establishment of unemployment insurance. My answer was that while I naturally was in favor of unemployment insurance, its enactment would not solve the problem
4 YOU MIGHT LIKE SOCIALISM
of unemployment. The way to solve that problem is to establish Social- ism and abolish unemployment. Socialism gets to the roots of things. And I feel that it is more worth while to be the most insignificant worker on behalf of something that provides ultimate solutions than to be a big shot in a system which has terrible difficulty in providing even temporary ones.
These, then, are the main reasons in my opinion why men and women of intelligence and good will are everywhere today earnestly seeking to find a way out for society which will permanently put an end to the intertwined evils of war and poverty, of economic crisis and cultural retrogression. As one of the seekers I have tried to think through the deep-going problems of these turbulent times. And I have come to the firm conclusion that a Socialist order offers the most certain hope for the renewal of human progress. Specifically, to sup- port Socialism means to work for, as the basis of a stable economy and a great culture, the goal of a planned and peaceful and democratic society, eventually on an international scale, in which the main instru- ments of production and distribution are publicly owned and operated.
2. The Voice of Democracy and Reason
I hold that the case for Socialism rests primarily on the belief in democracy and the appeal to reason. By democracy I mean the fair and equal opportunity of all individuals in all nations, regardless of race or religion, origin or occupation, to share in the good things, both material and cultural, of this life ; and to participate genuinely in the economic and political decisions affecting their mode of existence. Only persons who subscribe to democracy in this inclusive interpreta- tion of the word are capable, I believe, of possessing that passionate sense of outrage over the cruelties and injustices endured by mankind which has ever been an attribute of the world's great democrats. Only such persons are able to give their sincere and abiding loyalty to the happiness and progress of all humanity as the supreme ethical goal.
In general, it has been simply impossible for members of the upper \ classes to work sincerely for humanity as a whole, because they have Iways been filled with such profound sentiments of hatred and con-
MEMBERS OF THE UPPER CLASS 5
tempt for what they consider inferior classes, races and nations. They \ have accordingly felt that these groups were neither deserving of equal^/ opportunity nor fit for it. Conversely, the upper classes have been so certain of their own inborn intellectual, moral and biological superi- \ ority that they have enjoyed with a good conscience the various eco- \ nomic and cultural privileges which have gone with their status in \ the community. Upper-class ignorance of biology and social science often seems downright willful ; but more often, I think, it is due to an unconscious bias which throws up a protective screen of rationaliza- tion and purblindness to shut out unpleasant knowledge. And this is why in increasing measure today perfectly sane and sober capitalists refuse to acknowledge certain facts — commonly known facts — which they feel cast some sort of disrepute on their system.
These considerations explain why so many intelligent and formally well-educated men uphold reactionary views that work hardship on the masses of the people. If your basic social assumptions are narrow and ungenerous, if you believe in the God-given right of an exclusive aristocracy to rule the world and enjoy its finest fruits, then reason may well lead you to support a social system that cares little for the rights and happiness of the majority. The exercise of reason alone, then, does not necessarily point in the direction of Socialism or any other particular form of society. It all depends upon what assumptions you start from in your reasoning, especially upon what general pur- pose you have in mind. Unfortunately, reason, as embodied for instance in scientific techniques, may operate on behalf of all sorts of anti-social ends such as aggressive war and unscrupulous profit- making.
There are admittedly numerous exceptions among the ruling class to what I have been saying — men and women who are devoted to democracy in the broad sense. Yet surely most of these genuinely democratic capitalists, like many members of the working class, do not believe in Socialism! True enough. And here is where the appeal to reason comes in. For I maintain that an objective intellectual analysis \ of the contemporary scene and of the lessons of history shows clearly that those who honestly desire the extension of democracy and the I
0 YOU MIGHT LIKE SOCIALISM
continued progress of mankind must sooner or later espouse the cause of Socialism. Only unflinching reason and the democratic feeling working together lead to Socialist conclusions. And those believers in democracy and progress whose faulty thinking takes them in a non- « Socialist direction are in the end bound to meet with defeat and disap- pointment. Hence all liberals, for instance, or at least all liberals-with- guts, can hardly fail these days to become radicals.
Why Socialism should, I think, appeal to the reason of true demo- crats, to all those who are both tough-minded and tender-hearted, can be indicated by reference to one or two of the most pressing problems of the day. We radicals hold, for example, that only Socialist plan- ning within each country and between each country can eliminate the terrific economic pressures which under Capitalism — and just now particularly in its Fascist manifestations — lead over and over again to the horror of international conflict. I shall later take up in detail the problem of peace and war. The point I want to make here is that the radical thesis on this grave question is a matter of intellectual analysis. It stands or falls on that basis.
What Socialism achieves in an international way is inseparably bound up with what it is able to do on a national scale and whether, as I allege, it can establish continuous prosperity and allay the economic discontent and distress of the various peoples. Here again I say that it is reason which must decide whether or not the Socialist analysis is correct. But in this case it is not reason working merely with abstrac- tions and projecting fine-sounding hypotheses. For the Socialist theory has for the first time been receiving a large-scale test, going through a prodigious pragmatic ordeal, in the Soviet Union. There a planned economy has actually been functioning for a number of years and, as I learned from my two trips to Soviet Russia, has achieved extraor- dinary success.
Turning to still broader perspectives, I want to bring out as a fact of the highest importance that Socialism is not concerned simply with economics and material things. The Socialist cultural synthesis does not have merely a theory of economics and politics; it has a theory of history and art and science ; it has a theory of international and inter-
MEMBERS OF THE UPPER CLASS 7
racial relations ; it has an attitude toward the universe. In other words \ it offers the individual an inclusive and rounded philosophy of life and one which provides him with a high and worth-while loyalty during his career on this earth. In Socialism I and other non-prole- tarian radicals find an opportunity to fulfill ourselves. This ought to make it plain that, even apart from the hope of escaping death in some frightful armageddon or economic ruin in some precipitous crash, we are not devoting our lives to Socialism simply as a beautiful, altruistic gesture. While I would not say that we are entirely selfish, we do believe that Socialism has at least as much to give us as we have to give Socialism.
We feel, too, that we are associating ourselves with the most vital thing in the world today, that we are becoming part of a great, ongoing and probably invincible tide in the affairs of men, that we are casting our lot with theTFuture. All during the nineteenth century American Capitalism presented many challenging and exciting tasks. There was the opening up of the West, the building of a vast transportation sys- tem, the discovery and exploitation of our natural resources, the mechanization of industry and agriculture, the development of mass production and big corporate enterprise, the transformation of our country into a definite World Power. But now it appears evident that Capitalism has seen its palmiest days and that stirring opportunities within its framework are becoming increasingly scarce. The battle for
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Socialism — and for a long time yet in the United States it will be the uphill fight of a minority — seems to me much the most thrilling and / at the same time intelligent movement in which one can participate today.
The general aims of Socialism which I have been reviewing, from being alien to the spirit of America, are wholly in accord our traditions. What indeed could be more American than the complete democracy, of social justice, of economic security, of cultural opportunity, of world peace and of the right of all men to "life, liberty and the pursuit of happiness"? I am a radical precisely because such outstanding American ideals are daily stamped in the mire by Capital- ism, whether in its Fascist or non-Fascist forms; and because they can
ring, far \ >rd with ideal of
8 YOU MIGHT LIKE SOCIALISM
be rescued and fulfilled only through the establishment of Socialism. /These ideals, I may add, are sincerely shared by most Americans, i, including many honest conservatives and members of the upper class.
Let me illustrate from personal experience the meaning of this last statement. Two or three years ago a red-baiter by the name of Francis Ralston Welsh wrote an agitated piece about me and my parents called "Sowing the Wind and Reaping the Whirlwind." He pointed out that my mother, Mrs. Thomas W. Lamont, was on the Board of such terrible "Communist" organizations as the Foreign Policy Asso- ciation and the New School for Social Research, and that my father aided and abetted her subversive activities and was guilty of some rather liberal doings himself. "And so the wind was sown," the author said. Then came the inevitable "whirlwind," he concluded, and in no other form than my own humble self!
Now in spite of the absurdities of Mr. Welsh, he has a real point. For much of my radicalism is unquestionably due to my determination to see actualized certain of the ideals which were taught me in my home. I think especially of the goal of international peace and un- derstanding, always a dominant concern of my parents and one which led my father to depart from his traditional Republicanism in 1920 and support Governor Cox, the Democratic candidate for President, on the League of Nations issue.
Indeed, in my general family group there has long been a genuine tradition of independent and progressive thought. My uncle, Ham- mond Lamont, who died in middle age during the full tide of his brilliance, was managing editor of the liberal New York Evening Post for six years and editor of the militant Nation for three. Another uncle, John P. Gavit, was also managing editor of the Post for several years and later concentrated on the fight for a saner international order. My aunt, the former Mrs. Charles Corliss, is a popular novelist bearing the pen-name of Anne Parrish. A few years ago she wrote, under the title of Golden Weddingy one of the most effective contemporary satires on the wealthy American bourgeoisie. And one of my father's first cousins, Robert Rives Lamonte, was for many years a prominent member of the Socialist Party and a prolific author on the subject of
MEMBERS OF THE UPPER CLASS 9
Socialism. All in all, then, I do not feel very much like a black sheep in the family circle.
Of course, if my position is sound on the ways and means of achiev- ing peace and other recognized human values, then all progressive- minded and idealistic capitalists, including some of my close relatives, ought to seriously contemplate throwing their energies into the struggle for Socialism. I am convinced that many such members of the upper\ class would be individually happier in a co-operative society where their \ social sensitivities would not be constantly outraged and where they I would cease to lead lives which so often today are psychologically / oppressed, spiritually frustrated, and weighed down by the very bul^ of material possessions.
3. Critique of Well-to-do Radicals
The Marxists believe that the preponderant support for Socialism must come from the workers, because of their numerical strength and psychological cohesiveness, because of their basic and productive func- tion in industrial life, and because their precarious economic situation more readily leads them to recognize a Socialist order as their chief hope. The radical movement has in addition always attracted an impressive number of the middle class, especially Dj^ie^sjo&ak- and intellectuals, whose training is more prone to make them see the logi- cal case for Socialism.
Members of the upper class who espouse Socialism are relatively few and far between. The capitalists' economic stake in the present order — or, rather, border — makes this understandable, but they have an important psychological stake as well. Not only do they possess on the whole, even in America, a very deep loyalty to their class as such ; but also their careers and feelings of self-esteem are so bound up with the present system that to admit that it is failing or that some other system is preferable would constitute, in their minds, an admission that their own lives had been a failure. That is why in this era members of the upper class who come over to Socialism are almost always those of the second generation whose amour frofre is not necessarily tied up with Capitalism.
10 YOU MIGHT LIKE SOCIALISM
When, despite all inhibiting economic and psychological influences, members of the upper class do come over to the Left, it is possible for them to be as dependable as anyone else. Like any other types in the radical movement, they may honestly change their convictions or lose their nerve, grow conservative with age or become tired of it all. But they can rarely be bought off, because they already possess a goodly measure of economic security. And they are not likely to be corrupted by the lure of social prestige because they had plenty of that commodity to begin with. There is little danger of their enacting the revolting spectacle of a Ramsay MacDonald betraying British Socialism by gradually succumbing to the refined and aristocratic atmosphere of afternoon tea with the nobility.
We well-to-do radicals, however, have our own peculiar problems. There is the problem of what particular job will enable us to function most effectively in the movement, of how to handle the numerous and never-ending financial appeals, of making new and staunch friends on the Left who will give us understanding and moral support, and of adjusting our personal lives in a way that is appropriate to the beliefs we hold. The ordinary upper-class conservative is quite prone to call us insincere because we do not at once reduce our standard of living to that of the most poverty-stricken group in the United States. I well remember an encounter some years ago with that picturesque blusterer, ex- Vice-President, ex-banker and ex-general Charles G. Dawes, who leapt up from an excellent Sunday dinner and paced around the table chewing angrily on his pipe and charging that I had no right to believe in Socialism until I gave away my last penny. I reminded him that it was not Lenin but Jesus who had advised giving away all one's goods to feed the poor. The Christian ex-general, a multi-millionaire at the time, did not respond to this observation.
The point is that there are more significant things to do on behalf of Socialism than to make dramatic and half-baked gestures such as flinging away all one's money or moving to some city slum. It is well for at least a few friends of the radical movement to remain financially solvent. And it may be useful, too, for non-proletarian radicals to keep on working within the capitalist class where they were brought up and
MEMBERS OF THE UPPER CLASS II
to try to win over more persons from it or at least to arouse them against Fascism. It is customary to jeer at what are sometimes known as "Parlor Pinks" ; but as a matter of fact very good work can be done for Socialism in parlors both modest and magnificent. Some of the most flourishing seeds of the French and Russian Revolutions were planted in the salons of the high and mighty. And leftists like myself cannot help feeling that it is rather more important for us to be effective on behalf of Socialism than to try to satisfy the preconceived whims of upper-class folk as to how we should behave.
Finally, radicals like myself do not pretend to be either angels or martyrs; it is our unfriendly critics who concoct that myth and then accuse us of being hypocrites because we do not live up to it. Neither are we kill- joys who want to take all the fun out of life, gloomy fanatics who have no sense of humor, nor slaves to work who think that a cause can best be served by physical or nervous wrecks. The unexciting truth is that we are ordinary persons who like ordinary pleasures and recreations, who try to do a good day's work and who wish to provide our children with a decent environment in which to grow up. It would be folly for us, as for anyone else in this capitalist country, to attempt to act now in all respects as if full-fledged Socialism already existed in America.
Apologists for the present economic system, however, spare no efforts in their endeavor to discredit radicals of my type. Sometimes they attempt simply to laugh us off; sometimes, like Sinclair Lewis in his recent novel The Prodigal Parents, they resort to absurd carica- tures. But unquestionably their most frequent procedure is to try to explain us away by resorting to amateur psychoanalysis. Thus they claim that we are impelled toward Socialism by strange and obscure Freudian complexes. We have either a publicity complex, an Oedipus complex, an inferiority complex, a martyr complex or a romantic revolt-against-our-elders complex. We either were unhappy and neglected as children or became bored and took up radicalism as an engaging fad or had an ineffable, irrational yearning just to be "different."
Now a little psychoanalysis is a dangerous thing. And the first
12 YOU MIGHT LIKE SOCIALISM
trouble with the psychoanalytic approach to non-proletarian radicals is that, even granting that some of us, like other people, are afflicted with Freudian complexes, personal neuroses and social unpopularity, such psychological stimuli, while important to both thought and action, do not in themselves push a person toward any particular economic or political program. Even economic disaster does not necessarily lead a man leftward, since he may really think that his self-interest lies in some other quarter. These various types of pressure may and no doubt usually do move a man to some definite course of conduct in order to solve his personal dilemmas. He may then proceed to support Socialism and the labor movement; but instead he may join the Oxford Group, retire to an ivory tower of one sort or another, become a Fascist storm- /Irooper or commit suicide. So again it seems to me that the deciding
/ factor in bringing an individual around to the radical viewpoint must ordinarily be a deep but normal feeling for democracy and reliance on
\ the appeal of reason.
The second trouble with the psychoanalytic theory of radicalism is that radicals from the middle class or the so-called upper class do not appear to have been especially afflicted with psychological complexes. In the process of growing up we undoubtedly went through the average number of emotional difficulties, but nothing along these lines, I am sure, which would particularly distinguish us from the other 99 per cent of our social group who have faithfully stood by the existing economic order. Neither have we been in general unpopular among our fellows nor denied social recognition nor badly treated by our parents. Most of us graduated successfully from universities of long standing and high repute such as Harvard and Yale, Columbia and Chicago. And we are now engaged in congenial and productive occu- pations according to our abilities and training.
The third trouble with the psychoanalytic theory is, of course, that, conceding for the sake of argument that it is substantially true, it does not really undermine the case for radicalism. Even if personal malad- justments do drive people toward certain definite economic and politi- cal programs, this fact in itself by no means discredits such programs, whether they be radical or conservative in nature. Intellectual proposi-
MEMBERS OF THE UPPER CLASS 13
tions cannot be disproved by a parading of the various motives that have led men to accept them, but only by other intellectual propositions which refute them.
Very pertinent to this discussion is what Karl Marx (1818-1883) and Friedrich Engels (1820-1895), the founders of modern Social- ism, wrote in The Communist Manifesto. There they stated: "Just as \ in former days part of the nobility went over to the bourgeoisie, so now part of the bourgeoisie goes over to the proletariat. Especially / does this happen in the case of some of the bourgeois ideologists, who / have achieved a theoretical understanding of the historical movement as a whole." The reference here to "theoretical understanding" is roughly equivalent to what I have been calling "the appeal to reason." True enough, Marx and Engels did not have Freud's very original and significant work to guide them. But if they had had, I greatly doubt whether they would have considered some sort of sexual neurosis or other psychological complex more important in bringing over mem- bers of the bourgeoisie to Socialism than a certain modicum of good sound study and thinking.
As a matter of fact, as I have discovered after considerable experi- ence, the primary object of the psychoanalytic attack on radicalism is to becloud the fundamental intellectual issues by what are in essence ad hommem arguments. For years, starting during my term at Har- vard, whenever I took some unorthodox stand which required a certain amount of open fighting, people would accuse me of personal publicity- seeking. This developed in me a self-conscious jear of publicity about myself which was the nearest thing to a "complex" I ever had. Only later, when I came to understand the real purpose of such criticisms, was I able to deal with newspapers and reporters in a natural way.
There is one other ad hominem argument used against upper-class radicals that also warrants some attention. Since, as I have said, we usually belong to the second generation, the charge is made that most of us are either too young in years or too immature in mind to know what is good for society. It is significant that as long as we agreed in general with conventional doctrines or did not go beyond a liberal position, such criticisms were never levelled against us. One is never
14 YOU MIGHT LIKE SOCIALISM
too young to hold an opinion as long as it does not run fundamentally counter to prevailing views. But if one steps off the capitalist reserva- tion, it is a very different matter; then one suddenly discovers that no one under fifty is entitled to an opinion about anything.
From time immemorial the elder generation has used this depreca- tion of youthfulness in order to block progress and stop dissent. As far back as ancient Greece there was a proverb current, attributed to the Athenian Sage, Solon, to the effect that: "A young man who is not an anarchist is a knave ; an old man who is not a conservative is a fool." The most familiar modern form of this saying runs: "A man who is not a Socialist before he is twenty-five has no heart; if he is a Socialist after twenty-five, he has no head." The delightful implication of this, of course, is that Marx, Engels, Lenin and Stalin have all been mere sophomores in their adherence to Socialism. They never became mature enough to think things through !
It is important to note at this point that Marx and Engels were themselves of bourgeois origin. Marx was the son of a lawyer and married the daughter of a high government official of aristocratic lineage. Engels was in economic status distinctly upper class, being the son of a wealthy German textile manufacturer whose firm owned fac- tories in both Germany and England. He worked in the family busi- ness for more than twenty years, most of the time at Manchester. Out of the money he made as a functioning capitalist and also out of an inheritance he received from his father, Engels supported Marx for more than three decades and enabled him thereby to pursue those research and writing activities which resulted in the production of Capital.
Two other able leaders with capitalist antecedents in the German pre-War radical movement were Ferdinand Lasalle, who both co-oper- ated and fought with Marx, and Wilhelm Liebknecht, one of the most active spirits in the founding of the Social Democratic Party. The latter's son, Karl Liebknecht, was one of the few German radicals who uncompromisingly opposed the Great War, spending two years in prison for his stand. Monarchist officers murdered him, together with his colleague and co-leader, Rosa Luxemburg, of middle-class
MEMBERS OF THE UPPER CLASS 15
Polish parentage, at the time of the Spartacus uprising in 191 9. Today the German radical and anti-Fascist movement, necessarily either underground or emigre, probably contains more middle- and upper- class elements than ever before. Perhaps best known in America are some of the outstanding anti-Fascist writers such as Thomas Mann and Lion Feuchtwanger, the late Ernst Toller and Karl Billinger, Prince Hubertus Zu Loewenstein and Ludwig Renn, who inherited the title of Baron.
In Russia, Nicolai Lenin (1870-1924), the great leader of the Revolution and first head of the Soviet Government, was a middle- class intellectual; while his noted wife and co-worker, N. K. Krup- skaya, was the daughter of an impoverished nobleman. Upper-class authors like Prince Kropotkin and Count Tolstoi helped to pave the way for the overthrow of Tsarism. One of the heaviest financial con- tributors to the Bolshevik Party was a millionaire textile manufacturer named Alexander Morosov. Leonid Krassin, first Soviet Commissar for Foreign Trade and an executive of signal ability, was another wealthy businessman who had a hand in bringing about the Revolu- tion. Felix Dzerzhinsky, a Polish nobleman, was for many years a member of the Bolshevik Central Committee, served as head of the secret police force to combat counter-revolution and became Chair- man of the Supreme Economic Council. Of the fifteen original mem- bers of the Council of People's Commissars, the Soviet cabinet, eleven were middle-class intellectuals.
In France Jean Jaures, orator, parliamentarian and worker for peace, the leader of the Socialist Party for many years before his assassination in 1914, was of upper-class lineage. Leon Blum, who became first Socialist Premier of France in 1936, is the son of a rich manufacturer. Leading French intellectuals and writers like Romain Rolland, Andre Gide, Ramon Fernandez and Andre Malraux have been among the most able and effective supporters of the Left. In Spain a large proportion of the bourgeois intellectuals supported the movement to overthrow the monarchy and get rid of King Alfonso XIII. While a few of them later deserted the Republic when the Fascist rebellion broke out in 1936, most of them rallied to the defense
l6 YOU MIGHT LIKE SOCIALISM
of the Loyalist Government. Manuel Azana, a Left Republican and lawyer by profession, remained as President of the People's Front Republic. And the Socialist Juan Negrin, Prime Minister in the cabi- net which led such long and heroic resistance against the Fascists, comes from the professional class, having been a noted physician.
In England there has been a long tradition of middle- and upper- class radicalism, starting in the early nineteenth century with Robert Owen, wealthy and successful textile manufacturer, social idealist and experimenter with local Communist colonies. Later came William Morris, poet and author of the Socialist classic, News ]rom Nowhere; and after him the Fabian Socialists, including intellectuals like George Bernard Shaw, H. G. Wells and Beatrice and Sidney Webb (Lord Passfield). Among the present crop of radicals are members of the nobility such as Lord Marley and Lord Listowel, Lord Strabolgi and Sir Stafford Cripps; well-known authors such as John Langdon- Davies, Harold J. Laski and John Strachey; the poets W. H. Auden, Stephen Spender and C. Day Lewis; and Major Clement C. Attlee, parliamentary leader of the Labor Party, and Oliver Baldwin, son of Earl Stanley Baldwin, former Conservative Prime Minister.
Throughout the world, in fact, and not just in Europe, members of the middle and upper classes are active in the radical movement. In China we find that Mao Tse-tung, son of a prosperous peasant, is head of the Chinese Soviets and the greatest Communist leader in the East, while Chu Teh, scion of a wealthy family of landlords, is Comman- der-in-Chief of the Red forces; in Japan the police are constantly arresting young Reds who prove to be the sons and daughters of bankers, generals or the nobility; in India Pandit Jawaharlal Nehru, son of a rich Brahman, and Subhas Chandra Bose, of middle-class background, two leaders second only to Mahatma Gandhi in influ- ence, are both militant left-wingers; in Brazil a middle-class lawyer, Luis Carlos Prestes, is the outstanding left and anti-Fascist leader; in the United States a countless number of non-proletarians, most of them from the middle class, have served or are serving loyally and well in the labor and radical movements.
It is possible to mention only a few of these Americans here. But
MEMBERS OF THE UPPER CLASS IJ
they represent almost every field of endeavor, whether they be authors like Edward Bellamy, Jack London and Lincoln Steffens; Upton Sinclair, Harry Laidler and George Seldes; Theodore Dreiser, Ernest Hemingway and John Steinbeck; Anna Rochester, Anna Louise Strong and Dorothy Parker; journalists like John Reed, Hcywood Broun and Louis Fischer; editors like Alfred Bingham, Jessica Smith and George Soule ; artists like Thomas Benton and Rockwell Kent ; civil libertarians like Roger N. Baldwin and Professor Harry F. Ward; political leaders like the Communist, Robert Minor, and the Socialist, Norman Thomas; clergymen like Reinhold Niebuhr and William P. Spofford; teachers like Robert Morss Lovett and Granville Hicks; labor organizers like Powers Hapgood and Lement Harris; or roving fighters for freedom like Ella Reeve Bloor, Gardner Jackson and James Waterman Wise.
History records that in times of great social and economic stress it is a common occurrence for a small minority of the ruling class, pri- marily for moral and intellectual reasons rather than from economic need, to sympathize with and take part in the movements of the under- privileged. Sufficient material is available to write a substantial volume on this phenomenon alone. Thus we upper-class radicals of the present day feel that we are carrying on a long and honorable tradi- tion. While ancestor worship is not a very fruitful thing, a number of us can if necessary summon up the shades of our forebears to bestow a blessing on us; I myself had ancestors who sailed across the Atlantic in the good ship Mayflower and who fought in the American Revolu- tion. We are, then, by no means breaking entirely with the past; we\ are selecting out of that past what seems to us the highest course of/ conduct and are trying to follow it through.
On the Left with approval, on the Right with disapproval, we are sometimes called "traitors to our class." But I confess that I do not care for this negative formulation and find it very inadequate ; I prefer to say that in trying to be loyal to mankind as a whole we are com- pelled to oppose the economic interests of the capitalist class. At the same time we back the working class and accept its leadership because it possesses the potentiality of creating a new and better form of society
l8 YOU MIGHT LIKE SOCIALISM
and because the labor movement everywhere is in the interests of the overwhelming majority.
Realistic radicals do not nourish the illusion, however, that we can get Socialism for nothing; we cannot take the greatest step forward in history without paying for it. Even where Socialism comes peace- fully, as I trust it will in America, a lot of people, especially among the capitalists, are not going to enjoy it one bit. And certain traditional values, closely bound up with the rise and rule of Capitalism, are bound to perish. I am sorry that these things have to be ; but the uni- verse decreed long ago that evolution, however healthy and desirable, must be a somewhat painful process. As long as mankind continues to grow, it must endure growing pains.
f It is my thesis that if growth is to go on, it must be in the direction | of a Socialist society. I cannot hope to argue people into that demo- \cratic feeling which is the emotional core of the radical movement; most Americans have that feeling anyway. What I aim to do, there- fore, in the remainder of this book is to develop the intellectual case for Socialism and in so doing to reveal the path along which my own mind has traveled. I intend also to show in detail how Socialism's appeal to reason covers not only the realm of economics and politics, but that of culture and philosophy as well. In short, Socialism, whether as a goal to be achieved or as an achievement to be experienced and enjoyed, represents a total way of life.
Chapter II
Capitalism
Fails Mankind
I. An Independent Analysis
I AM not an orthodox Socialist, an orthodox Communist or an ortho- dox anything else. I have never been an enrolled member of any polit- ical party either conservative or radical. So far as I can remember, in every election in which I have voted, I have cast my ballot for the candidates of at least three different parties. The most accurate label I can find for myself is simply that of independent radical and worker for Socialism. Being an independent has certain advantages and certain disadvantages, but anyway that is what I am. And in writing about Socialism I am giving my own interpretations and emphases, with both omissions and inclusions which any official account would no doubt consider unjustified.
At the outset I want to call attention to the fact that economics has traditionally been pictured as a terribly difficult and complex sub- ject far beyond the grasp of the ordinary mind. This myth has been"; carefully fostered by the capitalist class in order to discourage people] from asking embarrassing questions about the present system. And it is easy to see that if the capitalists can succeed in setting up themselves and their professorial henchmen as the sacred Priests of Economics, who alone know the inner workings of this abstruse discipline, then the man in the street will have no alternative except to bow down in awe
20 YOU MIGHT LIKE SOCIALISM
before them. Indeed, if economics really were as difficult as is often claimed, only a few professional economists would have the intellect- ual right to hold opinions in this field and it would become all but impossible to develop a mass movement to change the existing order. Now of course there are details and ramifications of economic theory, whether Socialist or orthodox, which only specialists are equipped to follow. But I insist that the fundamental principles which explain the way in which Capitalism and Socialism function are comparatively simple. They can be understood readily by the average American citizen.
2. The Profit System and Laissez Faire
Let us go back for a moment to 1776. That was a very important date in the history of America. I cite it, however, not in order to discuss the Declaration of Independence, but because in that same year Adam Smith, Capitalism's most talented theoretician and probably the greatest of all the Smiths who have ever lived, published his famous book, The Wealth of Nations. This work became an international best-seller of the period and constituted, in a sense, world Capitalism's Declaration of Independence.
It is not [wrote Smith] from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. . . . The consideration of his own private profit is the sole motive which determines the owner of any capital to employ it either in agriculture, in manu- facture, or in some particular branch of the wholesale or retail trade. . . . Every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. It is his own advantage, indeed, and not that of society, which he has in view. But the study of his own advantage naturally, or rather necessarily, leads him to prefer that employ- ment which is most advantageous to the society.
CAPITALISM FAILS MANKIND 21
Thus Adam Smith laid down the principle that if each capitalist tried to make the most profit for himself and was permitted unre- stricted opportunity in this endeavor, everything would somehow work out in the end to the greatest possible benefit of the community as a whole. Complete liberty in the pursuit of profit implied an absolutely free market in which, Smith expected, free competition among the capitalists would result in the survival and success of the fittest and in the automatic adjustment of prices to the most efficient functioning of business and the maximum return for the consumer. A free market also assumed the right of free contract as between employer and employee, so that there could be unimpeded buying of labor-power by the capitalists and unimpeded selling of it by its possessors, the workers. Such a market, Smith thought, would create ever-extending spheres of economic activity and would stimulate that division of labor or specialization in production which was the surest way of increasing wealth.
He advocated the free market not just within countries but also between countries. For he was convinced that capitalist enterprise would reach the peak of prosperity only with the establishment of a market as wide as the world itself, and that international free trade would carry the division of labor to its logical conclusion by encour- aging each nation to specialize in the production of those goods for which its particular economy was best suited. So Smith urged the aboli- tion of all the cramping rules and regulations, monopolistic dealings and government restraints, burdensome taxes and duties — whether such practices affected primarily domestic or international trade — which had been the bane of business under the old system of Mercan- tilism. The new idea was well summed up in the French phrase Laissez jaire, meaning Let us alone or Hands off.
Capitalists throughout the Western World hailed with acclaim the principles enunciated in The Wealth of Nations. And in varying degrees these principles became actualized in each of the chief capi- talist countries. But the point I wish to stress here is that the capitalist \ does not run his business for fun, for charity, for love, for service, for j the social good or any other such purpose ; he runs it, and must run it, /
22 YOU MIGHT LIKE SOCIALISM
/ primarily for the sake of profit, for the return on capital which he can \ earn in excess of all costs. And that holds as true today as in the eighteenth century when Smith wrote his book or in the sixteenth century when the capitalist era first began to come into its own.
Now there is no doubt that the profit system of Capitalism, espe- cially during the period initiated by the Industrial Revolution and the new freedom of laissez ]airey succeeded in developing tremendously the productive and technical powers of mankind. It subdued to a large extent the forces of nature and harnessed them to useful employment ; it accumulated wealth on a scale far vaster than anyone had even dreamt of before ; it extended the pattern of economic enterprise and progress to every part of the globe; it greatly broadened cultural facilities in the more advanced nations; and it brought into the realm of possibility that Socialist form of society which it is the principal object of this book to elucidate. I would not deny for a moment that Capitalism has advanced humanity an immeasurable distance beyond the previous system of Feudalism. Nonetheless, the costs of this advance in terms of human suffering and social waste have been frightful and enormous. And laissez faire itself proved unable to survive.
The results of unbridled laissez faire have everywhere and always been disastrous for the physique, the morale and general welfare of the working class. In England, for instance, during the first decades of the nineteenth century scores of thousands of men, women and children (from the age of six upward) became broken in health and spirit toiling in badly lighted, badly ventilated, crowded and unsani- tary factories for twelve or even sixteen hours a day. No one has por- trayed more truly the spirit of Capitalism in quest of profits than Karl Marx himself on this very matter of the working day. He writes:
In its blind, unbridled passion, its werewolf hunger for surplus labor, capital is not content to overstep the moral restrictions upon the length of the working day. It oversteps the purely physi- cal limitations as well. It usurps the time needed for the growth, the development, and the healthy maintenance of the body. It
CAPITALISM FAILS MANKIND 23
steals the time essential for the consumption of fresh air and sunshine. It higgles over a meal time, incorporating this when- ever possible with the process of production, so that the worker receives his food only as one of the means of production, just as coal is supplied to heat the boiler, and lubricating oil to facilitate the running of the machinery. The workers' hours of sleep, of what should be healthy sleep for the collection, renewal, and refreshment of the vital powers, become a spell of so many hours of torpor as are essential to the temporary revival of an utterly exhausted organism. . . . Capital does not enquire how long the embodiment of labor power is likely to live. Its only interest is in ensuring that a maximum amount of labor power shall be expended in one working day. It attains this end by shortening the \ worker's life, just as a greedy farmer secures a greater immedi- I ate return from the soil by robbing the soil of its fertility. *
Accordingly, the capitalists have always strenuously opposed limit- ing the hours of work to a decent length, fearing that such a step would reduce profits. And even when they have been forced by law or other- wise to shorten the working day, they have in compensation to them- selves introduced into their factories the "speed-up," that is, an almost unbearable heightening in the tempo of the machines, and the "stretch- out," that is, a heavy increase in the number of machines to be tended by each worker. It is no wonder that the spurring on of production by such devices, putting the workers under a most fearful strain, even- tually resulted in the well-known maxim of modern industry, "Men over 40 not wanted."
It is not surprising, either, given the urgency of the capitalist desire to pile up profits, that businessmen have always contended they would be irretrievably ruined by the monetary loss involved in paying mini- mum wages, doing without child labor or safeguarding the workers from the more obvious hazards connected with employment. When and where labor is cheap and plentiful, capitalists are only too likely to adopt the motto of "Safety Last" — for their employees. During the evolution of Capitalism literally hundreds of thousands of workers
24 YOU MIGHT LIKE SOCIALISM
/ have met death and millions have suffered permanent disability f through preventable occupational accidents due to neglect and stingi- \ ness on the part of management.
One of the worst results of the hard-boiled profit motive operating in its pristine state has been the constant creation of hordes of workers unable to find employment and, until recently, unable to obtain the aid of public authorities in their plight. When business slackens and a capitalist cannot continue to make a profit on his regular program of manufacturing and selling goods, he curtails or stops altogether pro- ducing and distributing them. And he compels his employees, or a large proportion of them, to join the ranks of the jobless because it is temporarily more profitable for him to leave them idle. f In truth, though the capitalists have grown more and more exer- I cised over the size of unemployment figures, they do not want to \abolish unemployment entirely. For they -need a substantial number of unemployed as a labor reserve to be available during the sudden expansions and sky-rocketing booms so typical of Capitalism; and, among other things, they are able to use such a reserve to hold down working standards and to break strikes. All the while, in spite of the appalling needs of the millions out of work, the average businessman has been extremely hostile to state aid on their behalf, both because this might mean an increase in taxation and also might make the unemployed less amenable to wage exploitation.
Indeed, whether we study the history of unemployment insurance or workmen's compensation or some other reform, we see that there has hardly been one ameliorative measure of this sort in any country which has not at first been furiously contested by a large majority of the capi- talist class. The movement, however, for eradicating the most glaring industrial evils has been so strong that in all the advanced nations of the West numerous and far-reaching, though usually inadequate, statutes have been enacted in the field of labor and social legislation, from the British Factory Acts of the early nineteenth century to the New Deal reforms of President Roosevelt. The government controls over business which were designed for the protection of the working class and which everywhere accompanied the evolution of industry
CAPITALISM FAILS MANKIND 2$
constituted the first great breach in the system of laissez \aire. And it is quite likely that even Adam Smith himself, had he lived to see the brutish way in which Capitalism developed, would have favored such measures.
Businessmen have from the start also fought tooth and nail against trade unions, for fear that collective action on the part of labor would cut into profits by forcing employers to make expensive concessions to their workers. This is why in America during the past few years there has been such bitter and often violent capitalist resistance to the cam- paigns of John L. Lewis and the C. I. O. And it is likewise why one 'A of the first important moves of a Fascist regime is to suppress the trade J unions root and branch.
Toward the end of the nineteenth century in most capitalist coun- tries labor had won, though only after long and arduous struggles, the legal right to organize. But many restrictions in law even then remained on such indispensable trade-union practices as collective bar- gaining, the strike, and peaceful picketing. Employer recognition of trade unions, which constitutes the very substance of labor's progress, has grown extremely slowly, with our own United States a laggard in this respect and nations like Great Britain and Sweden in the van. Here again, in the gradually successful efforts of the workers to organize and protect themselves against the intolerable effects of uncontrolled profit-making, there occurred another significant lapse in laissez faire. For the whole idea behind trade unions has violated the laissez ]aire principle of an absolutely free contract between the indi- vidual employer and the individual workingman. (The word "free" here was always a misnomer so far as the workers were concerned.) At the same time the more powerful the unions have become and the more able to win wage increases and resist wage cuts, the more they have interfered with that complete flexibility in the price of labor- power which was such an essential attribute of the free market.
Meanwhile another change was taking place under Capitalism which was full of portent for laissez ja'ire and directly due to factors inseparably connected with the profit system. I refer to the process of concentration and monopoly. In order to keep making money, a
26 YOU MIGHT LIKE SOCIALISM
capitalist business has to compete continually with formidable rivals in the same line. Even during fairly prosperous years an astonishing number of firms — more than 350,000, for instance, in the U. S. during 1937 — discontinue operations because they cannot stand the pace. When we take bad times into account as well, it is conserva- tively estimated that at least one-fifth of all capitalist enterprises fall by the wayside. Up to a certain point the bigger the business, the more cheaply it can sell its goods on the market and the more chance it has of coming out on top. For, other things being equal, large-scale organization and production lowers the cost of manufacture by making possible comprehensive technological improvements, the standardiza- tion of output, the utilization of by-products, the general elimination of waste and the higher productivity of labor. Accordingly there is a steady tendency for the bigger capitalist, through greater competi- tive strength and profit-making ability, to drive the smaller out of the field or absorb him by buying up his business and putting through a merger.
The fact of concentration and centralization in American business life is acknowledged in all quarters, though opinion differs as to its exact extent and even more as to its exact significance. Adolph A. Berle, Jr., and Gardiner C. Means in their definitive study, The Mod- ern Corporation and Private Property, show that out of approximately 300,000 non-banking corporations in the United States, some 200 control one-half of the total corporate wealth. We are all familiar with the names of some of these huge companies whose assets run into bil- lions of dollars. Who has not heard, for instance, of United States Steel, General Motors, Pennsylvania Railroad, American Telephone and Telegraph, Standard Oil, General Electric, Anaconda Copper, United Cigar, Radio Corporation of America, Liggett Drug Stores, Metropolitan Life Insurance, the Great Atlantic and Pacific Tea Company?
The Census of Manufactures, compiled by the U. S. Department of Commerce, informs us that in 1929, out of 210,945 manufac- turing plants in America, those with an output worth $1,000,000 or over, though constituting less than 6 per cent of the total number,
CAPITALISM FAILS MANKIND 2J
employed almost 60 per cent of the workers and accounted for almost 70 per cent of production. These figures do not reveal the full degree of concentration, however, since many of the plants concerned are simply units in huge industrial combinations or trusts. Even in retail trade, where the small shopkeeper is ordinarily thought to retain such strength, 25 per cent of the stores in 1929 enjoyed the lion's share — 75 per cent — of the business. The ever-growing chain stores alone accounted for 2 1 per cent of the total retail trade.
Concentration and centralization extend into the banking field where houses such as J. P. Morgan & Company, the Guaranty Trust Company, the Chase National Bank and the National City Bank wield tremendous financial control. Out of approximately 25,000 banks in the U. S. in 1930, 140, or 0.58 per cent of the total held almost 50. per cent of the banking resources (excluding those of savings banks). Our whole economic life, whether in industry or agriculture, transportation or retail trade, is indissolubly bound up with the complicated system of credit which the banks administer. Large-scale industry, with its huge expansion programs and capital requirements, has come more and more to depend on financiers to provide the necessary loans and to float the necessary stock or bond issues. Monopoly in industry and monopoly in finance have grown together; but the ultimate and greater power, exercised both nation- ally and internationally, now rests in the hands of finance. And this era well warrants being called that of Finance Capitalism.
I need not labor the point of capitalist concentration. While plenty of small business continues to function in America, big business has without question come to play the decisive role here. And in its rise to power and subsequent career it has ruined beyond recognition the original scheme of free competition in a free market advocated by Adam Smith and the other supporters of Icnssez jaire. For not only does a business reach the monopoly stage by strangling competitors; but also, once it acquires something of a monopoly in its field, it is prone to boost prices inordinately and freeze them at a level which forces the consumer to take a severe drubbing. The net result is a market inflexibility that makes quick and adequate adjustment to
28 YOU MIGHT LIKE SOCIALISM
changing economic conditions virtually impossible and that constitutes a major reason why depressions under monopoly capitalism have become deeper and more acute than ever before. True enough, the government may step in and try to remedy the situation by anti-trust laws and the like. Such measures, however, have had little more effect than King Canute's famous attempt to stop the incoming tide by decree; and of course ipo facto they have constituted yet another violation of Icnssez faire's principle of Hands off.
Though unrestrained competition in profit-making leads inexorably to the stifling of competition, it is most necessary to add that the different monopolies themselves compete to the death with one another. Since, furthermore, it is the inmost essence of capitalist enterprise to expand or perish, when a business has exhausted the possi- bilities within a country it looks abroad for further spheres of con- quest. Then the battle between monopolies proceeds to take place on an international scale; the giant trusts, which sometimes enter into international price and production agreements, divide up the world among themselves; and the various capitalist governments, each one representing the profit-seeking urges and the monopolistic tendencies of a national capitalist class as a whole, struggle to obtain, through means fair and foul, peaceful and violent, trade advantages and terri- torial possessions from one end of the earth to the other.
One of the most common measures of economic warfare to which capitalist governments have resorted is that of the protective tariff. The reader will recall the strong emphasis which Adam Smith laid on the idea of international free trade. Great Britain, which had a considerable head-start over every other nation in the new adjust- ments called for by the Industrial Revolution and which depended on foreign commerce as its very life-blood, naturally favored a free- trade system. Thus, during the first sixty years of the nineteenth century British Capitalism step by step reduced and finally eliminated its protective tariffs on manufactured goods and foodstuffs.
But other countries wanted to stimulate their own industries and felt that they must shield them from foreign competition, especially that of England. The United States, under the leadership of Alexan-
CAPITALISM FAILS MANKIND 2Q
der Hamilton, took this position from the beginning. France made only wavering gestures in the direction of free trade. And during the last part of the nineteenth century all of the European Powers except Britain, and most of the smaller nations as well, erected a system of high-tariff walls. This unhappy development continued in the twen- tieth century, reaching a culmination in the Great Depression of the nineteen-thirties when some of the tariffs grew into virtual embargoes. It was then that even England, the great and traditional free-trade nation, finally succumbed to the pressure of economic self-defense and enacted far-reaching tariff laws. Indeed, the protectionist idea has recently been stretched to such fantastic lengths that formidable trade barriers, with particular application to farm products, have been set up between different states in the U. S. A. "Today," reports Secre- tary of Agriculture Henry A. Wallace, "we cannot say that we have free trade between the states."
Though the tariff system has of course swelled immensely the profits of particular capitalists and corporations, its price to the peoples of mankind has been incalculably high. It has proved a constant obstruction to the flow of commerce and the interchange of mutually desired goods; it has been a potent factor in causing ill feeling between nations and fanning the flames of international conflict ; it has brought about an enormous loss of wealth by leading to wasteful duplication in production as between various countries; it has raised the cost of living by enabling capitalist business, protected from the competition of foreign imports, to push up beyond all reason the prices of goods on the domestic market; it has resulted in the establishment of high- pressure lobbies in all the chief capitals and has notably contributed to the corruption of public officials; and it has fatally disrupted the vast world market envisioned by latssez jcnre.
Since 1929 other changes have taken place in the capitalist system which have lent cardinal assistance to the tariff racket in ripping to pieces laissez jaireys romantic picture of international free trade. Of primary importance is the fact that the monetary systems of the dif- ferent capitalist nations have been experiencing extreme vicissitudes, with all the chief countries going off the gold standard and using their
30 YOU MIGHT LIKE SOCIALISM
depreciated currencies as weapons to gain trade advantages over one another. The result has been that the value of money, at best never very stable under Capitalism, has come to fluctuate more and more on both a national and international scale, with dire consequences for the ideal of the freely functioning market.
Meanwhile the various capitalist governments, in their panic- stricken efforts to secure national self-sufficiency, or autarchy as it is called, have been striking out wildly in the most diverse directions. As the English writer John Strachey points out in his brilliant book, The Coming Struggle for Power,
A whole science, designed for maximizing the exports and minimizing the imports of each and all of the nations of the world simultaneously, has now been elaborated. Import "Quotas," import licenses, export bounties, subsidized railway rates to the frontier, penal railway rates from the frontier, subsidies to export industries of every kind, subsidized advertising of "home" pro- duced products, the systematic placing of all Government and municipal contracts "at home," regardless of comparative costs, a whole labyrinth of measures for the restriction of international exchanges has been elaborated by the patient and devoted civil servants of every nation.
What tariffs, export bounties and all the rest really amount to is intervention by the government on behalf of certain favored business interests. And the capitalist class, in spite of all its talk about rugged individualism and government coddling, has always enthusiastically backed those repudiations of laissez jaire which have seemed to promise bigger and better profits. Professor W. Z. Ripley, formerly of Har- vard, estimates that in the days of the great trans-continental railway expansion, federal, state and municipal contributions to construction costs came to no less than $700,000,000 and that the grants of public lands totaled 155,000,000 acres. Government authorities in America have in effect subsidized the automobile industry to the extent of billions by constructing a vast network of concrete and macadam
CAPITALISM FAILS MANKIND 31
roads running to every part of the country. And contemporary capi- talists, however loud their outcries over public aid to the sick, the aged and the unemployed, have offered up hosannas of praise and gratitude for the timely loans which the Reconstruction Finance Cor- poration has granted to ailing banks and businesses.
The American capitalist class, too, has ever been most alacritous\ in attributing to governmental agencies terrible "wastefulness" and \ lack of foresight in public affairs. Yet it was this same class, which • in its mad scramble for immediate monetary gain, recklessly gutted natural resources right and left throughout the country. That is why here in the United States we have witnessed the irredeemable waste j of billions of dollars worth of oil and gas, coal and timber. And the tragic devastation of our forests has finally led, because of the inter-/ dependency of Nature, to chronic floods and the ruination of hugfe tracts of fertile land.
All the developments which I have discussed in this section — and \ I have by no means been able to include the whole story — are the J direct outcome of the great and glorious profit motive in action./ And they prove without a shadow of doubt that the pure and perfect profit system of laissez jaire dreamt of by Adam Smith and the others is dead beyond all hope of resurrection and a future life. If you set up the aim of individual private profit as the central principle of economic enterprise, then you should not be surprised when the logical consequences of this principle actually come into being. But there is another consequence which has revealed itself with increasing sharp- ness during the more recent decades of Capitalism and which brings out most dramatically of all the fundamental weakness of the existing system. That is the well-known and ever more insistent paradox of unceasing want in a world of actual and potential abundance.
3. Poverty Amid Potential Plenty
Until the full unfolding of the Industrial Revolution the many movements of social protest had little chance of achieving a high standard of living for the masses of the underprivileged, since there simply did not exist the productive equipment to supply to everyone
32 YOU MIGHT LIKE SOCIALISM
the necessary consumers' goods. Hence those movements frequently ended up in a blind alley, though always keeping awake the spirit of revolt and the urge for a better life. Today the situation is very dif- ferent. Today every schoolboy knows that in the industrially developed nations there is enough goods-producing machinery to insure a very fair level of existence to the entire populations of such communities. Today for the first time we have the means to bring true that material well-being of mankind which the great Utopia-painters of the past have so vividly portrayed.
In the United States, above all other countries, we possess the natural resources, the mechanical equipment and the technical skill to provide all of our citizens with a thoroughly satisfactory standard of living. Yet President Roosevelt, in his second inaugural address, stated that even during the New Deal recovery one-third of the American people were "ill-housed, ill-clad, ill-nourished"; and the President was being conservative. This was proved in the autumn of 1938 when the National Resources Committee, a government- appointed organization composed of Cabinet members, expert econo- mists and private businessmen, made a report, after painstaking sur- veys and research, on income levels in the U. S. for the year 1935-36. The scientific findings of this committee were startling and demon- strated, on the most conservative interpretation, that at least one-half of this nation's population, or 65,000,000 people, fit the President's description.
The report showed that one-third of all American families and single individuals received during 1935-36 annual incomes of less than $780, with the average income of this group amounting to $471 or $9 a week. One-half of our families and individuals had incomes of less than $1,070 and two-thirds less than $1,450. Even this latter figure is below the sum set by the U. S. Department of Labor as necessary for the average American family to live with a minimum of decency and comfort. Taking the figures for the 29,000,000 American families alone, we find that 14 per cent of them had incomes of less than $500, 42 per cent less than $1,000, 65 per cent less than $1,500 and 87 per cent less than $2,500.
CAPITALISM FAILS MANKIND 33
At the other end of the scale the National Resources Committee stated that a bare 3 per cent of American families received incomes of $5,000 or more and I per cent $10,000 or more. But this top 3 per cent got 21 per cent of the total national income and this top I per cent 13 per cent of it, as compared with the 16 per cent share of the lowest 42 per cent of all families and the 10 per cent share of the lowest one-third of the families and individuals taken together. The Committee also established the fact that there is an unfortunate sec- tional concentration in wealth, with average family income in New England at the apex of the pyramid and that in the South at the bottom. Agricultural areas in general also have far less income than urban. The statistics of the National Resources Committee check fairly well, if allowance is made for the changed economic situation, with those on the mal-distribution of American wealth worked out for the prosperity year of 1929 by the respectable Brookings Institution, a private research organization.
The full import of this discussion strikes home only when we contrast what might be with what is. The Brookings Institution pub- lished in 1934 an extremely significant volume entitled Americans Capacity to Produce. This study reported that at the peak of 1929 prosperity in the United States our production of goods was about 2O per cent below the actual capacity of our economic plant. For the five-year period from 1925 through 1929 the loss of potential output was 22 per cent. Using these figures as a base, it can be shown that production in 1932, the worst year of the Great Depression, fell 45 per cent, or almost half-way short of its possibilities; in 1934, 40 per cent; and in 1935-36, 30 per cent. Reliable estimates show that full use of our economic resources from 1922 through 1934 would have increased the total income of the American people by 248 billion dollars, a sum more than half as large as the entire accumulated wealth of the U. S. A. and almost five times as great as the cost of America's participation in the First World War. Undeniably peace has its losses as well as war.
Another way of grasping the terrible waste that occurs under the capitalist system is to look at the unemployment figures. Even in
34 YOU MIGHT LIKE SOCIALISM
1927, a year of upswing and bustling business activity, there were around 4,000,000 unemployed in the United States. At the bottom of the depression the number rose to probably 15,000,000, not to mention the millions of others who were working only part-time. At the height of the first New Deal recovery, in the winter of 1936-37, there were still 8,000,000 without employment in the U. S. And with the recession that followed, this figure went up to at least I2,OOO,OOO.
/'"What all this means is that year after year millions and millions ( of willing and able-bodied men and women are compelled to sit idly I by instead of producing the billions upon billions of dollars worth xof goods which could serve to enrich both themselves and others. It has been authoritatively reckoned, for example, by Mr. Franklin P. Wood of the Rural Electrification Administration, that ten million unemployed in the United States could, working forty hours a week with two weeks' vacation, account for the following in one year: ade- quate food and clothing for 10,000,000 people, 5,000,000 five-room houses with proper furnishings, 10,000,000 radios, 10,000,000 re- frigerators, 10,000,000 automobiles, 2,500 schools, 150,000 miles of rural power lines, 30,000 miles of highways, 10 Boulder Dams. How much income could the average American family of four expect to earn if the tremendous wastes and inefficiencies of the present order were eliminated? Some years ago Howard Scott and his technocrats, in the first flush of their enthusiasm, said $20,000. That is obviously too high a figure. More modest and reliable was the estimate given by Harold Loeb and his associates in the Chart of Plenty y a solid and scholarly study issued by the National Survey of Potential Product Capacity. This report, proceeding from the basis of the plant and equipment available in 1929 and making allowance for two or three work-shifts wherever feasible, put the possible income for each family at $4,370. I do not wish to quibble over statistics. But after giving due attention to the various estimates made and to the more than 25 per cent rise in labor productivity over the last ten years, I believe it is unquestionable that under a more
CAPITALISM FAILS MANKIND 35
rational system it would be possible to guarantee promptly an annual return to every American family of goods and services equivalent in value to at least $5,000, thus raising the present proportion of families attaining that level from 3 to 100 per cent.
Our economy of abundance, however, instead of being a blessing is turned into a curse. And we are told by the master minds of the capitalist system that this very abundance, in the form of a strange phenomenon known as "over-production," is the cause of all our troubles. In other words, the real reason for one-half the American people being ill-housed is that there is too much wood and steel and concrete ; the real reason for these tens of millions being badly clothed is that there is too much cotton and wool and leather; the real reason for them being underfed is that there is too much meat and milk and wheat ! Instead of being thankful for the bounteousness of nature, we dread it as much as a drought. These and similar absurdities have been exposed many times, but they remain as completely repugnant to reason and common sense as before.
The truth of the matter is of course that, except perhaps in a few luxury trades, there is not and never has been an over-production of goods that the people need, but only of goods that they can afford to buy. It is far more accurate, then, to say that the root of the diffi- culty lies in under- consumption on the part of the masses of the popu- lation. And this under-consumption is forced upon them by the inexy orable operation of the profit system itself.
For profit-making, to cite Mr. John Strachey again, is not only the motive of every capitalist; it is also the regulator of capitalist production.
Under Capitalism it is not only the object, it is the very condition of production that a profit should result. Those things, that is to say, which will yield a profit can and will be produced, but those things alone. For anybody who produces things which do not, either directly or indirectly, yield a profit will sooner or later go bankrupt, lose his ownership of the means of pro-
3& YOU MIGHT LIKE SOCIALISM
duction, and so cease to be an independent producer. Capitalism, in other words, uses profitability as the criterion, or test, of whether any given thing should or should not be produced, and, if so, how much of it should be produced.
This means that no matter how much the people may be in need of a commodity or how great may be the technical capacity for pro- ducing it, considerations of profit take precedence. For the capitalist system the general human welfare is merely a by-product which may or may not result from normal business activities.
If a business, especially one of the big monopolies I have described, decides that it can make more money by keeping its prices high and products scarce, then scarcity there must and shall be in that particular field, even if this entails the actual destruction of goods. Capitalist concerns, furthermore, in spite of the greater efficiency implicit in labor-saving machinery, are as likely as not to get the jitters over the prospect of fresh technological advance, because it may lead to the obsolescence and junking of present equipment and to an increase in that very abundance they so fear. In fact they suppress new inven- tions by the thousand. Though the Rust cotton-picking machine, for example, promises to bring about another progressive economic revo- lution in the South and to eliminate a huge sector of dreary and back- breaking toil, numerous businessmen all over America tremble at the thought of its widespread introduction. Indeed, throughout the\ capitalist world there has recently sprung up a whole philosophy of retreat from modern technique, with its adherents crying out that > the "machine is devouring humanity" and repeatedly urging "scientific / holidays" and a "moratorium on invention."
The paradox grows even more fantastic during times of crisis when the population is more in need of consumers' goods than ever, but when the creation of artificial scarcity is carried on with redoubled energy. In his masterly book Man?s Worldly Goods Mr. Leo Huber- man tellingly sums up what happened during the Great Depression: "Confronted by the paradox of poverty in plenty, capitalist countries devised a plan for tackling the problem. The plan was to abolish the
CAPITALISM FAILS MANKIND 37
flenty." Who can possibly doubt that, whatever else is wrong with the capitalist system, it has come to represent stupidity incarnate and to be an intolerable affront to a sane man's intelligence?
*; •d
4. The Central Contradiction of Capitalism
Now obviously enough there would be no fear of plenty, nor would business ever slacken, if the capitalists could depend on a steady market for all the goods that they and their workers produce. Unfortunately, however, quite contrary is the actual case. The market is forever fail- ing and fading away, so much so, in fact, that in the United States during the 150 years since 1790 we have gone through no less than fifteen major and twenty minor economic breakdowns, each of the major ones and several of the minor causing large-scale unemploy- ment and untold hardships amongst the population. On the average during this long period there has been about one year of depression for every year and a half of prosperity. And much the same story of ever-recurring crisis has been true of the other capitalist nations. All of which constitutes an easily readable barometer of the "efficiency" of the profit system.
Now the basic reason for the continual failure of the capitalist market is simply that the masses of the people do not have sufficient purchasing power to absorb the plenty, to buy the vast abundance of goods produced and producible. Hence the crucial question for Capitalism is: Why does that purchasing power remain insufficient? That question brings us straight up against the central and inescapable contradiction of the capitalist system; and the answer to it is in a nutshell this: On the one hand, you cannot raise wages high enough to give the people sufficient purchasing power to absorb all the available goods and services, without at the same time so reducing the total amount and rate of capitalist profit that economic crisis periodically / results; on the other hand, you cannot hold down wages sufficiently ^ to insure profits without keeping the purchasing power of the people j so low that economic crisis periodically results. Whatever solution of this dilemma the capitalists attempt, supply and demand (the latter of which depends on purchasing power) are certain to become mal-
38 YOU MIGHT LIKE SOCIALISM
adjusted every so often to a calamitous degree. And this brings dis- ruption of the market and depression.
For the purposes of this analysis I include under the heading of wages 90 per cent of the fine-sounding category of salaries. Wages and salaries are of supreme importance in the picture because they constitute the mode of compensation for four-fifths of the American people and because, as Karl Marx showed so clearly in his Ca-pttaly the employers make their profit by underpaying their employees and thus exploiting their labor-power. In general, asserts Marx, it is the policy of the capitalists, unless under pressure by a trade union or ; some other extraneous factor, to pay their workers only the very/ minimum necessary to keep them alive and functioning and to insure/ the biological reproduction of more workers who will some timf take their place.
/ But the workers in field and factory, in transport and store and office, turn out goods or services worth far more in value than their own pay; they are able to produce value equivalent to their wages in vless than the total working day, say in five out of eight hours. The re- maining three hours Marx calls surplus labor-time, and the value pro- duced in this period surplus value. The capitalist employer appropriates this surplus value, the amount of which will vary according to circum- stances, and it enables him to make his profit. Thus all profit, whicfy includes the categories of rent and interest, has its direct or indirect! source in surplus value; and all surplus value is in substance "the materialization of unpaid labor-time."
I would consider it both unnecessary and unfruitful to take up in this book the widespread and unending controversy that has been waged over the Marxist theory of surplus value. I happen myself to believe that Marx is substantially correct. At the very least, however,^ all radicals must admit that this theory symbolizes most successfully the terrible exploitation to which the working class is subject under Capitalism; and that a very large proportion of capitalist profit, if not the whole amount, has its origin in this exploitation. It als enables us readily to understand that constant strife I have already
CAPITALISM FAILS MANKIND 39
mentioned between capitalists and workers over the matter of hours and wages.
Even conservative capitalists and orthodox economists must admit that pay-rolls constitute both the largest and most flexible element in production costs, and that the favorite method used by business to economize, on behalf of profits, is to keep wages from going up or to force them to go down. To quote our old friend Adam Smith once more : "The workmen desire to get as much, the masters to give, as little as possible." I remember during the Great Depression talking with any number of businessmen who bewailed the efforts of both the Hoover and Roosevelt administrations to maintain wages at former levels. They insisted that recovery could come only through lowering wages so that the ball of profit could be started rolling again. I always surprised these capitalists by saying that this analysis was quite Marxian. For it was Marx's contention that a major part of the regular capitalist procedure of recovering, always temporarily of course, from economic crisis consisted of riding out on the backs of the workers by reducing wages; or by stopping wages entirely I through dismissing workers from their jobs.
Though America has been able to boast of a rather high wage standard in comparison with other countries, the point about insuf- ficient purchasing power applies here because that standard, in the light of our enormous wealth and economic resources, has never been relatively high enough to properly balance purchasing power and production. "If," as Professor Reinhold Niebuhr so forcefully puts it/ "we produced ten times as much goods per capita as Europe and our millionaires were ten times richer than European plutocrats and our workers had a wage ten times higher than European proletarians, our economy would still be subject to violent dislocations if our mar- kets could not absorb our productive capacity because of the faulty distribution of our wealth." The figures I have cited prove how dis-\ mally low our living standards are on the basis of even minimum/ needs. But it also remains true that, while most American businesses could well afford to pay considerably higher wages, and by all means
40 YOU MIGHT LIKE SOCIALISM
should do so, they would cease to make a profit altogether if pay rolls went up beyond a certain point.
Another way of looking at what I have termed the central con- tradiction of Capitalism is from the point of view of prices. If prices go down on a widespread scale, then what economists call real wages (that is, wages fairly adjusted to fluctuations in the price structure or currency values) go up, since each dollar is able to buy more than before. An expanding consuming power results. This is the method of achieving economic stability advocated by a number of observers these days, prominent among them being Dr. Harold G. Moulton of the Brookings Institution. It is plain, however, that capitalist businesses cannot keep reducing prices indefinitely without also reducing profits to the zero point. And even if they could all be persuaded to lower prices to that minimum compatible with an attractive amount of profit, the masses of the people would not thereby sufficiently increase their purchasing power to solve Capitalism's problem.
As a matter of fact, aside from the ultimate implications of the price-reducing policy, it is extremely doubtful whether the capitalist world in the main, and particularly the monopolies, could be counted upon to put it into effect and establish it as a permanent program. Though individual firms may reap huge profits through continual price-cutting, nothing is more full of potential disaster for the average businessman. And regardless of the effect on the country's economy as a whole, he will boost prices whenever he thinks such a course will bring more profits. For example, the inveterate tendency of the capPv talists, as soon as trade unions have won wage increases from them and have enlarged to that extent consumer buying power, is to/ cancel this gain by pushing up the prices of their goods on the markef. This is exactly what has happened in America following the successes of the C. I. O. and the A. F. of L. during the past few years.
The fundamental dilemma of the capitalist system comes to light again when we investigate the question of private saving versus private spending. If we include, in addition to the earnings of those who work for average wages and salaries, the fancy emoluments of the upper-class executives and professionals, the incomes of all the capi-
CAPITALISM FAILS MANKIND 4!
talists and the profits of business in general, the total sum is sufficient to buy back the goods which the capitalist system produces. Then why does not this fact counterbalance the lack of purchasing power on the part of the masses which I have already discussed?
The hitch occurs in that the small minority in whose hands the wealth of America is concentrated do not spend anywhere near all their incomes; they quite understandably save a large proportion. And they reinvest their savings or use them for speculation on the stock exchange or, in bad times, simply hoard them by letting them stagnate as deposits in the bank, which in turn is unable to find good invest- ment opportunities for its assets. The more money you have, the more money you are likely to save. In 1929, for example, American fami- lies receiving over $20,000 annually saved more than half of their total incomes. And of the $15,000,000,000 of individual savings in that year, $12,000,000,000 came from persons with incomes of more than $5,000.
There are several good reasons for this phenomenon of saving on the part of the economically privileged. After all, the most opulent plutocrats possess only one stomach, a limited amount of energy and twenty-four hours per day. Try heroically as they may and gorge on luxuries as they will, our most consummate spendthrifts can only absorb a certain quantity of consumers' goods — food, drink, clothing, radios, automobiles, houses, yachts and so on — and no more. So even the most extravagant millionaires find it difficult to spend their entire annual incomes, though they sometimes resort to the most fantastic and wasteful extremes in attempting to get rid of their money. Besides, the profit motive, the fun of successful speculation, and ordinary convention spur on the rich to get richer: the lesser fry to become millionaires, the millionaires to become multi-millionaires and all capitalists in the upper brackets to increase the family possessions as much as possible.
One of the chief ambitions of the average capitalist-minded indi- vidual is to amass enough property in stocks and bonds and real estate so that he can support himself and his family indefinitely simply on dividends, interest and rent. This deep desire to maintain solvency
42 YOU MIGHT LIKE SOCIALISM
through the magic of unearned increment is shared by the hospitals, universities and other institutions to which capitalists sometimes give a portion of their largess. Such institutions, in order to ensure per- manent security, prefer to be always adding to their endowment and to spend only the annual return from it. Another significant item in the sphere of saving is the vast reserve funds, usually in liquid form (that is, in cash or easily convertible into cash), which businesses of every kind, feeling none too secure under their beloved Capitalism, build up for the inescapable rainy day.
X* Aside from all this, however, and more important than anything / else, is the fact that the very nature of capitalist business compels it / to go on forever accumulating, to keep plowing back a big percentage of its profits into self-improvement and self-expansion or to seek \ outside financing for these ends. In Marx's words:
\
The capitalist process of production is at the same time essen- tially a process of accumulation. . . . The development of capitalist production necessitates a continuous increase of the capital invested in an industrial undertaking; and Capitalism sub- jects every individual capitalist to the immanent laws of capi- talist production as external coercive laws. Competition forces him continually to extend his capital for the sake of maintaining it, and he- can only extend it by means of progressive accumu- lation.
The method of accumulation, of what might well be called dynamic saving, is to take profits and, instead of spending them on consumers' goods, to use them to expand capital goods, that is, production goods, further and further. Capital goods consist of all the materials, machin- ery and other equipment produced by heavy industry and used by light industry for the direct manufacture of consumers' goods such as clothing, automobiles and books. They include of course the various means necessary for the operation of heavy industry, and also most forms of construction and housing. It is generally agreed among economists of all schools that the mainspring of capitalist prosperity
CAPITALISM FAILS MANKIND 43
lies in continuous investment in a successfully functioning capital- goods industry.
For a while, in a country like the United States, the new invest- ment and expansion in capital goods heightens business activity and augments consumer purchasing power. But the fresh profits being garnered by the capitalists are, as always, based on the under-payment of the working masses; pretty soon the increasing supply of con- sumers' goods which the increasing quantity of production goods makes available starts to outrun demand, since the purchasing power of the population cannot keep pace with the new productive power of the capitalists. A glut of unbought consumers' goods, immediately reacting to create a glut of capital goods, quickly ensues. Light industry slumps and pulls down heavy industry after it; agriculture (in an unmitigated state of doldrums in the U. S. since 1920) sinks to still lower depths; and mounting unemployment and declining pay-rolls decrease ever more alarmingly the purchasing power that has already failed.
Thus over-investment, over-accumulation, over-saving on the part of capitalist individuals, institutions and businesses bring on "over- production." And economic crisis descends upon every section of the population. This tendency of savings to outstrip the possibilities for\ profitable investment used to be cyclical; the ominous thing now is ) that in recent times it seems to have become chronic. Year after yeair billions upon billions of capital has been lying idle in American banks. Such an enormous hoard of unemployed money inevitably leads to unemployed factories and unemployed men. And it is a phenomenon which has received some well-deserved attention from Senator Ma- honey's Monopoly Committee.
Of late at all stages of the economic cycle the capitalists have resorted to increasingly desperate expedients in order to evoke con- sumer demand. Everybody remembers the pathetic "Buy Now" cam- paigns of the early thirties. Everybody suffers from the high-pressure advertising that continually shrieks at one from magazine and news- paper, from billboard and radio. And everyone is led into the valley of temptation by our ultra-modern and stream-lined methods of
44 YOU MIGHT LIKE SOCIALISM
installment selling. Previous to both the Great Depression and the 1937-38 recession millions of American citizens had over-extended themselves by installment buying of everything from perambulators to permanent waves, from refrigerators to radio sets. Of the vast number of automobiles sold in the U. S. A., 60 per cent are purchased on the installment plan. In 1937 total installment sales in all lines amounted to well over $5,000,000,000. In this way American con- sumers mortgage to an uncertain future, not just their houses and land, but their wages, salaries and entire means of livelihood. And when the inevitable crash comes, this mountain of indebtedness topples over to make the wreckage even worse.
But the most important device of all in re-animating the dormant pocketbook of the consumer and one which gives another valuable insight into the great quandary of Capitalism has come to be gov- ernment spending. What a government does in effect in a large- scale spending program is to tap the surplus profits of the capitalists through taxes and especially through borrowing and to transform this money into fresh purchasing power by means of public loans and expenditures of a wide variety. But to distribute indefinitely sufficient purchasing power in this fashion for the masses of the people to buy back the output of business either would entail such burdensome taxation on profits (assuming that business was not able merely to pass on such taxes to the general public) that capitalist enterprise might not deem it worth while to go on; or would so strain the whole financial structure of the community through the huge, unbal- anced budgets and the constant resort to borrowing by federal, state and municipal authorities that governmental bankruptcy would occur.
Such bankruptcy might well take the form of disastrous inflation, of the government setting its printing presses going full tilt and turn- ing out paper money by the carload. If and when serious inflation comes to a country, the added purchasing power that a state spending program may have brought is quickly offset. For as more and more money is thrown into circulation, its value rapidly depreciates, prices rise sky-high in compensation, and the real wages of the people suffer
CAPITALISM FAILS MANKIND 45
a drastic decline. Public spending can go quite far, however, befoi bankruptcy or severe inflation begins to threaten. The federal debt> of the United States, for instance, still remains, in terms of propor- tionate population figures, less than one-third the size of Great Britain's and could be enormously increased without bankruptcy or inflatk necessarily drawing near. And income taxes in this country are mi lower than in England.
Nonetheless, it is unquestionable that in this era of capitalist decline, the gigantic budgets for unemployment and social insurance, public works and armaments, are proving terrific burdens for the average capitalist government to carry. So it is quite natural for capitalist apologists like the Austrian economist, Professor Hayek, to become fearfully worried over the expanding social services of the modern state. And the time may soon come when most capitalist economies can no longer afford to maintain even the present inadequate stand- ards of unemployment and social insurance. Yet they cannot afford, either, to cut down on these expenditures very far. For to reduce government spending as drastically as Professor Hayek and the ordi- nary businessman so devoutly wish would not only cause millions of people — especially the unemployed — infinite hardship and stimulate dangerous unrest, but also would react most unfavorably on business by curtailing mass purchasing power.
Our American economic situation since 1933 provides convincing proof of much that I have been saying. In addition to the payment of the soldiers' bonus, the indispensable and predominant factor in the partial recovery that culminated toward the end of Roosevelt's first term was the colossal "pump-priming" program which the President put across through such agencies as the FERA (Federal Emergency Relief Administration), the PWA (Public Works Administration) and the WPA (Works Progress Administration). But Mr. Roosevelt, under pressure to reduce expenditures by the very capitalist interests which profited from his spending, decided that it was dangerous to continue this program. Accordingly, at the beginning of his second administration he started to reduce greatly the governmental outgo.
46 YOU MIGHT LIKE SOCIALISM
And this was a decisive reason for the sharp recession that began late in 1937. Then in 1938 the Democrats again proceeded to prime the pump to the tune of billions, and an upturn again resulted.
If the "economy" conservatives and the budget-balancers sooner or later prevail once more at Washington, they probably will heavily slash public expenditures in hopes that business will be able to carry on by itself. We can be reasonably sure, however, that their hope will not come true, at least over more than a very brief period. And whether the Democrats or Republicans happen to hold power, it will finally become plain that temporary primings are not enough for our ailing American Capitalism. For as soon as the new purchasing power '. due to government spending has become actualized in fresh consumer \ demand, a disproportionate share of it is promptly siphoned off into/ profits for the capitalists. This is exactly what happened during the first New Deal upswing when the rate of increase in real wages lagged far behind that of dividends, interest and other forms of profit; and also behind the increase in labor productivity. Hence the mal-distribution of wealth continued much as before and the customary depression-making processes repeated their natural course.
So our analysis comes full circle once more. Neither extreme gov- ernment economy, which in its lessening of purchasing power is com- parable to extensive wage-reducing or price-raising, nor extreme gov- ernment spending, which in its augmenting of purchasing power is comparable to extensive wage-raising or price-reducing (practices that the capitalists have never been guilty of over-stressing), nor a moderate program in between promises any ultimate unraveling of Capitalism's Gordian Knot.
Finally, we discover that Capitalism's basic difficulty reappears, with some additional trimmings, on the international scene. Not being able to sell enough goods in the home market to maintain prosperity, the capitalists naturally try to get rid of them in foreign fields, some- times going so far as to bolster up foreign purchasing power by lending huge sums abroad. But the desperate search for purchasing power in the world at large necessarily leads to all the characteristic ills of imperialism. And at best it affords but temporary relief. Today,
CAPITALISM FAILS MANKIND 47
even if a free international market existed or could be assured in the near future (suppositions wildly contrary to reality), so that each nation were at full liberty to find customers in every section of the globe, the same phenomenon of lack of purchasing power would eventually be repeated on a world scale. And a United States of capitalist Europe, for instance, would not necessarily solve any more economic problems in the long run than has the United States of capitalist America.
After studying, then, the central contradiction of Capitalism as it reveals itself in these various forms, I am ready to state definitely that Capitalism in the smallest and poorest country, Capitalism in the largest and richest country, Capitalism in all countries considered together, inevitably leads to an unbalanced and lopsided distribution of income, to lack of purchasing power, to depression and crisis. To ask why purchasing power under Capitalism is always insufficient is really equivalent to damning the system, since there is no way of eliminating this insufficiency as long as we retain the present order. Therefore all those proposed remedies for the situation which leave the fundamentals of the profit system intact amount to little more than futile fumbling in the dark.
5. Solutions Superficial and Retrogressive
These observations about profits and purchasing power, wages and prices, private saving and public spending, show why I feel certain that no prescription short of planned Socialism can cure the creeping paralysis that has seized upon our contemporary world. The conjur- ing-up of scapegoats such as Jews or Bolsheviks, politicians or trade unions, on whom to load the sins of the capitalist system is on a par with the ancient device of blaming everything that goes wrong on black magic and witchcraft. Coming to more substantial suggestions, I think it is patent that all the fancy currency schemes, with their almost inevitable tendency toward inflation, run afoul of Capital- ism's inescapable and inmost contradiction. The once much-vaunted "New Capitalism," with high wages as its chief ingredient, meets this same insuperable obstacle. And so does the panacea of a single
48 YOU MIGHT LIKE SOCIALISM
tax on land and rent put forward by Henry George and his disciples. There are those who argue that Capitalism has adequately solved the problem of production and that it falls down only in respect to the problem of distribution. While undoubtedly our present short- comings become most obvious on the level of distribution, I hope that the analysis which I have been making shows how impossible it is to divorce the problem of distribution from that of production and the profit system in general. It is for this very reason that we must regard as superficial beyond measure the numerous "share-the- wealth" schemes, from the dazzling proposals of the late Senator Huey Long to the old-age pension plans of the Townsendites and the recent $ 3 O-E very-Thursday idea popularized in California. These promised short cuts to Utopia are one and all variations on government spending as the way out. They at least serve to dramatize the mal-distribution of wealth and the completely correct sense of the people that the American economy ought to be able to do far better by them ; but they also shunt the minds and energies of millions into most wasteful channels.
To carve up, for instance, the cake of national wealth and income into equal slices for everyone would not only be highly imprac- ticable, but would be worse than useless if the underlying charac- teristics of the capitalist system were left untouched. Confiscating all it once and to such an extreme degree the profits of the more well- to-do sections of the community, would fatally cut the nerve of the money motive so essential to Capitalism. Thus the unplanned, com- petitive anarchy of the present order would remain minus its chief driving force. And since the share-the-wealthers have worked out no alternative for such a situation, the certain consequence, as both radicals and conservatives agree, would be complete and fruitless breakdown.
j What we radicals want to put through is not madcap projects to
I divide up the national income, but a program that will release to the
\utmost our productive potentialities. As a prominent New Dealer,
Mr. Adolph A. Berle, Jr., puts it: "The underlying and eternal
problem is the problem of so using our national plant and our resources
CAPITALISM FAILS MANKIND 49
that the income of the country may steadily and continuously rise. The job is to level up far more than to level down. Distribution is one problem. But if the ultimate goal is to be reached, there must be a great deal more to distribute." The millionaire Republican, the late Ogden Mills, Secretary of the Treasury under President Hoover, said much the same thing when he asserted that the way to prosperity is not through "the sharing of poverty," but through the creation of \ new wealth. So Democrats, Republicans and radicals can all unite on this goal, however much they disagree about the requisite methods f of arriving there.
What I have already said in passing should have made it evident that the methods of the New Deal are not in my opinion far-reaching enough to solve the economic problems facing the American people. Much of the legislation that has been enacted under the two Roosevelt administrations is all to the good. I give my wholehearted support to the National Labor Relations (Wagner) Act, the Social Security Act, the Securities Exchange Act, the Fair Labor Standards (Wages and Hours) Act and other federal or state measures of a progressive nature. Such laws ought to go a long way in bringing us abreast of advanced European countries like England in the sphere of reform.
I also much prefer government spending of the New Deal sort to government parsimony. For such spending genuinely, if only tem- porarily, relieves human misery; and an intelligent public works program, designed to fill basic community needs, can bring about lasting improvements and is akin to what a Socialist regime will itself undertake on an infinitely greater scale. Furthermore, the New Deal policy has been able to stave off economic disintegration during a period when, the American people still being unready to accept Socialism, such disintegration might have brought stark reaction or even Fascism into the saddle. At the same time President Roosevelt's measures have educated the people to realize that only government intervention can cope with present-day problems and that certain standards of welfare are to be considered the unquestioned right of the entire population.
It is, then, a hundred times preferable to have the Roosevelt Demo-
5O YOU MIGHT LIKE SOCIALISM
crats holding political power than the Republicans. But extensive reform has not prevented economic depression and crisis in other countries; nor will it in the United States. And radicals as well as conservatives, Joseph Stalin as well as J. P. Morgan, know perfectly well that public spending within the limitations imposed by Capi- talism can achieve, in an economic sense, little more substantial than the familiar "monkey-gland" recoveries of recent years. On the other hand, the frenzied wail of the businessmen that all their troubles stem from government extravagance is about as far away from the truth as can be.
A secondary solution for Capitalism which seems to have been intermittently pursued by Mr. Roosevelt is that all would be well if we could replace certain malevolent capitalists with certain noble- minded capitalists. This good-man, bad-man analysis of economics and politics will not hold water. It is an unrealistic approach because it does not get down to economic fundamentals. If the leading capi- talists of the world were all able to qualify for the communion of saints, they would still find it impossible to make their system work satisfactorily. This is why appeals for a world-wide revival of religion or for the ethical regeneration of mankind, under the slogan of "moral rearmament" or anything else, cannot do much to eradicate the evils of Capitalism, unless they somehow stimulate people in the direction of a Socialist society.
It is a question of economics, not ethics. The capitalist cannot per- sonally be held responsible for all the terrible things that happen under the profit system. That system is cruel, but individual capi- talists, inextricably caught in its toils like everyone else, usually are not cruel. They act under the circumstances as psychologist and philosopher would expect the ordinary man to act, their behavior being conditioned by their environment and education. Thus, Karl Marx himself, in one of his prefaces to Captal, said:
The persons of capitalists and landowners are not, in my book, depicted in rose-tinted colours; but if I speak of individuals, it is only in so far as they are personifications of economic categories,
CAPITALISM FAILS MANKIND 51
representatives of special class relations and class interests. Inas- much as I conceive the development of the economic structure of society to be a natural process, I should be the last to hold the individual responsible for conditions whose creature he himself is, socially considered.
To my mind, more futile than any of the palliatives I have been discussing are those dreams of a return to some far-off Golden Age of Capitalism that supposedly existed sometime, somewhere in the shadowy past. Most of these nostalgic fantasies envision a revival of old-fashioned laissez ]cnre or some variation of it. But if we could today somehow wipe the slate clean over the entire earth and begin anew with a laissez jalre system, the inexorable workings of the profit motive would in all probability create a situation as far removed from laissez jaire as the present one. The only possible way to have pre- vented the anti-laissez jaire developments of laissez jaire would have been to pass a drastic series of government acts in every nation which from the outset would have constituted a fundamental violation of
^
laissez jaire. In short, the history of the last 150 years has pretty well proved that Adam Smith, who undoubtedly had the best interests of mankind at heart, far from qualifying as the realist he has been reputed to be, was one of the most Utopian thinkers who ever lived. His blueprint for a capitalist paradise was doomed from the start.
Yet here is a well-known English liberal of the old school, the Marquess of Lothian, present British Ambassador to the United States, in an essay entitled Liberalism in the Modern World, naively calling for a re-establishment of the free market and calmly overlooking all those deep-lying capitalist tendencies which led businessmen them- selves to whittle away that market with such devices as tariffs and huge monopolistic corporations. This noble lord proceeds to put the chief blame for the parlous state of the world on "international anarchy," especially as displayed in the First World War. Again, Lothian's mind never seems to have the faintest glimmering of the fact that the capitalist classes of the various nations, ever ready to fight one another to the death in their imperialist ventures, were them-
52 YOU MIGHT LIKE SOCIALISM
selves responsible for the evolution of international anarchy and the disaster of the Great War. It is easy, but hardly profound, to push the cause-effect sequence back only as far as the cataclysm of 1914-18 and attribute all the current troubles of mankind to that one event.
A slight knowledge of history also plays havoc with Mr. Walter Lippmann's recent book The Good Society in which the author, like the Marquess of Lothian, advocates a return to the free market and true liberalism. Mr. Lippmann identifies the root of all evil in "au- thoritarian collectivism," which he sees as based on the principle that men can be made happy through the coercive power of the state and centralized economic planning. It was after 1870, Mr. Lippmann claims, that the deplorable collectivist movement came into its ascend- ancy. Yet long before then Capitalism was afflicted with its charac- teristic ills; and the free-market phase upon which Lippmann looks back with such longing was not, after all, a very happy one for the great majority of mankind. Like Lord Lothian, Mr. Lippmann almost totally ignores those inescapable aspects of the profit system which made it what it is today. And, fatal inconsistency, he finally outlines a series of social reforms much like those of the New Deal, one of the collectivisms he so despises, though these reforms would entail many of the same governmental controls that he denounces elswhere in his book.
To put it briefly, Mr. Lippmann's facile remedy for the sickness of modern society is for Capitalism to return to the days of its radiant youth, but miraculously cleansed of all the original sin with which it was born and rid of all the caprices and crudities of adolescence. The unfolding of nature, however, and the sequence of events in this hard, hard world are irreversible ; it is not so simple to turn back the clock of history a hundred years. And I think it is true to say of Lipp- mann what he himself says of Herbert Spencer: that he is defending positions which have in fact been abandoned by events.
Akin to Lord Lothian and Mr. Lippmann is that school of Utopian retrogressives — Distributists, Neo- Agrarians and others — who propose a return to a small-business economy as the solution of the world's present woes. Whereas in earlier days the crusade against big business
CAPITALISM FAILS MANKIND 53
came mainly from agrarian and petty bourgeois sources that feared the growing encroachments of large-scale enterprise and which focused upon the limited end of curbing this danger, now we have a pretentious little-business philosophy which brashly sets itself up as an economic cure-all.
The prime defect in this philosophy is the cavalier way in which it ignores how twentieth-century concentration grew naturally and inevitably out of the original capitalist competitive system, and the casual fashion in which it accordingly suggests an utterly impracticable about-face in the dynamics of history, a sudden and hazardous throw- ing into reverse of the speedily moving machine of modern indus- trialism. To actualize such a program, for instance, as Mr. Herbert Agar sets forth in his Land of the Free, would mean scrapping the major portion of our technical improvements during the last 75 years. To overcome the immense economic and political obstacles involved would definitely require something in the nature of central planning and a government dictatorship, both of which loom as horrible spectres in Mr. Agar's mind. And this dictatorship would need a huge bureaucracy to keep small business small and to enforce that 100 per cent system of competition so dear to the hearts of our backward-lookers.
Moreover, we must ask, even if the platform of the small-business enthusiasts were somehow achieved, where would we be then? Did the small-business era in America, prior to the eighteen-seventies, pro- vide a solution for our economic problems? It did not. Beset always by the recurring failure of purchasing power, it brought that same cycle of boom and depression and unemployment that constitutes the worst economic feature of the capitalist system. More than that, the abolition of big business would, as Mr. Agar and his friends readily admit, result in a considerable decline in the American standard of living, a standard which even as it is rates abysmally low from the viewpoint of the masses of the population.
Inadequate or dangerous or both as are the various proposals which I have been reviewing, I would prefer any one of them to the adoption of Fascism. For Fascism decrees the end of very nearly everything
54 YOU MIGHT LIKE SOCIALISM
that I, and most other Americans as well, hold dear. Fascism means unceasing violence, in both domestic and foreign affairs; it means war and imperialism and the whir of bombers overhead; it means the erection of racial and national prejudice into a major principle of government; it means the death of democracy and labor's rights, of civil liberties and academic freedom; it means the burning of the books and the degradation of culture; it means a constant decline in living standards and a sharpening of all Capitalism's economic contradictions, including the central one revolving around purchasing power and profit.
f Fascism represents the last desperate attempt, through resort to unprecedented force and savagery, of Capitalism and the capitalist class to survive in a world which has outgrown them. Fascist tyranny stands as the brutal and reactionary essence, undisguised and un- ashamed, of the capitalist system. Fascism is contemporary Capitalism in the nude, stripped of all garments that hide its ugliness. And neither Capitalism nor capitalists in any country can escape their share of responsibility for what Fascism, that is, Fascist Capitalism, does.
The capitalist supporters of the chief Fascist Governments — those of Italy and Spain, Germany and Japan — may have some mental reservations about the reckless dynamite-hurling of their dear dictators in the international sphere. But what promptly over-rules such qualms is that the Fascist regimes put an end to the trade unions and other working-class organizations, shoot or throw into concentration camps all the liberals and radicals who do not succeed in fleeing the country, and check or drive into underground channels the movement toward Socialism. It is for these reasons that a good many upper-class Ameri- cans look upon Fascism with profound sympathy not only in its foreign aspects, but also as a possible program for the United States.
Though it is true that Fascism has been able to prolong Capitalism for a while in the totalitarian lands, the experience of capitalists in Germany, Italy and Japan ought not to make the businessmen of other countries any too enthusiastic over the prospects of Fascist dictatorship. For in the three main Fascist states there has been an ever-increasing
CAPITALISM FAILS MANKIND 55
encroachment by the government in the realm of private business, whether finance, industry or agriculture. When Capitalism becomes particularly hard-pressed, it extends its collective controls in order to make itself more efficient. This happened in the big capitalist powers during the First World War, and has been happening again since the Great Depression. The Fascist states being in the most precarious con- dition of all, capitalist collectivism has gone further within them than anywhere else. And we find in the Fascist economies a sprinkling of semi-Socialistic measures designed to head off real Socialism ; "a form of planning-to-avoid-planning," as Professor Max L/erner says in his discerning book It Is Later Than You Think.
More distressing than anything else to businessmen in the Fascist countries is that they are simply staggering under the load of taxation, mainly for armaments and other war purposes. In Italy Mussolini even went so far as to make a 10 per cent capital levy on all real estate and corporations in order to help pay for his Ethiopian venture. Able econ- omists, both conservative and radical, increasingly agree that the eventual outcome in the Fascist states is likely to be national bank- ruptcy, either in a war or during the natural course of peace. So it is becoming more and more plausible to suggest that in Fascism the capi- talists have raised up a Frankenstein monster which in the end will get completely out of control and involve them in an unparalleled eco- nomic collapse accompanied by a holocaust of violence. When the Fascist dictatorships start to totter, we may be sure that the domestic scene will not be one of peace and politeness. And if Fascism really does lead ultimately to all this, the capitalists in democratic countries may well ask themselves whether a peaceful transition to a Socialist society, avoiding altogether the hideous Fascist episode, would not be a great deal better for themselves as well for everyone else.
Since none of the programs, Fascist or non-Fascist, conservative or liberal or sheer quack, which the capitalists and their varied assortment of theoreticians have proposed or put into effect, are anywhere near adequate to lead the world out of its economic morass and slough of despond, there can be no question that Capitalism stands today in a most critical state. Hardly anyone, even among conservative business-
56 YOU MIGHT LIKE SOCIALISM
men, can pretend that the future of either the Fascist, semi-Fascist or democratic Capitalisms looks very bright. Whatever may be the defects of Socialism, it is impossible to discover any humane or workable Alternative to it. And the proverbial observer from the planet Mars / might well decide that it is not we radicals who are unrealistic and
/ sentimental, throwing our lives away on behalf of a Utopian day- dream, but rather the poor capitalists, those blind, pathetic idealists
\ who will go down nobly with their lost cause singing one last hymn
\ to Rugged Individualism.
Now conceivably the reader will ask here whether Capitalism has not always surmounted its difficulties and gone on to better things. This was indeed true up to the Great War and, in the United States, up to the Great Depression. Since 1929 America, however, as well as Europe, has continually been in the midst of or on the edge of economic crisis; and the recovery periods between depressions are growing both shorter and less substantial. There is a mass of evidence on hand that henceforth, whatever upward movements may take place, the course of Capitalism will be in general downward in terms of living standards. In the chief capitalist nations and especially in the United States, no great new industries appear to be in the offing to spur on that expansion of capital goods and productive equipment which formerly used to result in at least a temporary upsurge of mass purchasing power and business prosperity. Moreover, the mechanization of existing industries has already been carried out to a high degree ; and in any case further mechanization, under our general conditions of decline, is nearly certain to swell mightily the ranks of the unemployed.
What bodes least well of all for Capitalism is the international situation. Never in the history of the present system has the export of surplus commodities and the profitable investment abroad of surplus capital been attended with such difficulties. It is not simply that the spheres of foreign exploitation have been fairly well exhausted or gobbled up, and can be encroached upon only through new economic or military warfare; nor simply that one-sixth of the earth, Soviet Russia, lies outside the orbit of regular capitalist exploitation; nor that the colonial and semi-colonial areas are awakening and threaten-
CAPITALISM FAILS MANKIND 57
ing to unloose the bonds of imperialist domination ; nor that artificial barriers to international trade are more serious and extensive than ever before. On top of all this there looms a second world conflict, which, if it comes, will probably be even more devastating than that of 1914.
This menace of war is everywhere having a ruinous effect. In Europe the big nations, and most of the little ones too, are spending far more on armaments than at any time except during the Great War itself. In the world at large the sums earmarked for military purposes have trebled during the past four years and during 1938 reached the staggering total of $18,000,000,000, a four-fold increase over 1913. If indirect military expenditures were added, the figure would prob- ably go up at least 50 per cent. In most countries the huge armament budgets have been financed through government loans, a procedure which tends definitely in the direction of rising prices and perilous inflation. And it is undeniable, as the English review The Round Table reminds us, that in so far as rearmament heightens industrial i activity, "it does so only at the cost of distorting the balance of the < national economy, driving sound recovery into unsound boom and / gathering labor into industries where its future employment depends/ on the continuance of world-wide political madness."
Even if the much-feared general war does not take place, economic catastrophe threatens. For in most of the capitalist countries of Europe present economic activity is dependent in a decisive measure on the armaments race ; and in America also heavy armament orders on the part of our own and other governments have contributed substantially to such prosperity as there has been in the past few years. The ghastly paradox is that when the armaments race stops or even measurably slows down, the effects on European and world economics may well be disastrous. Benito Mussolini himself, one of the chief offenders in the direction of armament and aggression, recognizes the economic dan- gers involved. To quote an interview from the Scripps-Howard news- papers in May, 1937: "So many people are now employed in the world-wide armament program, II Duce holds, that if the wheels were suddenly stopped and the armament workers thrown out of jobs, the
58 YOU MIGHT LIKE SOCIALISM
world might well be set back to where it was seven or eight years ago at the beginning of the depression." Unless, therefore, something drastic were done, "the consequences might easily be as terrible as war itself."
Even supposing, in spite of all these dire portents, that the capitalist system both in America and elsewhere does some day stage a complete recovery from its recent ills and achieves higher average living stand- ards than before, such an outcome does not to my mind seriously affect the argument for Socialism. For I know that in any event Capitalism is doomed sooner or later to plunge downward again into another big depression; that mass unemployment, with millions and millions out of work, has become a permanent feature of the system ; and that international wars, with their ever more scientific slaughter- fests, will continue to afflict the peoples of the earth. Progress upward at the cost of so much misery and destruction is too frightful and sense- less to contemplate. We have had more than enough of this unhappy muddling through ; it is time to discover a better method. I am through /with Capitalism because I want mankind once and for all to be / through with the wretched cycle of suffering and violence and cruelty y that this system makes inevitable.
I recognize the historical function of Capitalism and the important
part it has played in the evolution of mankind. But this system no
longer has a useful role to fulfill ; it is time for it to retire from the
stage of history and permit a more competent actor to take its place.
/In fact, in my opinion, the job which Capitalism alone was fitted to
I perform, the function in which it was unique and indispensable, was
\finished close to a century ago. Once Capitalism had broken through
the cramping feudalist bonds and had developed to a substantial degree
the factory system and the working class, the division of labor1 and the
process of mechanical invention, it would have been desirable, I believe,
regardless of how far politically possible, to establish a Socialist system
in the Western World. And certainly this was the position of Marx
and Engels, who as far back as 1848 were calling for the end of
Capitalism in The Communist Manifesto.
If the chief nations of the West had been operating under Socialism
CAPITALISM FAILS MANKIND 59
these last hundred or seventy-five or fifty years, I am convinced that they would be far beyond where they are at present in terms of the wealth and welfare of their populations as a whole. And many of the most crushing costs, both material and spiritual, of capitalist evolu- tion, such as the Great War and the Great Depression, would have been avoided. What I want to point out in addition is that equally heavy or even heavier costs face the world in the future unless it gets rid of Capitalism, and gets rid of it quick. Every year, every month, every day that we prolong the hopelessly infirm and decadent life of the present system, we prolong the agony of humanity and consign to limbo an infinity of splendid hopes and potentialities that could otherwise find fulfillment.
This is the most poignant tragedy of our times and perhaps of all times: that the finest and fairest new world that has ever been imagined lies within our grasp, but that we do not have quite the strength, quite the courage, quite the intellectual force to make it wholly and indis- putably ours.
The key that will open up that new world for us is Socialism and its planned economy.
Chapter III Socialist Planning
for Abundance
I. Everyone Can Live Well
LIKE anyone else I want to live well, and I want my wife and three children to live well. I believe in the wholehearted affirmation and enjoyment of life. There are surely few mortals who appreciate more than myself the simple material things that both sustain human existence and can bring to it such delight. I enjoy good food, comfortable living quarters and surroundings that are pleasant and healthful. I am very fond of sports, especially tennis, skating and swim- ming. I like to dance. And I enjoy, too, the pleasures of culture : the leisured reading of books and poetry, stimulating wit and conversation, evenings at theater and concert and motion picture, the opportunity to write.
Some of my conservative upper-class friends occasionally banter me on the exuberant way in which I relish the sweets of existence, as if such relish showed that I could not really believe in Socialism. But they miss the point. For it is precisely the destiny of Socialism to bring to the whole community those felicities of living that up to now only a small minority have had the chance to enjoy. I want everyone to live well. And I am convinced that Socialist planning could quickly assure to every American family not merely economic security, but also a fair degree of comfort. For this reason the idea of a Socialist
60
SOCIALIST PLANNING FOR ABUNDANCE 6l
society ought to attract profoundly not just the more poorly paid \ workers and farmers, but most of the middle class and many members J of the upper class as well.
If we attain Socialism in the United States during my lifetime, I fully expect that I and other persons who are at present economically privileged will be able, if we work loyally under the new system, to maintain a very decent standard of living, though not one that is luxurious or extravagant. This Socialist promise of general prosperity \ is one of the chief reasons why I consider so infinitely short-sighted and j unintelligent those members of the upper class who oppose with such / bitter-end stubbornness the passing of Capitalism. For they themselver can share to a substantial extent in the abundance which Socialism will make actual. And so long as they prevent this abundance from coming to fruition, they are playing the invidious role of dogs-in-the-manger. They are saying in effect to the people: "It is true that we cannot our- selves unlock the untold possibilities of this modern economy, but just the same we don't intend to let you do it."
Suppose the American people woke up some fine morning and read in the newspapers that every factory and farm in the country was operating at full blast, that all the millions of unemployed had been able to find jobs, that sweeping increases in wages would shortly go into effect and that for the first time in years federal, state and munici- pal governments saw the sure prospect of balancing their budgets. One can imagine the sense of relief, the happiness, the positive thrill that would be felt from one end of the country to the other; one can picture the rejoicing that would be called forth in every American home, in every place of business, in every public gathering. It would be like the ead of the Great War; indeed, it would be the end of a Great War, the war on poverty, on unemployment, on depression and the thousand ills that accompany these major maladies of the capitalist system.
All this I have been depicting is no mere word-mirage. It is a close approximation of what would actually take place under full-fledged Socialism. For Socialist planning means that the American economic system would in fact be kept going at 1 00 per cent capacity, that its potential plenty would at long last be released, its productive resources
62 YOU MIGHT LIKE SOCIALISM
and distributive techniques utilized and developed to the maximum for the people and by the people. The almost immediate outcome would be that $5,000 income for every American family that I mentioned earlier. And as time went on, this figure would steadily rise. These considerations spell out why Socialism means wealthy fabulous wealth, and eventually tenfold, yes a hundredfold, more wealth than Capital- ism has ever been able to bring mankind.
2. The Principles of Planning
The fundamental principle that lies behind planning is fairly simple and one which we encounter in some form in many different realms of human behavior. It consists of co-ordinating our activities in the light of our capacities and of the objective external environment, especially its economic aspects. As individuals we all plan to some extent, whether it be for a day or a month, a year or a decade, always keeping a weather eye on the state of our finances.
If we have a family, then planning becomes more complex and essential. The intelligent family looks into the future so far as is possible and plans, according to its resources, for the needs of its various members. If it is wise and has any sort of dependable income, it will make an annual budget, allocating definite sums to food, housing, clothing, recreation, baby carriages and the like. It will also probably try to set aside certain amounts as savings; and the most prudent heads of families will plan years and years ahead for the par- ticular needs and vicissitudes of old age. Thoughtful people will take an even further step and, through the process of wills, lay careful plans for friends and family long after they are dead.
Coming to purely economic units, we find that every kind of busi- ness concern, no matter what its size and nature, must plan. The larger and more complex it is, the more attention it has to pay to planning. Any big corporation, for instance, with its many different departments, must have central planning in order to co-ordinate its various activities and to function successfully as a business. This is true whether the U. S. Steel Corporation or General Motors is con- cerned, whether R. H. Macy and Company or American Telephone
SOCIALIST PLANNING FOR ABUNDANCE 63
and Telegraph, whether Standard Oil of New York or the Pennsyl- vania Railroad. The planning necessary for the efficient management of huge businesses like these reaches out to all parts of America and in some degree abroad as well. And in certain fields where big business has come to be overwhelmingly predominant, the planning of a few large trusts or even of a single monopoly may extend over well-nigh a whole industry.
The purpose of planning in all capitalist enterprise is, of course, to make money. And this means that each business, in the process of con- tinually establishing and re-establishing its own superiority, must plan \ against its rivals and win away from them more and more customers, j Trusts in the same industry have to plan against each other and also, in order to capture a larger and larger share of the general consumer's income, against trusts in other industries. Thus, in enterprise both large and small, the plans of individual businesses and businessmen tend to cancel one another out to a considerable extent. The capitalist theory is that the most efficient and intelligently managed concerns come out on top. Undeniably this is frequently true ; just as often, however, it is ruthlessness and lack of moral scruple that turns the trick, as has been amply illustrated in the lives of our "robber barons." But whether efficiency or ruthlessness or perhaps both together are operative in any particular case, the result for the_ community is in the end economic
In order to mitigate or prevent the disastrous results of anarchic Capitalism in some important field, capitalist governments sometimes put into effect a species of planning for an entire industry. In most European countries the telephone and telegraph are publicly owned and operated, and in several the railways as well. Then, too, there are public planning schemes in existence over particular localities. A good example of this is the Tennessee Valley Authority (TVA), which is exploiting the power resources of the Tennessee basin on behalf of the population of the vicinity, much to the chagrin of the private utility companies. These types of piecemeal planning, however, no matter , how well they may work in the sectors allotted to them, cannot go far / in solving the economic problems of a country as a whole. /
64 YOU MIGHT LIKE SOCIALISM
It is characteristic that the most far-reaching schemes of public planning under Capitalism should be for profit, or for profit and war. The so-called planning of the New Deal during President Roosevelt's first term was directed, especially in agriculture, toward decreasing production in order to bring back profits by making goods scarcer and prices higher. While the Great Depression was still ravaging the United States, the NRA (National Recovery Administration) and the AAA (Agricultural Adjustment Administration) nobly co- operated, through planned destruction, with the usual haphazard destruction for profit by individual capitalists. Those were the days when almost over-night a fourth of the cotton crop was ploughed under, the wheat acreage reduced by 20 per cent, and five million pigs destroyed. The AAA, doing its best under the circumstances to rescue the American farmer by boosting the price level, actually paid bonuses to all the producers who participated in this wholesale sacrifice to the capricious gods of capitalist economics.
During the Great War, America, and more than half the nations of the earth as well, carried out planned destruction on an even larger scale. Not only did this war planning entail the shooting away into nothingness of billions and billions of dollars worth of goods in the form of munitions; even the food, clothing and other supplies for the military and naval forces were for the purpose of enabling millions of men to engage in the entirely unproductive function of fighting to the death millions of other men. In order to wage war more efficiently, the American Government proceeded to co-ordinate in some measure the economic life of the United States by setting up the War Industries Board, the War Trade Board, the Shipping Board, the Fuel Adminis- tration, the Food Administration and the Railroad Administration. Since the railroads under private management could not stand the added strain of war conditions, the Government took them over entirely and administered them on a unified basis.
Unhappily, today again, the bulk of the planning that is going on in capitalist countries is for belligerent purposes. This is especially true of the Fascist Powers — Germany, Italy and Japan — in each of which
SOCIALIST PLANNING FOR ABUNDANCE 65
the whole economy has for a number of years been on a war basis. As these Fascist states push farther and farther their present aggressions and prepare for new ones, they are forcing the democratic Capitalisms to introduce ever more extensive planning for the object of armed self-defense.
This brief review of the limited planning that takes place under Capitalism shows how far removed it is in aim and scope from Socialist planning. Planning under Socialism is for use, not profit, for increasing production, not decreasing it, for ^eace^ not war. And it demands as an absolute prerequisite the socialization of production and distribution. For as long as private capitalists retain possession of a country's natural resources and transportation facilities, of factories, farms, banks and all the rest, they have the power to throw out of gear the best-laid of Plans. It is common knowledge that even with the minor public con-
. . - .
trols established under Roosevelt's NRA, the American capitalists, long before the law was declared unconstitutional, constantly sabo- taged, dodged and defied the Act.
But Socialist planning puts a finish to that unending tug of war, so characteristic of Capitalism, between the Government, supposedly representing the public in general, and various business interests jockey- ing for control of it and determined to carry out whatever profit- promising policies seem most advantageous. Under Socialism, politics and economics are thoroughly integrated.
The socialization of economic activity which I have in mind, how- ever, does not necessarily entail either nationalization by the federal government or ownership by state or city governments. Many indus- tries under Socialism the national government will certainly take over; many other economic concerns, less far-reaching in their ramifi- cations, state or city governments will own and operate. But besides all this, there will be a broad sector of enterprise which is socialized yet not governmental. It will be advisable to run some industries through the instrumentality of Public Corporations, which will be subject to control by the government planning authorities, but largely independent in their administrative work. In the non-governmental class will also be collective farms and fisheries, and indeed almost the
66 YOU MIGHT LIKE SOCIALISM
whole of agriculture; co-operative societies for production and dis- tribution; and much of journalism, art and culture in general.
This means that there will be a sizable number, running into several millions, of independent individuals not on the pay-roll of any govern- mental concern. These will include a large proportion of the handi- craftsmen, farmers, fishermen, inventors, teachers, authors, journalists, actors, artists and intellectuals. They will make their living by work- ing in such organizations as I have just mentioned; or by selling their products or services to such organizations, to public agencies or to other individuals. So, in the Socialist state there will be plenty of room for freelance workers of every type.
Socialist planning differs from any sort of capitalist planning, lastly, in that it is not confined to special localities, industries or periods of time, but is continuous and nation-wide. A genuinely planned economy demands not only that all individual businesses in one industry, whether it be concerned with hats, shoes, sugar, coal or anything else, be consciously co-ordinated, but that each industry as a whole, includ- ing the prices of its products and the wages and working hours of its employees, be co-ordinated with every other industry as a whole. Think of the increase in efficiency and the decrease in waste that would result from planned co-ordination among America's big energy-producing industries: coal, gas, oil and electric power. Such co-ordination, how- ever, could reach its high point only when there was complete co-ordi- nation also among the industries to be served. For only when we know how much energy is required throughout the whole country, and where and when, can we accurately gauge how much coal, how much gas, how much oil and how much electric power should be made available in a given period and in a particular locality.
Again, it is obvious that there is so much overlapping in the field of transportation — among railways, boats, buses, trucks and airplanes — that the situation cries out for unified planning. But it is not possible to separate transportation from the things to be transported. A plan for coordinated transportation implies a plan for coal and steel, farm products and finished goods, just as a plan for all these things definitely implies a plan for transportation.
SOCIALIST PLANNING FOR ABUNDANCE 67
And of course all of agriculture must be carefully correlated with all of manufacture. The flow of foodstuffs to the cities must be co- ordinated with the flow of manufactured goods from them. The needs, of the farmers must be estimated. Our steel plan, for example, must take into consideration the demand for tractors, combines and other agricultural machinery; and our agricultural plan the particular food requirements of the heavily laboring steel workers.
Likewise there must be a well-worked-out plan for wholesale and retail trade, linking up these two main branches of distribution all along the line with industry, transportation and agriculture. The shops in town and city, the restaurants, the warehouses, the gasoline stations and other such distributive units all come into the planning picture here.
Since the planning I envisage covers the entire socio-economic scene, it naturally extends into the fields of health and recreation, of education and culture. Socialism is particularly concerned to bounti- fully provide all the different activities and services in these realms with the necessary equipment and other economic prerequisites. The educational plan of the country, moreover, must be always closely interrelated with the economic plan, so that there may never be a lack of the needed technicians, scientists and other experts nor a deficiency of suitable employment opportunities for graduating students.
Finally, the entire economic and cultural life of the country must be carefully correlated with finance under one vast, unitary budget that takes in all branches of industry and agriculture, of commerce and trade and extra-economic endeavor.
This completes, in outline form, the picture of the great National Plan which Socialism sets in motion, a Plan which brings into the economic and social affairs of any country that adopts it a closely knit unity, a smoothly functioning team-work, among all the myriad enter- prises and individuals involved, making each one count for infinitely more and lifting the collective achievement to new and unheard-of heights.
Because of its controls over production and distribution, currency
68 YOU MIGHT LIKE SOCIALISM
/and capital investment, prices and wages and hours, Socialist planning f is able to overcome totally and permanently the central capitalist diffi- \:ulty of lack of purchasing power. As more and more goods come out of the factories, wages go up throughout the land or prices decrease or the working day grows shorter. To take care of the increased turn- over in commodities, currency may, depending on its velocity of cir- culation, be expanded. Since there are no capitalists to appropriates a large proportion of the value which the people produce, the full instead of only the partial value of their labor returns to them in /' one form or another. Thus, the unceasing abundance of goods is matched by an unceasing abundance of purchasing power. And this results in that depression-defeating, prosperity-ensuring balance between production and consumption, supply and demand, which every orthodox economist and capitalist has fondly dreamed of seeing Capitalism itself attain.
The United States and other capitalist nations are only as rich as the amount of goods that can be sold for a profit during any given period. But Socialist planning makes a country exactly as rich as its entire productive capacity during any period. This is why I say with- out hesitation that Socialism, in terms of sheer economic efficiency, is sure to far outstrip Capitalism.
Since finance is the most important single element in Socialist plan- ning and more crucial, if anything, than in a capitalist economy — a fact which ought to give some slight consolation to capitalist bankers — I want to discuss the subject in more detail. In a Socialist state the banking system operates under and administers an all-embracing Financial Plan for the nation as a whole. This Financial Plan is the counterpart of the Material Plan and translates all the production and distribution schedules of the latter into dollar units. The dollar is the common denominator in which the various aspects of the National Plan can be accurately expressed and clearly related to one another. The Financial Plan and the Material Plan are, in effect, two versions of the National Plan and each serves as a check on the other.
The Government Treasury Department, together with the State Bank and its numerous branches, acts as a great central pool for the
SOCIALIST PLANNING FOR ABUNDANCE 69
national income. This it does not only through taxation of Socialist business concerns and of individuals, but also through receiving a sub- stantial share of whatever surpluses the different businesses, including those involved in foreign trade, succeed in accumulating. A consider- able portion of such surpluses, however, are retained locally by the factory or other unit earning them and are used collectively for expan- sion, improvements or social benefits connected with the same enter- prise. The Government also raises a certain amount of capital through savings banks and through the flotation of public loans, which continue to be necessary during the first stages of Socialism.
The surpluses or "profits" which economic enterprises build up under Socialism have a very different status and play a very different role from what we have been accustomed to expect under Capitalism. They are, in fact, mainly a book-keeping device. Socialist business is run, as I have said, not for the sake of making profits, but in order to provide goods and services to the community. The most convenient process of accounting and of distribution, however, demands the mech- anism of buying and selling, of money and prices. Furthermore, identifiable "profits" are necessary so that our Socialist planners can set aside a certain proportion of the nation's income in order to meet depreciation and obsolescence and, above all, in order to expand the means of production. Soviet Russia, for instance, put into social sav- ings for such purposes an annual average of one-third its total in- come during the first two Five-Year Plans, a feat which stands out %> all the more owing to the fact that capitalist economists have always argued that a Socialist government would act like a reckless spend- thrift and could not possibly exercise the foresight and intelligence to accumulate capital.
Whereas under Capitalism money and prices control the output of goods, under Socialism it is the output of goods that controls money and prices. Money is on a goods standard, not a gold standard. No real need exists for the latter unless to make the initial transition from Capi- talism psychologically easier in the minds of the people. There can be no such thing as financial bankruptcy unless the supply of commodi- ties proves inadequate ; the value of the currency does not depend on
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any gold reserve, but on the quantity and quality of goods that nation- wide planning has made available. Money ceases to be a commodity in itself, as under the capitalist system. It simply serves as the recognized unit of economic measurement and exchange, a function that some medium will have to perform in any future stage of society.
The most obvious advantage of a Socialist financial system is that it enables the public authorities to distribute and re-distribute the nation's capital resources according to the needs of the entire economy. The surpluses acquired in one sector of business can be transferred to other less developed and less lucrative branches of economic activity. This is analogous, on a national scale, to the various allocations within the huge budgets of some of the bigger capitalist corporations. Under Socialism a number of enterprises, particularly in the sphere of educa- tion and social services, will continue to show financial loss, perhaps permanently. And there will also be deficits in the industrial field, especially when some great new project is getting under way.
Socialist financial planning requires that there be an ordered flow of capital investment all along the line in place of the slap-dash, hap- hazard methods prevalent in capitalist countries today. Instead of over- investment in some directions and under-investment in others, with crisis-causing disproportions as the certain result, Socialist planning ensures a balanced and even distribution of capital resources, that is, social savings, in the directions most useful and important. It would be^X inconceivable, for example, for vast quantities of capital to go into the building of palatial homes, yachts and other super-luxuries for a small class of the economically privileged while millions of families lived in houses beneath even a minimum standard of decency.
It would also be inconceivable for socialized capital to go into the \ production of things clearly harmful to health and well-being — such as noxious drugs, patent medicines and deleterious foodstuffs — for which there might be unintelligent and perverse demand. It would be impossible, too, for capital to create manufacturing plants and services that would be continually duplicating one another, ruining one another through cut-throat competition, spending huge fortunes in misleading advertising, and inundating a locality or even the entire
SOCIALIST PLANNING FOR ABUNDANCE *JI
country with a bewildering flow of practically identical goods. The huge sums of money and the very large personnel involved in specu- lative activities in commodities, in land, and in stocks and bonds would also become a thing of the past. And, alas for the gamblers of high finance, that symbol of Capitalism at its worst, the stock market., would be no more. **r
The perfect synchronization between savings and capital investment that Socialist planning makes possible is one of the weightiest argu- ments in its favor. Since the decision of how much and where and when to save and the decision of how much and where and when to invest rests in the hands of the Planning Commission and the Government, there is no danger that these important decisions will be at odds with each other as they so often are under Capitalism. The unplanned capitalist method means that two sets of different people, frequently with conflicting interests, save and invest as they see fit, with the result that the relations between saving and investment are always becoming maladjusted. Either savings cannot find an outlet in profitable investment or needed investment cannot find sufficient savings to put it across. In either case economic troubles are the out- come.
Under the financial system I have been outlining, every producing and distributing unit in the country has an account in the central State Bank or one of its branches. And it is the duty of each bank to check up on the use of the credits, long-term, short-term or emergency, which it issues at any time. It must make certain that the automobile factory, for instance, to which it has advanced a certain amount of credit, actually produces the motorcars called for by the Plan and supposedly made possible by the credit. The factory has the obligation of giving the bank definite reports on definite dates showing how it is fulfilling its program. If the bank discovers that the credit is being wasted or used inefficiently, it will at once stop further credits until the matter is cleared up, even instituting a special investigation if necessary.
Thus, under Socialist planning, the banks become the watchdogs of the whole economy by carrying on what amounts to a constant audit
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of all business enterprises. They act as the vital link between the various sets of plans drawn up on paper and the fulfillment of these plans in terms of concrete goods and services. Their vigilance means that there can be no let-down on the part of either management or workers in a concern without the whole personnel being called to task. In this function the banks are aided by a system of accounting which penetrates into every nook and cranny of economic activity. Socialist accounting, organized on the strictest basis, aims to cut production costs and to attain the greatest possible results for the least possible expendi- ture. Book profits enter again into the picture here as a partial test of whether or not a plant is being operated efficiently. So the idea sometimes advanced that, under Socialism, extravagant executives will fling away heedlessly and without restraint the financial resources of the community is merely a caricature.
Furthermore, besides the checks and balances inherent in the tech- nical set-up of Socialist planning, there is always the control exercised by the people themselves through regular democratic procedures. At established intervals they can approve or disapprove of the planning schemes in effect or proposed by electing representatives and officials committed to carrying out the popular will. And at all times they can bring pressure to bear by criticisms and suggestions through public meetings, the organs of opinion, individual or organized lobbying, and other such processes of democracy. Of paramount importance in this connection will be the role of the trade unions, to which virtually all working persons will presumably belong. There is nothing, then, in the nature of Socialist planning which prevents it from being administered in a thoroughly democratic manner.
One can easily imagine some of the big public issues which are almost certain to emerge in the natural course of collective economic planning. Since the standard of living under Socialism goes steadily up, the question will arise as to how the people can most benefit from the increasing wealth. Shall our planners put the emphasis on raising wages continually or on providing more and better free services like libraries, parks and public concerts? How much of the national income shall be saved for the purpose of new capital construction? And in this
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connection will the time come when the population will prefer to stabilize the standard of living at a certain point and concentrate on enjoying the consumers' goods producible at that level rather than to continue with vast expansion programs? For under Socialist planning\ there is no categorical imperative, as under Capitalism, for an economy^ to keep on expanding indefinitely.
This particular issue might well develop in relation to the matter of the average annual working time. In order that more leisure be secured, one political party might advocate reducing the work-day by a third or augmenting the number of holidays or cutting the age of retirement to fifty; another party might call for the maintenance of existing work-time schedules and for a mighty increase in production which would lift the standard of living to even greater heights. Or another burning issue might come to the fore, once the necessities of life had been provided for everyone, over whether to stress the provision of cultural as distinct from material goods and services.
The exact planning techniques which I have been describing will certainly not be used in all stages of Socialism nor in all countries adopting the new system. For it is crystal clear that each nation will use somewhat different methods, adapting Socialism to its characteris- tic traditions, political institutions and degree of economic develop- ment. It would be foolish to imagine that if central planning were introduced in China at the same time as in the United States, it could be put into effect by precisely the same measures or at the same rate. Indeed, there will be plenty of differences even between two countries both as highly evolved industrially as America and Great Britain, one obvious reason being that the latter is in so many ways economically dependent on the outside world. But just as the general principles of the capitalist system were potentially applicable in every quarter of the globe, so the general principles of Socialist planning are applicable to the United States and all other nations.
3. Socialist Planning for America
To make the picture of Socialist planning more concrete, let us visualize how it would work out in a definite country. And let us take
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as an example our own U. S. A. Suppose that in the elections of 1952 or sometime thereafter the American people elect a President and a substantial majority in Congress pledged to establish Socialist planning throughout the country. Let us assume, furthermore, that the Supreme Court declares the legislative measures of the planning Party con- stitutional or that they are promptly made so through amendment of the Constitution at special state conventions. Leaving aside for the moment a discussion of the necessary transitional steps and without pretending to any finality, let us see what the pattern of American Socialist planning would in general be like.
Apart from the political field, the key organization in the American planning system, as in any other, would be the National Planning Commission, with headquarters at Washington, D. C. The President, with the advice and consent of the Senate, chooses the eighteen mem- bers of the Executive Council of this Commission, including its Chairman, who sits as a member of the Government Cabinet. The appointments are non-political and are made from among experts especially qualified by wisdom and experience to deal with broad social and economic problems. The Commissioners are to regard themselves as trustees of the public interest. They will each receive salaries of $15,000 a year, except the Chairman, who will draw $20,000.
Each of the Commissioners heads one of the eighteen different Divisions into which the Commission is organized. These Divisions, together with some of their more prominent Sections, are as follows:
Steel
Machinery Heavy Indusuy Hous;ng
Timber, Etc.
Clothing
T . . _ . Footwear
Light Industry ,,
r urmture
Motor Vehicles
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Finance
Transportation
Communications
Distribution
Social Welfare
Education
Culture
Banking and Currency Capital Investment The Budget Taxation
Railroads Motor Transport Air Transport Shipping (Domestic)
Telephone Telegraph Radio Post Office
Retail Trade Storage Co-operatives Consumers' Needs
Unemployment Insurance Pensions Public Health Recreation
Primary Schools Secondary Schools Technical Institutes Colleges and Universities
The Arts Motion Pictures Science and Invention The Press
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Fuel and Power
Agriculture
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Coal Oil
Electricity Gas
Cotton Wheat Dairy
Livestock
Forests Soil Conservation & Reclamation Flood Control
Sub-soil Deposits
Foreign Trade
Defense
Labor
Statistics & Research
Exports Imports
Merchant Marine Foreign Exchange
Army Navy Air Force Munitions
Wages and Hours Workers' Safety Employment Exchange Women Workers
Industrial Agricultural Population Social Trends
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Education of Planning Experts Organization Personnel
Inter-Divisional Problems Co-ordination n ,,. n i •
Public Relations
The functions of all but the last two of the Divisions are clear enough from their names. The Organization Division has charge of managing and selecting the personnel of the Commission, which employs as trained statisticians or technical experts at least a thousand persons, as well as thousands of ordinary clerical workers. Appoint- ment to a responsible position on the Planning Commission or the numerous subordinate commissions throughout the country is on a civil service basis. Only men and women who have fulfilled certain definite requirements are eligible for appointment. And one of the chief tasks of the Organization Division is to ensure the proper training of plan- ning experts in a special Government institution or in already existing colleges and universities, which will establish special courses or gradu- ate work for those who are aiming to enter the profession of planning.
The Co-ordination Division, the head of which is always the Chair- man of the entire Commission, has the crucial task of constructing and synthesizing the final National Plan from the figures and projects submitted by the other Divisions and by the various sub-commissions throughout the country. It also oversees the relations between the National Commission and the Government, and through its Public Relations Section takes care of all publicity work for the Commission.
The Plans drawn up by the National Planning Commission and its subordinate commissions, while tremendously important and influ- ential, are by no means final. Bills embodying the National Plans must be passed by Congress and signed by the President. They are subject to debate, criticism, and amendment like all other measures brought before the Senate and the House of Representatives. Since, moreover, the Commission is not an administrative body, its different Divisions, except those of Statistics & Research and Organization, must be matched in the national Government by corresponding administrative
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Departments, each of which has a planning board within it as one of its Bureaus. This naturally entails a considerable amount of reorgan- ization in the structure of the Federal Government. The Departments of State and of Justice alone will retain their present set-up.
Each of the forty-eight states in the Union has its own Planning Commission, of which the ten members are appointed by the Gov- ernor. Each of the territories and dependencies, such as Alaska and Hawaii, the Pacific Islands and the Canal Zone, also has its separate Planning Commission; and in addition there is a special Regional Commission with responsibility for them all. There are also nine regional Planning Commissions covering various states as groups according to the following arrangement:
New England Region
Middle Atlantic Region
South Atlantic Region
Gulf Region
The six New England states
New York down through West Virginia
Maryland to Georgia, including Kentucky and Tennessee
Florida west to Louisiana and Arkansas
Headquarters at Boston
Headquarters at New York City
Headquarters at Atlanta
Headquarters at New Orleans
Great Lakes Region
Great Plains Region
Ohio, Indiana, Michigan
Illinois and
Wisconsin in the east to the Dakotas in the west and Mis- souri and Kansas in the south
Headquarters at Chicago
Headquarters at Des Moines
Southwest Region
Texas to Arizona
Headquarters at Dallas
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Rocky Moun- Six mountain states with Mon- Headquarters at tain Region tana in the north, Colorado in Denver
the south and Nevada in the west
Pacific Region California, Oregon and Wash- Headquarters at ington San Francisco
Within the states each county and each city has its own Planning Commission. And in the more sparsely settled agricultural districts every unit of population amounting to 10,000 or more has a com- mission. There are also Planning Commissions for each industry as a whole and for each sub-division of each industry. For instance, the entire steel industry as a unit has its Planning Commission ; the various regional steel trusts, of course publicly owned and operated, likewise have their separate commissions; as does each substantial producing unit within each trust. Finally there exist planning committees in each factory and even in each shop of each factory.
Thus, all of the workers in a steel factory combine to put through a plan for that unit; all the factories in a certain district combine to put through a central plan for the steel trust of which they are part; all the trusts combine to put through a plan for the steel industry as a whole; and then the steel industry itself, the co-ordinating centers of which are a Division of the Planning Commission and a Depart- ment of the Government, combines with every other industry and economic activity to put through a balanced Plan for the entire country. The geographical planning bodies operate on the same prin- ciple, that is, from the smaller up through the larger. The cities' plans fit into that of the county, the counties' into that of the state, the states' into that of the region, and the regions' into that of the entire country.
Planning under Socialism is, then, a complex process embodying three different but intimately related aspects. All of the plans are, in the first place, plans over a definite period of time. Taking the presidential term in America as an appropriate time-span, our Com-
8o
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mission adopts for the nation a First Four- Year Plan, a Second Four- Year Plan, a Third Four- Year Plan and so on. Inside these Four- Year Plans there are one-year, quarterly and even one-month plans. In the second place, there is the geographic aspect of the plans. Besides the country as a whole, each region, state, county and city has its own four-year and one-year plan. In the third place, there is the functional aspect of the plans as applied to each industry and its sub-divisions. These three fundamental aspects of planning — the temporal, the geographic and the functional — are thoroughly inte- grated by the National Planning Commission in each big Four- Year Plan.
It is this Commission that welds together in one vast, integrated, long-range Plan all the minor plans and reports of all the various regions, states, counties, cities, industries, factories, distribution units, and cultural organizations throughout the entire United States. It is this Commission which takes the thousand and one estimates pour- ing in from all parts of the country and correlates them into the considered and rational whole which constitutes a National Plan. It is this Commission at Washington which from week to week, from month to month, from year to year, casts its all-seeing eye over the economic activities of the nation and shifts the schedules within the Plan to keep pace with new and unforeseen developments.
America's First Four- Year Plan will need careful and extensive preparation before it can be put into effect. If our planning Party is victorious in the national elections of November, 1952, it will have two months of leeway before the new President and Congress come into office in the first week of January, 1953. Accordingly, it can be expected to have ready for action by Congress bills empowering the Government to take over at once a few key enterprises such as the railroads, communications, fuel and power, and — most important of all — the banks. Provision will be made for appropriate compensation of the owners over what must necessarily be a long period of years. The planning Party will also submit bills establishing the general structure of the planning system and giving very general estimates of what is to be accomplished during the First Four- Year Plan. I expect
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that the complete functional activization of existing capacity will be the main productive goal of this period.
Eight months later, September I, 1953, the National Planning Commission will be ready with a preliminary draft, giving detailed figures and measures for the First Four- Year Plan. During the next three months this draft will be published abroad throughout the land and given the widest kind of publicity in newspapers, magazines, radio programs, public meetings, educational institutions, scientific institutes and other organs of public opinion. At the same time the Planning Commission will send out to all subordinate planning organi- zations the provisional quotas to be fulfilled in the geographical or functional sectors for which they are responsible. Thus, the prelimi- nary Plan will be discussed and criticized from one end of the country to another both by the public in general and by the specific planning, economic, and cultural agencies concerned in translating it into actu- ality. "How can we improve the Plan?" will become a nation-wide slogan.
By December I the various planning units, after careful consid- eration and in light of whatever suggestions have been made, will return revised drafts to the Planning Commission. During the next six weeks the Commission will proceed, after receiving all available information and criticism from its sub-commissions and other sources, to draw up a final Plan for presentation to Congress in the middle of January, 1954. Congress will then thoroughly discuss the Plan according to its regular procedures and will undoubtedly amend it to some degree. We can probably count on having the President's signature on the final congressional planning bill by May I, 1954, so that it can become definitely operative at the beginning of the fiscal year on July I.
This means that the First Four- Year Plan (ending June 30, 1957) will be in operation as a completed and functional whole for only three years out of the full period. There is no way of avoiding this, however, for the first National Plan ; but the second will over- come any time-lag and will go into effect July I, 1957. All of the Plans will begin and end with the regular fiscal year. The Planning
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Commission will release its preliminary draft of the Second Four- Year Plan (1957-1961) on July i, 1956, to run the gamut of public opinion. Its final version it will have ready promptly on January I, 1957, for submission to Congress. The Commission will not wait for the formal completion of one Four- Year Plan before starting to draw up estimates for the next; and this preparatory work will ordinarily begin a full year before each Plan is due for presentation to Congress.
The standard-of-living goal for each family of four at the end of the First Four- Year Plan will be an annual minimum of $5,000 in consumers' values, including those made available by the extension of free government services. This goal will be achievable through the full utilization of our present labor supply, taking in the able-bodied unemployed but totally ruling out child labor, on the basis of a seven- hour day, a five-day week and a yearly holiday of three weeks. The minimum mentioned would be even higher if the new regime were able to eliminate America's soaring defense and armament expendi- tures. In any case, my $5,000 estimate by no means adequately rep- resents the advantages which the American people will enjoy under Socialist planning. For it is impossible to evaluate in financial terms even the physical gains which will, for instance, accrue to the urban masses when they all live in houses or apartments which have plenty of room, good light and fresh air. And it is also out of the question to put a definite money value on the immense psychological boons which Socialism will bring, especially through insuring everyone a job and eliminating the chief economic worries of the present.
One of the most important problems that our planning experts will have to face is that of procuring trustworthy data on the capacities and needs of the various areas and of the country as a whole. It is not possible even to start planning without some such data; yet it is not possible to obtain complete and reliable data until planning is well under way. For only an organization like the National Planning Commission, with its hundreds of subordinate agencies in different localities and economic enterprises throughout America, is equipped to gather in and organize all the necessary statistics. The Commis- sion's own Division of Statistics & Research plays a central role
SOCIALIST PLANNING FOR ABUNDANCE 83
here. Thus as planning makes headway, we shall see a steady improve- ment and enlargement of the statistical base, making the intricate network of economic forces more and more measurable and bringing about what has aptly been called by economists complete economic visibility.
In regard to this important matter of statistics, Socialist plann in America will not, as in Soviet Russia, have to start almost from scratch. For there already exist here a number of agencies, both public and private, which are constantly building up the kind of statistical / knowledge that planning demands as a foundation. In the public field the most useful of these is the National Resources Planning Board, formerly called the National Resources Committee, which has pub- lished a number of volumes particularly pertinent to the subject of planning. Then we have the reports of the numerous local planning organizations, there being in the U. S. A. at present no less than 42 state planning boards, 400 county and over 1,100 municipal — all with very limited powers, of course.
In addition, each of the main Departments of the Federal Gov- ernment carries on vital fact-finding activities, outstanding in this respect being the Bureau of the Census and the Bureau of Standards, both under the Department of Commerce; the Bureau of Internal Revenue and the U. S. Public Health Service, both under the Treasury Department; the Bureau of Labor Statistics, under the Department of Labor; the Bureau of Home Economics, under the Department of Agriculture; and the Geological Survey, under the Department of the Interior. There has also been established recently at Wash- ington a Central Statistical Board to render information and advice in the working out of inter-departmental problems. Under private auspices we find the substantial studies issued by the Brookings Insti- tution and the Russell Sage Foundation, the reports of well-known research bodies such as the National Bureau of Economic Research and the National Industrial Conference Board, and the regular pub- lications of organizations for the protection of the consumer such as the Consumers Union.
A huge aggregate of carefully organized and up-to-date statistics
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is as essential for the carrying out of a Four- Year Plan as for its preparation. For the National Planning Commission must keep informed on the progress or lack of progress that is being made throughout the country. For this reason the vast network of sub- commissions send into it frequent reports, at least once every two weeks. And the Commission has the duty, which is also an oppor- tunity, of constantly revising the Four- Year Plans in the light of the specific situation at the beginning of each year, each quarter and each month. Whatever changes the Commission recommends to the Government Departments empowered to put them into effect, must of course fit in with the general perspectives laid down by the original Four- Year Plan, but need not conform exactly to the original figures. These periodic readjustments are essential because in large-scale and long-range planning there are sure to occur both under-fulfillments and over-fulfillments. Then, too, it is perfectly obvious that a Planning Commission, even if composed of the wisest men in the world, is bound to make some miscalculations.
Moreover, there exist certain factors which the most flawless tech- nique of planning can hardly anticipate: weather conditions, for ex- ample, affecting the fortunes of crops throughout the country ; new in- ventions and new discoveries of mineral wealth, affecting the progress of industry and agriculture ; the movement of world prices, affecting payments for needed imports; and the whole international situation, affecting the day-to-day psychology of the people and the proportion of the industrial plant which has to be geared to defense. All of these \ reasons combine to make intelligent flexibility a natural and funda- \ mental principle of social-economic planning in the dynamic and ever-changing society of today; the notion that Socialist planning / implies some sort of strait-jacket thrown over the life of the people/ is very wide of the mark.
It is most important to note that the planning procedures which I have in mind make ample allowance for local initiative. The idea behind Socialism is not to set up a group of dictatorial supermen who sit in Washington and hand down orders to the rest of the country,
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but to provide for continuous and democratic interaction between the local planning units and the ones higher up, between the organizations on the circumference and those at the center. Within the framework of the National Plan it is possible and indeed highly desirable to give a good deal of leeway to the lower planning and administrative agencies in working out the details for their own particular sectors and in making final decisions on matters of primarily local signifi- cance. The National Planning Commission or the Federal Govern- ment steps in only if decisions seem to violate or disturb in some way the objectives and schedules of the National Plan.
S Naturally enough, our Socialist planners are going to take full advantage of that bigness and concentration which is so marked a characteristic of American industry; and of the collectivism which objectively exists today in the form of mass concentration of workers \ in the factories, of extensive trade-union organization, and of the
^ar-flung collective controls of corporate enterprise. A Socialist regime would find many problems solved in advance if it proceeded, for example, to take over the steel industry. For steel in the U. S. A., with a handful of monopolies ruling the roost, is already unified to such an extent that the step to total unification required by Socialist planning would be comparatively easy. And the same point holds true for a number of other basic industries. Indeed, if the present man- agements of these industries could be trusted to administer them faithfully on behalf of a Socialist commonwealth (and this is a very big if), they could be left substantially in charge.
Undoubtedly, in some cases concentration has already gone too far for the highest efficiency. There is such a thing as administrative
breakdown from sheer bulk. But the unification intended by Socialism
^
does not rule out decentralization in production. The over-concentra- tion of industries in urban areas, resulting in crowded living condi- tions, bad air and lack of decent recreational facilities, is one of the first things which Socialist planning aims to rectify. The principle to be followed throughout is that of the greatest possible degree of decen- tralization and autonomy consistent with nation-wide co-ordination.
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The final guarantee that local initiative will flourish under Social- ism is that in the last analysis the drawing up and execution of any social-economic plan depends on individuals. The extent to which the beautiful blueprint of a Four- Year Plan is written into concrete material and cultural achievement rests upon the initiative and intelli- gence and energy of the workers and farmers, the technicians and professional people, throughout the length and breadth of America. Without their unceasing co-operation and support every Plan must fail. Hence the Public Relations Section of the National Commission has the vital task of educating every category of the population on the fundamentals of planning and of arousing their enthusiasm concerning the objectives and possibilities of the Four- Year Plans.
It must bring to every individual an understanding of his part in the total planning set-up and the connection between his own function and that of others. And this in itself constitutes one of the outstanding benefits of Socialist planning, since everyone in the community becomes able to see how and why his job fits into the larger scheme of things and to feel a significance and dignity in his work that was seldom present before. In this way central planning for the whole nation brings central planning into the activity of each person, pulling together the conflicting strands of his nature and making of them a potent unity.
Socialist planning, carried out in America in the American way, will present to the citizens of this country the greatest challenge they have ever had. Limited as war planning was in the U. S. and destruc- tive as was its objective, it did show that the theory and practice of nation-wide planning is not something entirely alien to the American genius. It is my firm opinion that under Socialism all the idealism and practical engineering technique for which America is so noted, freed at last from the shackles of the profit system, w^ll have unprec- edented opportunity for fulfillment in projects of almost unlimited scope and grandeur. There will be no lack of tasks to appeal to the imagination and ambition of new generations. And the American people in their boundless energy will sweep forward to conquer new heights of economic and cultural achievement.
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4. Some Objections Answered
With this general view before us of Socialist planning and of how it would operate in the United States, I want to consider spe- cifically some of the more common objections to this new way of handling the affairs of the world.
What I have already said about democratic processes, adminis- trative flexibility and local initiative in a planned economy ought to have made it plain that political dictatorship is by no means a neces- sary part of Socialist planning. Quite contrary to the truth, therefore, is this typical statement made by Mr. Walter Lippmann: "If the social order is to be planned, it has to be directed as it is in war time, and the liberty of private transactions has to give way to regimenta- tion." This line of criticism has gained weight because in Soviet Russia, which is the only nation where Socialist planning functions today, a dictatorship still exists and aggression from abroad unfor- tunately continues to be a grave menace. But with the steady democ- ratization of the U. S. S. R., that dictatorship is gradually passing away. And the constant threat of war, while of course an important factor in Soviet policy, has in no sense been the guiding principle behind the planned economy of the country.
Mr. Lippmann, moreover, instead of acknowledging the obvious fact that the danger of war has enormously handicapped the Soviet Five- Year Plans, maintains the extraordinary thesis that the war danger is what has made any Soviet planning possible and that "when Russia no longer feels the need of mobilization, it will become neces- sary to liquidate the planning authority." Tn§t.ead-.of
undeveloped state of industry in Tsarist Russia and its irrational, uneconomical concentration in a few regions, Lippmann argues that the laying of a heavy industrial base for the Socialist economy and the building of some of it in strategically invulnerable parts of the country demonstrates that the primary objective of Soviet planning has been military and not the improvement of the general standard of life.
Crowning folly of all, in order to show that planning is incom-
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patible with democracy, Mr. Lippmann tells us that "a plan subject to change from month to month or even from year to year is not a plan." Since precisely such flexibility is a basic characteristic of plan- ning, I submit that a comment of this sort could be made only by a person who has forgotten the commonplace planning procedures of daily life, who has ignored most of the extant literature on economic planning and who has been blind to events in Soviet Russia over the last fifteen years. And it is not surprising to learn that Walter Lipp- mann, the smooth and solemn refuter of Socialist economics, has never once bothered to visit the Soviet Union in the entire twenty-two years since the Communist Revolution, though it is his custom to make an annual pilgrimage to the other leading Powers of Europe.
While I propose to take up the whole matter of democracy at length in a later chapter, it is essential to state now that concepts like regimentation and liberty cannot be adequately considered apart from existing economic conditions. Who could be more regimented, forv instance, than those wretched multitudes under Capitalism who are/ condemned through no fault of their own to unemployment P^Afid if Socialist planning really does result in the elimination of depression and unemployment and in an enormous rise in the material and cultural standards of the whole population, then "regimentation" is hardly the correct word to apply to it. For such gains mean a very large increase in the liberty of the masses of the people.
The end of unemployment not only creates a new life for the unemployed, but also puts a quietus on the fear of discharge that haunts the employed. The rise in the standard of living gives millions of workers and farmers and members of the professions a hundred freedoms which they never had before, infinitely enlarging the vistas of their lives and the opportunities of their children. As Mr. Lippmann himself writes in an unguarded moment, "The existence of plenty is a condition of liberty, and multiplies the individual choices." The\ fact is that those capitalist apologists who are forever crying out that \ planning will exterminate freedom are thinking mainly of the unim- peded, godlike freedom of the present leisure class. They are afraid
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it may be curtailed by collectivism ; and so it may. Indeed, "Share the freedom" might be rather effective as a slogan in the campaign for Socialism.
Closely akin to the charge that Socialism means some sort of dicta- torship is the claim that it will bring into power a vast army of gov- ernment bureaucrats who will proceed to boss all of us about and tend to become a self-perpetuating body of slack, corrupt and privileged functionaries. While such an outcome may be theoretically possible, it is not inevitable nor even probable. For one thing, Socialist planning means the establishment of industrial democracy in business enter- prise where private capitalists have hitherto acted like little tsars, hiring and firing, reducing wages and raising prices, restricting and expanding production all at their own sweet profit-motivated will. Then, too, since those elected to office will be dealing with the chief economic as well as political questions of the day, the people will presumably be a good deal more vigilant than at present in keeping abreast of public affairs and checking up on their representatives.
In the sense that any economic system must have the personnel to administer it, every economic system has a bureaucracy. And there is no proof whatsoever that an administrative group working as public servants is any less efficient than such a group working at the direction of private business and constituting a private bureaucracy. Whether character or ability is in question, we should reflect that when the main economic enterprises of the nation are all parts of governmental or some other form of socialized service, the administrators of which are consistently well-paid, the highest talent available will enter that service.
jr Then there will no longer exist the present situation in which a vast majority of the best men and women go into private business because of its greater rewards in terms of money, social prestige and
\sense of power. Today only too often those who have shown out- standing capacity as government servants are lured away by capitalist corporations which then use the experience and energy of such men to fight the Government. This has been particularly true in regard
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to the noble efforts of the capitalists to beat the income tax laws and to circumvent certain government restrictions and regulations imposed on business in the public interest.
In spite, however, of the greater attraction that private business holds at present for average men and women of ambition and capacity, the public administrations in city, state and nation have on the whole done a pretty good job. Who would dream of suggesting, for instance, that we turn back into private hands the local fire departments, the postal service, the building of highways, or the water-supply systems of New York and other cities? And think of the splendid accomplish- ments of the TVA and the WPA; of many city-owned utilities and power plants throughout the country; and of the Port of New York Authority, which has had charge of the construction and administra- tion of the George Washington Bridge across the Hudson River and the Holland and Lincoln tunnels under it.
The fact that during the Great War the American railroads under Government ownership piled up large deficits is often cited as proof that public operation of a great industry is sure to be inefficient. These deficits were due mainly, however, to the Government's high-wage labor policy and to its holding down of railway rates, on behalf of the general war effort, in relation to the rising prices of coal and other materials. The fundamental purpose of the Wilson adminis- tration was, after all, to win the war and not to make a success of the railroads in the usual business sense. This matter of the railroads \ also brings out the point that since governments usually take over weak or failing industries, public ownership and operation often start / off with a heavy handicap and for this reason seldom receive a gen- uinely fair test.
Further objection is offered to public ownership and operation on the ground that government officials cannot be relied upon ethically. Now while it is true that the governments of modern societies have been honey-combed with graft, it is probable that dishonesty and shady dealing in private business have been far worse. At once there leap to mind the names of notorious capitalist crooks of the last decade such as Ivar Kreuger, the Swedish match-king and forger extraor-
SOCIALIST PLANNING FOR ABUNDANCE QI
dinary; Richard Whitney, Wall Street stockbroker and embezzler in the grand manner, and F. Donald Coster-Musica, versatile president of McKesson & Robbins, who juggled the accounts of the big drug company to the tune of $18,000,000.
Most essential of all to remember is that political life takes its color from the dominant economic institutions and practices of the time. Public officials are naturally affected by the prevailing motivations of the era. When making big money is held up as the big object of \ life, government functionaries as well as private capitalists are likely / to nourish high pecuniary ambitions and not be too particular how' they fulfill them. Corruption in politics is a function of the corrupt capitalist system. Almost always when a public official goes wrong, there is a private businessman on the other end of the transaction offering an outright bribe or some other form of speedy enrichment. The scandals of the Harding Administration, for example, were not due merely to weak and faithless officials; important oil interests represented by unscrupulous businessmen, with their bribes and little black satchels and all the rest, played an indispensable role.
As Lincoln StefFens, the dean of American muckrakers, discovered \ over and over again, the badness of the bad men in municipal govern- j ment, of the bosses and the lesser grafters, always in the end came/ down to "the system" rather than to the individual. And whenever he pushed his investigations toward the ultimate roots of the trouble, he ran into the sullen opposition of vested business interests frightened to death that they themselves would be exposed. Even reform admin- istrations are able to accomplish little of a permanent nature. Steffens sums it up: "The same privileged interests which controlled the old 'rascals' find ways to influence, moderate, and gradually to control the new reformers, and things go on as before." The peculiarly^ American institution of "rackets" also has a definite connection with \ our faulty economic order. As Thurman W. Arnold, Assistant United States Attorney General, states: "The gangster with a racket / is an answer to competitive conditions in which current ideals refuse/ to permit sensible organization."
Yet capitalist democracy, on those brief occasions when it becomes
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thoroughly aroused over government by thieves and thugs, can go quite far in cleaning house, as the accomplishments of Mayor LaGuar- dia and District Attorney Dewey in New York well show. Their work gives a hint of what an alert and determined Socialist adminis- tration would do. I do not claim that Socialism will completely put an end to graft ; but by mercilessly prosecuting crooks of every variety, by eliminating permanently the private business elements that do so much of the grafting, by ensuring good pay to public officials, by steadily extending the civil service system and by changing the moral atmosphere of economic and political life, it will make corruption in government both more difficult to get away with and less tempting psychologically. In so far as Socialism discourages and rules out dis- honesty, it will of course increase the efficiency of government admin- istration. One of the more important but less obvious reasons for this result is that today much of the red-tape in government services is due to the fact that they are organized on the basis of a lot of infuriating checks and balances designed primarily for the prevention of graft.
Another criticism of Socialist planning is that there is no man or group of men in a nation wise enough to carry it through. Says Dr. Benjamin M. Anderson, Jr., formerly of the Chase National Bank: "If a government of a collective system undertakes to regulate the business of the country as a whole, and to guide and control produc- ,tion, there is required a central brain of such vast power that no human being who has yet lived, or can be expected to live, can supply it." This is of course a naive caricature of the planned economy, since no one ever proposed that one man assume such an impossible burden. The fact is that the "central brain" for planning is the collective brain of the entire country. In other words, it is millions and millions of individual brains functioning through the multifarious planning com- missions and attaining final co-ordination in the National Planning Commission and the Government.
Returning to Walter Lippmann, we find him arguing that plan- ning cannot possibly operate in an economy of abundance as distinct from an economy of scarcity and that in America "the sheer com-
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plexity of the industrial system . . . would baffle any set of official planners who set out to direct it." What Lippmann really does^ ^' • in this statement, it seems to me, is to throw up his hands in de- £WlllX^ spair before the mentally overpowering chaos he sees around him \ at present. And my comment on his capitulation is that precisely because the economic order has become so terribly complicated in the / United States and other countries of a high technical development, I planning is now the most vital need of our times. The old capitalist'' methods become more and more disastrous as the economic repercus- sions of events in one area tend increasingly to spread throughout a country and the repercussions in one country throughout the world.
Mr. Lippmann buttresses his thesis by reference to Soviet Russia. Thus he writes that "what they may be able to do in a nation which has no capitalistic inheritance certainly provides no analogy for the United States, where the most highly developed Capitalism the world has ever seen is a going concern. For Russia is still at a stage in the development of manufacturing industries where there is not enough of anything, where the demand outruns any visible supply, where, in short, no plan to increase production can be very wrong." Yet the indubitable fact is that the farther the Soviet Russians go in building up their economy, which is no longer exactly simple, the more smoothly and successfully does social-economic planning function. And as\ Lippmann himself would have to admit, there are very few, if any, j high-grade industrial products even in America which have outrun/ the actual needs of the masses of the population.
The further assertion is made by Mr. Lippmann that "the more varied are the products of an industrial order the less possible it becomes to deal with it as a planned economy." Obviously such a statement conflicts with the very idea of Socialist planning, since the chief productive aim of this new system is that everyone should have an abundance of all sorts of personal possessions, including so-called -luxuries. One of the most common misunderstandings about Socialism is the idea that it rules out the owning of personal property such as houses and automobiles, furniture and fountain pens. The point is that personally owned property must be for consumption, for use, for
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enjoyment. Only private property in the means of production and distribution is collectivized under Socialism; intimate personal things are not and never will be.
Mr. Lippmann's opinion to the contrary notwithstanding, the con- sumption goods which a planned economy turns out will be as dif- ferent in quality and design as the consumer wishes. One of the main duties of a National Planning Commission and its country-wide agen- cies is to keep informed on the needs and desires of the consumers. And as I have already pointed out, the Commission has a special Section on Consumers' Needs which will concentrate on this task. This Section will no doubt make special tests of consumers' habits and send out questionnaires on a large scale to the public, as many capitalist businesses and magazines do already. Occasionally, the Planning Com- mission would, I am sure, gravely over-estimate or under-estimate demand; in fact, almost all of its estimates would have to be approxi- mate rather than exact. This means that undoubtedly a certain pro- portion of consumers' goods would be wasted. Some waste in the mechanics of distribution, however, is inevitable under any economic system; under Socialism it would be cut down to a minimum and would not be a very serious matter.
Furthermore, so far as quality and variety are concerned, with So- cialist planning producing for use and beauty instead of profit, there is /hot the same pressure for utilizing cheap and non-durable materials Sajid neglecting aesthetic considerations. Harold Loeb, one of Amer- ica's most able economists, claims that the competition for cheapness which Capitalism makes inevitable "is particularly keen in clothing, utensils, household furnishing, and speculative building, and is char- acteristic of nearly all mass-production lines. A very small addition to the cost of the cloth, or of the plumbing, would result in an article likely to withstand a great deal more wear and tear. Unfortunately, under our present system the additional life that might be built into consumer goods, at so slight an additional cost, would in no way benefit the manufacturer. His pecuniary interest lies in selling a sec- ond article to replace the one that has been worn out."
Another of our more progressive economists, George Soule, reminds
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us that "A certain amount of standardization is not incompatible with useful variety and freedom of choice. We should not suffer if we did not have to choose between hundreds of brands of canned fruits or vegetables whose relative merits we cannot know without laboratory experiments. . . . The American public is not impoverished because its choice of automobiles is now limited to a few standard makes in each price range, nor is a rather strict planning and control in the manufacture of these cars incompatible with a satisfactory variety in style and color." In some fields, indeed, greater standardization, which will permit the economies of mass production, is a crying need. The whole sphere of housing, for example, is an outstanding case in point.
Naturally enough, errors will be made under Socialist planning, particularly at the start. And I hope I have not given the impression that I think a planned economy will result either immediately or in the long run in a final solution of all our problems. Mankind is always going to have plenty of stiff problems to keep it occupied. What Social- ist planning does is to solve permanently some of our basic economic difficulties and to lift thereby all our other problems onto a higher level. Critics of Socialism, and sometimes its advocates, are prone to\ overlook the fact that a number of undesirable things are bound to I remain in some form or other under any economic system whatsoever. / Thus in our planned society there will surely be a certain amount of favoritism ; personal "pull" will continue to play a part in the obtain- ing of jobs. There will of course be leaders who achieve the more important positions and also-rans who hover around the bottom and bite their nails in jealousy. There will be some dishonesty and some red-tape. But a slight residue of such well-known human traits could not be a very cogent reason for condemning Socialism.
Certainly our planners will have to be exceedingly stupid and per- verse if they ever achieve mistakes as ruinous as the Great War and the Great Depression. And I cannot help thinking that critics like Messrs. Anderson and Lippmann are of the type who in the early\ days of the American Republic would have opposed the establishment \ of a United States Supreme Court on the ground that no group of I men were wise enough to lay down the law for the entire country./
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Pursuing this thought further, I would say that the great issue facing America today is whether or not we are to have, as it were, a Supreme Court of Economics in the form of a democratically controlled National Planning Commission.
In the address from which I have already quoted, Dr. Anderson states that, "Our present system relies upon the unconscious, auto- matic functioning of the markets." Precisely! And we all know, both by reading history and experiencing the present, what calamitous results this "unconscious, automatic functioning" has brought upon the American people and the human race in general. We all know how tragically the countless splendid individual intelligences and abilities of mankind keep thwarting one another in the chaotic anarchy of unplanned Capitalism. Socialist planning with its collective coA ordination would release these now frustrated intelligences and abili- ties. It means just the opposite of what Dr. Anderson recommends in defense of Capitalism. In short, Socialist planning means the conscious, purposeful, non-automatic, unceasing functioning of the great com- munity mind on behalf of the common j^ood. It means embodying in human affairs what philosophers have called the life of reason. Thus Socialism not only appeals to reason, but also promises to give the method of reason far larger opportunities than ever before in history./
5. International Planning
Socialist planning can never be considered complete until, with the U. S. A. and all other nations closely co-operating, it goes into effect on an international scale as the basic foundation of that great and peaceful world society which, long an ideal in the minds of statesmen, has become an acute necessity for our age.
Looking for a moment at the situation under Capitalism, we find that just as a species of planning can take place within nations under the present system, so also there can be certain forms of international planning within its framework. The most far-reaching example of capitalist international planning yet known was in the work of the Allied Maritime Transport Council, which during the last year of the Great War carried out a program for co-ordinating the shipping
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of England, France, Italy and the United States. In peace times, too, there have been capitalist attempts at international planning. These have usually taken the form of "cartels" or other special agreements in which steel manufacturers, oil producers, rubber planters, sugar growers and other varieties of businessmen from different countries extend internationally the well-known capitalist device of fixing prices, curtailing production and restricting competition among themselves for the purpose of maintaining or restoring profit markets.
Socialism's goal of world planning has in view very different methods and very different ends. When the same general principles of national planning that I have proposed for America are in effect over a sufficient proportion of the earth, Socialism envisages a series of Twenty- Year World Plans that will immeasurably raise the living standards of all humanity and sweep unemployment, depression and war off the face of the globe. This would entail, besides the establish- ment of National Planning Commissions in each country, an Inter- national Planning Commission with headquarters at Geneva or some other appropriate city. There would also be Continental Planning Commissions for North America, South America, Europe, Asia, Africa and Australia; and, wherever necessary, sub-divisions of these cov- ering several countries. It is quite possible that part of the mechanism of international planning could be worked out through a greatly revamped League of Nations, which, with its constituent members Socialist instead of capitalist-imperialist nations, would be a very different organization from what it is today.
All this, I admit, is looking rather far into the future, and I do not intend to be so presumptuous as to prophecy the details of the First Twenty- Year World Plan. A concrete illustration, however, of how international Socialist planning might function within the next five or ten years is provided by imagining either Germany or Japan, or both, becoming Socialist commonwealths. In the latter eventuality they could immediately start to co-operate closely with the existing Soviet planning system. Germany and Japan, both of which lack foodstuffs and raw materials, would receive a proper proportion of these from the resources of the present U. S. S. R. in exchange for their excellent
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finished goods. And these two new Socialist units would proceed to function in the production of abundance for a vastly enlarged planning area. The most vexing economic problems of Germany and Japan would quickly advance a long way toward solution. So, instead of attempting to solve their difficulties by foreign aggression, these two nations would obtain peacefully far more than they could gain through the most successful war.
In the Western Hemisphere, if the United States, with its immense prestige, power and economic potentialities, were to adopt Socialist planning, it would probably not be long before other countries in North and South America followed suit. Mexico in particular, where con- siderable strides in planning have already been made, might speedily become desirous of co-operating with its northern neighbor in setting up a Socialist planning area of continental proportions.
But whatever may be the precise mode in which true international planning develops, the radical answer to the faint-hearted and timid- minded of these times is that modern men have the capacity to plan — and plan well — not only for a nation as a whole, but also ultimately for the world as a whole.
Socialism and Socialist planning will put a final end to the eco- nomics and politics of drift.