{"collection":"philosophy-ethics","full_text_available":true,"graph_url":"https://unchartedknowledge.5gfusion.net/v2/api/page/gutenberg_33741/graph","html_url":"https://unchartedknowledge.5gfusion.net/v2/page/gutenberg_33741","id":"gutenberg_33741","license":"Public Domain (US)","rights_basis":"gutenberg_metadata_copyright_false","source":"gutenberg","source_url":"https://www.gutenberg.org/ebooks/33741","summary":null,"tags":["Category: Philosophy & Ethics","Category: Politics","Category: Sociology","Economics","Industries","Social problems"],"text":"Produced by Al Haines\n\n\n\n\n\n\n\n\n\nTHE ACQUISITIVE SOCIETY\n\n\n\nBY\n\nR. H. TAWNEY\n\n\nFELLOW OF BALLIOL COLLEGE, OXFORD; LATE MEMBER\n  OF THE COAL INDUSTRY COMMISSION\n\n\n\n\nNEW YORK\n\nHARCOURT, BRACE AND COMPANY\n\n\n\n\nCOPYRIGHT, 1920, BY\n\nHARCOURT, BRACE AND HOWE, INC.\n\n\n\nPRINTED IN THE U. S. A. BY\n\nTHE QUINN & BODEN COMPANY\n\nRAHWAY, N. J.\n\n\n\n\nCONTENTS\n\n\nCHAPTER\n\n    I  INTRODUCTORY\n   II  RIGHTS AND FUNCTIONS\n  III  THE ACQUISITIVE SOCIETY\n   IV  THE NEMESIS OF INDUSTRIALISM\n    V  PROPERTY AND CREATIVE WORK\n   VI  THE FUNCTIONAL SOCIETY\n  VII  INDUSTRY AS A PROFESSION\n VIII  THE \"VICIOUS CIRCLE\"\n   IX  THE CONDITION OF EFFICIENCY\n    X  THE POSITION OF THE BRAIN WORKER\n   XI  PORRO UNUM NECESSARIUM\n\n\n\n\n_The author desires to express his acknowledgments to the Editor of\nthe_ Hibbert Journal _for permission to reprint an article which\nappeared in it_.\n\n\n\n\n{1}\n\nTHE ACQUISITIVE SOCIETY\n\n\nI\n\nINTRODUCTORY\n\nIt is a commonplace that the characteristic virtue of Englishmen is\ntheir power of sustained practical activity, and their characteristic\nvice a reluctance to test the quality of that activity by reference to\nprinciples.  They are incurious as to theory, take fundamentals for\ngranted, and are more interested in the state of the roads than in\ntheir place on the map.  And it might fairly be argued that in ordinary\ntimes that combination of intellectual tameness with practical energy\nis sufficiently serviceable to explain, if not to justify, the\nequanimity with which its possessors bear the criticism of more\nmentally adventurous nations.  It is the mood of those who have made\ntheir bargain with fate and are content to take what it offers without\nre-opening the deal.  It leaves the mind free to concentrate\nundisturbed upon profitable activities, because it is not distracted by\na taste for unprofitable speculations.  Most generations, it might be\nsaid, walk in a path which they neither make, nor discover, but accept;\nthe main thing is that they should march.  The blinkers worn by\nEnglishmen enable them to trot all the more steadily along the beaten\n{2} road, without being disturbed by curiosity as to their destination.\n\nBut if the medicine of the constitution ought not to be made its daily\nfood, neither can its daily food be made its medicine.  There are times\nwhich are not ordinary, and in such times it is not enough to follow\nthe road.  It is necessary to know where it leads, and, if it leads\nnowhere, to follow another.  The search for another involves\nreflection, which is uncongenial to the bustling people who describe\nthemselves as practical, because they take things as they are and leave\nthem as they are.  But the practical thing for a traveler who is\nuncertain of his path is not to proceed with the utmost rapidity in the\nwrong direction: it is to consider how to find the right one.  And the\npractical thing for a nation which has stumbled upon one of the\nturning-points of history is not to behave as though nothing very\nimportant were involved, as if it did not matter whether it turned to\nthe right or to the left, went up hill or down dale, provided that it\ncontinued doing with a little more energy what it has done hitherto;\nbut to consider whether what it has done hitherto is wise, and, if it\nis not wise, to alter it.  When the broken ends of its industry, its\npolitics, its social organization, have to be pieced together after a\ncatastrophe, it must make a decision; for it makes a decision even if\nit refuses to decide.  If it is to make a decision which will wear, it\nmust travel beyond the philosophy momentarily in favor with the\nproprietors of its newspapers.  Unless it is to move with the energetic\nfutility of a squirrel in a revolving cage, it must have a clear\napprehension both of the {3} deficiency of what is, and of the\ncharacter of what ought to be.  And to obtain this apprehension it must\nappeal to some standard more stable than the momentary exigencies of\nits commerce or industry or social life, and judge them by it.  It\nmust, in short, have recourse to Principles.\n\n\nSuch considerations are, perhaps, not altogether irrelevant at a time\nwhen facts have forced upon Englishmen the reconsideration of their\nsocial institutions which no appeal to theory could induce them to\nundertake.  An appeal to principles is the condition of any\nconsiderable reconstruction of society, because social institutions are\nthe visible expression of the scale of moral values which rules the\nminds of individuals, and it is impossible to alter institutions\nwithout altering that moral valuation.  Parliament, industrial\norganizations, the whole complex machinery through which society\nexpresses itself, is a mill which grinds only what is put into it, and\nwhen nothing is put into it grinds air.  There are many, of course, who\ndesire no alteration, and who, when it is attempted, will oppose it.\nThey have found the existing economic order profitable in the past.\nThey desire only such changes as will insure that it is equally\nprofitable in the future.  _Quand le Roi avait bu, la Pologne etait\nivre_.  They are genuinely unable to understand why their countrymen\ncannot bask happily by the fire which warms themselves, and ask, like\nthe French farmer-general:--\"When everything goes so happily, why\ntrouble to change it?\"  Such persons are to be pitied, for they lack\nthe social quality which is {4} proper to man.  But they do not need\nargument; for Heaven has denied them one of the faculties required to\napprehend it.\n\nThere are others, however, who are conscious of the desire for a new\nsocial order, but who yet do not grasp the implications of their own\ndesire.  Men may genuinely sympathize with the demand for a radical\nchange.  They may be conscious of social evils and sincerely anxious to\nremove them.  They may set up a new department, and appoint new\nofficials, and invent a new name to express their resolution to effect\nsomething more drastic than reform, and less disturbing than\nrevolution.  But unless they will take the pains, not only to act, but\nto reflect, they end by effecting nothing.  For they deliver themselves\nbound to those who think they are practical, because they take their\nphilosophy so much for granted as to be unconscious of its\nimplications, and directly they try to act, that philosophy re-asserts\nitself, and serves as an overruling force which presses their action\nmore deeply into the old channels.  \"Unhappy man that I am; who shall\ndeliver me from the body of this death?\"  When they desire to place\ntheir economic life on a better foundation, they repeat, like parrots,\nthe word \"Productivity,\" because that is the word that rises first in\ntheir minds; regardless of the fact that productivity is the foundation\non which it is based already, that increased productivity is the one\ncharacteristic achievement of the age before the war, as religion was\nof the Middle Ages or art of classical Athens, and that it is precisely\nin the century which has seen the greatest increase in {5} productivity\nsince the fall of the Roman Empire that economic discontent has been\nmost acute.  When they are touched by social compunction, they can\nthink of nothing more original than the diminution of poverty, because\npoverty, being the opposite of the riches which they value most, seems\nto them the most terrible of human afflictions.  They do not understand\nthat poverty is a symptom and a consequence of social disorder, while\nthe disorder itself is something at once more fundamental and more\nincorrigible, and that the quality in their social life which causes it\nto demoralize a few by excessive riches, is also the quality which\ncauses it to demoralize many by excessive poverty.\n\n\"But increased production is important.\"  Of course it is!  That plenty\nis good and scarcity evil--it needs no ghost from the graves of the\npast five years to tell us that.  But plenty depends upon co-operative\neffort, and co-operation upon moral principles.  And moral principles\nare what the prophets of this dispensation despise.  So the world\n\"continues in scarcity,\" because it is too grasping and too\nshort-sighted to seek that \"which maketh men to be of one mind in a\nhouse.\"  The well-intentioned schemes for social reorganization put\nforward by its commercial teachers are abortive, because they endeavor\nto combine incompatibles, and, if they disturb everything, settle\nnothing.  They are like a man who, when he finds that his shoddy boots\nwear badly, orders a pair two sizes larger instead of a pair of good\nleather, or who makes up for putting a bad sixpence in the plate on\nSunday by putting in a bad shilling the next.  And when their fit of\nfeverish energy {6} has spent itself, and there is nothing to show for\nit except disillusionment, they cry that reform is impracticable, and\nblame human nature, when what they ought to blame is themselves.\n\nYet all the time the principles upon which industry should be based are\nsimple, however difficult it may be to apply them; and if they are\noverlooked it is not because they are difficult, but because they are\nelementary.  They are simple because industry is simple.  An industry,\nwhen all is said, is, in its essence, nothing more mysterious than a\nbody of men associated, in various degrees of competition and\nco-operation, to win their living by providing the community with some\nservice which it requires.  Organize it as you will, let it be a group\nof craftsmen laboring with hammer and chisel, or peasants plowing their\nown fields, or armies of mechanics of a hundred different trades\nconstructing ships which are miracles of complexity with machines which\nare the climax of centuries of invention, its function is service, its\nmethod is association.  Because its function is service, an industry as\na whole has rights and duties towards the community, the abrogation of\nwhich involves privilege.  Because its method is association, the\ndifferent parties within it have rights and duties towards each other;\nand the neglect or perversion of these involves oppression.\n\nThe conditions of a right organization of industry are, therefore,\npermanent, unchanging, and capable of being apprehended by the most\nelementary intelligence, provided it will read the nature of its\ncountrymen in the large outlines of history, not in the bloodless {7}\nabstractions of experts.  The first is that it should be subordinated\nto the community in such a way as to render the best service\ntechnically possible, that those who render no service should not be\npaid at all, because it is of the essence of a function that it should\nfind its meaning in the satisfaction, not of itself, but of the end\nwhich it serves.  The second is that its direction and government\nshould be in the hands of persons who are responsible to those who are\ndirected and governed, because it is the condition of economic freedom\nthat men should not be ruled by an authority which they cannot control.\nThe industrial problem, in fact, is a problem of right, not merely of\nmaterial misery, and because it is a problem of right it is most acute\namong those sections of the working classes whose material misery is\nleast.  It is a question, first of Function, and secondly of Freedom.\n\n\n\n\n{8}\n\nII\n\nRIGHTS AND FUNCTIONS\n\nA function may be defined as an activity which embodies and expresses\nthe idea of social purpose.  The essence of it is that the agent does\nnot perform it merely for personal gain or to gratify himself, but\nrecognizes that he is responsible for its discharge to some higher\nauthority.  The purpose of industry is obvious.  It is to supply man\nwith things which are necessary, useful or beautiful, and thus to bring\nlife to body or spirit.  In so far as it is governed by this end, it is\namong the most important of human activities.  In so far as it is\ndiverted from it, it may be harmless, amusing, or even exhilarating to\nthose who carry it on, but it possesses no more social significance\nthan the orderly business of ants and bees, the strutting of peacocks,\nor the struggles of carnivorous animals over carrion.\n\nMen have normally appreciated this fact, however unwilling or unable\nthey may have been to act upon it; and therefore from time to time, in\nso far as they have been able to control the forces of violence and\ngreed, they have adopted various expedients for emphasizing the social\nquality of economic activity.  It is not easy, however, to emphasize it\neffectively, because to do so requires a constant effort of will,\nagainst which egotistical instincts are in rebellion, and because, if\nthat will is to prevail, it must be embodied in some social {9} and\npolitical organization, which may itself become so arbitrary,\ntyrannical and corrupt as to thwart the performance of function instead\nof promoting it.  When this process of degeneration has gone far, as in\nmost European countries it had by the middle of the eighteenth century,\nthe indispensable thing is to break the dead organization up and to\nclear the ground.  In the course of doing so, the individual is\nemancipated and his rights are enlarged; but the idea of social purpose\nis discredited by the discredit justly attaching to the obsolete order\nin which it is embodied.\n\nIt is not surprising, therefore, that in the new industrial societies\nwhich arose on the ruins of the old regime the dominant note should\nhave been the insistence upon individual rights, irrespective of any\nsocial purpose to which their exercise contributed.  The economic\nexpansion which concentrated population on the coal-measures was, in\nessence, an immense movement of colonization drifting from the south\nand east to the north and west; and it was natural that in those\nregions of England, as in the American settlements, the characteristic\nphilosophy should be that of the pioneer and the mining camp.  The\nchange of social quality was profound.  But in England, at least, it\nwas gradual, and the \"industrial revolution,\" though catastrophic in\nits effects, was only the visible climax of generations of subtle moral\nchange.  The rise of modern economic relations, which may be dated in\nEngland from the latter half of the seventeenth century, was coincident\nwith the growth of a political theory which replaced the conception of\npurpose by that of mechanism.  During a great part of history men had\n{10} found the significance of their social order in its relation to\nthe universal purposes of religion.  It stood as one rung in a ladder\nwhich stretched from hell to Paradise, and the classes who composed it\nwere the hands, the feet, the head of a corporate body which was itself\na microcosm imperfectly reflecting a larger universe.  When the\nReformation made the Church a department of the secular government, it\nundermined the already enfeebled spiritual forces which had erected\nthat sublime, but too much elaborated, synthesis.  But its influence\nremained for nearly a century after the roots which fed it had been\nsevered.  It was the atmosphere into which men were born, and from\nwhich, however practical, or even Machiavellian, they could not easily\ndisengage their spirits.  Nor was it inconvenient for the new\nstatecraft to see the weight of a traditional religious sanction added\nto its own concern in the subordination of all classes and interests to\nthe common end, of which it conceived itself, and during the greater\npart of the sixteenth century was commonly conceived, to be the\nguardian.  The lines of the social structure were no longer supposed to\nreproduce in miniature the plan of a universal order.  But common\nhabits, common traditions and beliefs, common pressure from above gave\nthem a unity of direction, which restrained the forces of individual\nvariation and lateral expansion; and the center towards which they\nconverged, formerly a Church possessing some of the characteristics of\na State, was now a State that had clothed itself with many of the\nattributes of a Church.\n\nThe difference between the England of Shakespeare, {11} still visited\nby the ghosts of the Middle Ages, and the England which merged in 1700\nfrom the fierce polemics of the last two generations, was a difference\nof social and political theory even more than of constitutional and\npolitical arrangements.  Not only the facts, but the minds which\nappraised them, were profoundly modified.  The essence of the change\nwas the disappearance of the idea that social institutions and economic\nactivities were related to common ends, which gave them their\nsignificance and which served as their criterion.  In the eighteenth\ncentury both the State and the Church had abdicated that part of the\nsphere which had consisted in the maintenance of a common body of\nsocial ethics; what was left of it was repression of a class, not the\ndiscipline of a nation.  Opinion ceased to regard social institutions\nand economic activity as amenable, like personal conduct, to moral\ncriteria, because it was no longer influenced by the spectacle of\ninstitutions which, arbitrary, capricious, and often corrupt in their\npractical operation, had been the outward symbol and expression of the\nsubordination of life to purposes transcending private interests.  That\npart of government which had been concerned with social administration,\nif it did not end, became at least obsolescent.  For such democracy as\nhad existed in the Middle Ages was dead, and the democracy of the\nRevolution was not yet born, so that government passed into the\nlethargic hand of classes who wielded the power of the State in the\ninterests of an irresponsible aristocracy.  And the Church was even\nmore remote from the daily life of mankind than the State.\nPhilanthropy abounded; but religion, {12} once the greatest social\nforce, had become a thing as private and individual as the estate of\nthe squire or the working clothes of the laborer.  There were special\ndispensations and occasional interventions, like the acts of a monarch\nwho reprieved a criminal or signed an order for his execution.  But\nwhat was familiar, and human and lovable--what was Christian in\nChristianity had largely disappeared.  God had been thrust into the\nfrigid altitudes of infinite space.  There was a limited monarchy in\nHeaven, as well as upon earth.  Providence was the spectator of the\ncurious machine which it had constructed and set in motion, but the\noperation of which it was neither able nor willing to control.  Like\nthe occasional intervention of the Crown in the proceedings of\nParliament, its wisdom was revealed in the infrequency of its\ninterference.\n\nThe natural consequence of the abdication of authorities which had\nstood, however imperfectly, for a common purpose in social\norganization, was the gradual disappearance from social thought of the\nidea of purpose itself.  Its place in the eighteenth century was taken\nby the idea of mechanism.  The conception of men as united to each\nother, and of all mankind as united to God, by mutual obligations\narising from their relation to a common end, which vaguely conceived\nand imperfectly realized, had been the keystone holding together the\nsocial fabric, ceased to be impressed upon men's minds, when Church and\nState withdrew from the center of social life to its circumference.\nWhat remained when the keystone of the arch was removed, was private\nrights and private interests, the materials of a society rather {13}\nthan a society itself.  These rights and interests were the natural\norder which had been distorted by the ambitions of kings and priests,\nand which emerged when the artificial super-structure disappeared,\nbecause they were the creation, not of man, but of Nature herself.\nThey had been regarded in the past as relative to some public end,\nwhether religion or national welfare.  Henceforward they were thought\nto be absolute and indefeasible, and to stand by their own virtue.\nThey were the ultimate political and social reality; and since they\nwere the ultimate reality, they were not subordinate to other aspects\nof society, but other aspects of society were subordinate to them.\n\nThe State could not encroach upon these rights, for the State existed\nfor their maintenance.  They determined the relation of classes, for\nthe most obvious and fundamental of all rights was property--property\nabsolute and unconditioned--and those who possessed it were regarded as\nthe natural governors of those who did not.  Society arose from their\nexercise, through the contracts of individual with individual.  It\nfulfilled its object in so far as, by maintaining contractual freedom,\nit secured full scope for their unfettered exercise.  It failed in so\nfar as, like the French monarchy, it overrode them by the use of an\narbitrary authority.  Thus conceived, society assumed something of the\nappearance of a great joint-stock company, in which political power and\nthe receipt of dividends were justly assigned to those who held the\nmost numerous shares.  The currents of social activity did not converge\nupon common ends, but were dispersed through a multitude of channels,\n{14} created by the private interests of the individuals who composed\nsociety.  But in their very variety and spontaneity, in the very\nabsence of any attempt to relate them to a larger purpose than that of\nthe individual, lay the best security of its attainment.  There is a\nmysticism of reason as well as of emotion, and the eighteenth century\nfound, in the beneficence of natural instincts, a substitute for the\nGod whom it had expelled from contact with society, and did not\nhesitate to identify them.\n\n  \"Thus God and nature planned the general frame\n  And bade self-love and social be the same.\"\n\n\nThe result of such ideas in the world of practice was a society which\nwas ruled by law, not by the caprice of Governments, but which\nrecognized no moral limitation on the pursuit by individuals of their\neconomic self-interest.  In the world of thought, it was a political\nphilosophy which made rights the foundation of the social order, and\nwhich considered the discharge of obligations, when it considered it at\nall, as emerging by an inevitable process from their free exercise.\nThe first famous exponent of this philosophy was Locke, in whom the\ndominant conception is the indefeasibility of private rights, not the\npre-ordained harmony between private rights and public welfare.  In the\ngreat French writers who prepared the way for the Revolution, while\nbelieving that they were the servants of an enlightened absolutism,\nthere is an almost equal emphasis upon the sanctity of rights and upon\nthe infallibility of the {15} alchemy by which the pursuit of private\nends is transmuted into the attainment of public good.  Though their\nwritings reveal the influence of the conception of society as a\nself-adjusting mechanism, which afterwards became the most\ncharacteristic note of the English individualism, what the French\nRevolution burned into the mind of Europe was the former not the\nlatter.  In England the idea of right had been negative and defensive,\na barrier to the encroachment of Governments.  The French leapt to the\nattack from trenches which the English had been content to defend, and\nin France the idea became affirmative and militant, not a weapon of\ndefense, but a principle of social organization.  The attempt to\nrefound society upon rights, and rights springing not from musty\ncharters, but from the very nature of man himself, was at once the\ntriumph and the limitation of the Revolution.  It gave it the\nenthusiasm and infectious power of religion.\n\nWhat happened in England might seem at first sight to have been\nprecisely the reverse.  English practical men, whose thoughts were\npitched in a lower key, were a little shocked by the pomp and\nbrilliance of that tremendous creed.  They had scanty sympathy with the\nabsolute affirmations of France.  What captured their imagination was\nnot the right to liberty, which made no appeal to their commercial\ninstincts, but the expediency of liberty, which did; and when the\nRevolution had revealed the explosive power of the idea of natural\nright, they sought some less menacing formula.  It had been offered\nthem first by Adam Smith and his precursors, who showed how the\nmechanism of economic life {16} converted \"as with an invisible hand,\"\nthe exercise of individual rights into the instrument of public good.\nBentham, who despised metaphysical subtleties, and thought the\nDeclaration of the Rights of Man as absurd as any other dogmatic\nreligion, completed the new orientation by supplying the final\ncriterion of political institutions in the principle of Utility.\nHenceforward emphasis was transferred from the right of the individual\nto exercise his freedom as he pleased to the expediency of an\nundisturbed exercise of freedom to society.\n\nThe change is significant.  It is the difference between the universal\nand equal citizenship of France, with its five million peasant\nproprietors, and the organized inequality of England established\nsolidly upon class traditions and class institutions; the descent from\nhope to resignation, from the fire and passion of an age of illimitable\nvistas to the monotonous beat of the factory engine, from Turgot and\nCondorcet to the melancholy mathematical creed of Bentham and Ricardo\nand James Mill.  Mankind has, at least, this superiority over its\nphilosophers, that great movements spring from the heart and embody a\nfaith; not the nice adjustments of the hedonistic calculus.  So in the\nname of the rights of property France abolished in three years a great\nmass of property rights which, under the old regime had robbed the\npeasant of part of the produce of his labor, and the social\ntransformation survived a whole world of political changes.  In England\nthe glad tidings of democracy were broken too discreetly to reach the\nears of the hind in the furrow or the shepherd on the hill; {17} there\nwere political changes without a social transformation.  The doctrine\nof Utility, though trenchant in the sphere of politics, involved no\nconsiderable interference with the fundamentals of the social fabric.\nIts exponents were principally concerned with the removal of political\nabuses and legal anomalies.  They attacked sinecures and pensions and\nthe criminal code and the procedure of the law courts.  But they\ntouched only the surface of social institutions.  They thought it a\nmonstrous injustice that the citizen should pay one-tenth of his income\nin taxation to an idle Government, but quite reasonable that he should\npay one-fifth of it in rent to an idle landlord.\n\nThe difference, neverthelesss, was one of emphasis and expression, not\nof principle.  It mattered very little in practice whether private\nproperty and unfettered economic freedom were stated, as in France, to\nbe natural rights, or whether, as in England, they were merely assumed\nonce for all to be expedient.  In either case they were taken for\ngranted as the fundamentals upon which social organization was to be\nbased, and about which no further argument was admissible.  Though\nBentham argued that rights were derived from utility, not from nature,\nhe did not push his analysis so far as to argue that any particular\nright was relative to any particular function, and thus endorsed\nindiscriminately rights which were not accompanied by service as well\nas rights which were.  While eschewing, in short, the phraseology of\nnatural rights, the English Utilitarians retained something not unlike\nthe substance of them.  For they assumed that private property in {18}\nland, and the private ownership of capital, were natural institutions,\nand gave them, indeed, a new lease of life, by proving to their own\nsatisfaction that social well-being must result from their continued\nexercise.  Their negative was as important as their positive teaching.\nIt was a conductor which diverted the lightning.  Behind their\npolitical theory, behind the practical conduct, which as always,\ncontinues to express theory long after it has been discredited in the\nworld of thought, lay the acceptance of absolute rights to property and\nto economic freedom as the unquestioned center of social organization.\n\nThe result of that attitude was momentous.  The motive and inspiration\nof the Liberal Movement of the eighteenth century had been the attack\non Privilege.  But the creed which had exorcised the specter of\nagrarian feudalism haunting village and _chateau_ in France, was\nimpotent to disarm the new ogre of industrialism which was stretching\nits limbs in the north of England.  When, shorn of its splendors and\nillusions, liberalism triumphed in England in 1832, it carried without\ncriticism into the new world of capitalist industry categories of\nprivate property and freedom of contract which had been forged in the\nsimpler economic environment of the pre-industrial era.  In England\nthese categories are being bent and twisted till they are no longer\nrecognizable, and will, in time, be made harmless.  In America, where\nnecessity compelled the crystallization of principles in a\nconstitution, they have the rigidity of an iron jacket.  The\nmagnificent formulae in which a society of farmers {19} and master\ncraftsmen enshrined its philosophy of freedom are in danger of becoming\nfetters used by an Anglo-Saxon business aristocracy to bind insurgent\nmovements on the part of an immigrant and semi-servile proletariat.\n\n\n\n\n{20}\n\nIII\n\nTHE ACQUISITIVE SOCIETY\n\nThis doctrine has been qualified in practice by particular limitations\nto avert particular evils and to meet exceptional emergencies.  But it\nis limited in special cases precisely because its general validity is\nregarded as beyond controversy, and, up to the eve of the present war,\nit was the working faith of modern economic civilization.  What it\nimplies is, that the foundation of society is found, not in functions,\nbut in rights; that rights are not deducible from the discharge of\nfunctions, so that the acquisition of wealth and the enjoyment of\nproperty are contingent upon the performances of services, but that the\nindividual enters the world equipped with rights to the free disposal\nof his property and the pursuit of his economic self-interest, and that\nthese rights are anterior to, and independent of, any service which he\nmay render.  True, the service of society will, in fact, it is assumed,\nresult from their exercise.  But it is not the primary motive and\ncriterion of industry, but a secondary consequence, which emerges\nincidentally through the exercise of rights, a consequence which is\nattained, indeed, in practice, but which is attained without being\nsought.  It is not the end at which economic activity aims, or the\nstandard by which it is judged, but a by-product, as coal-tar is a\nby-product of the {21} manufacture of gas; whether that by-product\nappears or not, it is not proposed that the rights themselves should be\nabdicated.  For they are regarded, not as a conditional trust, but as a\nproperty, which may, indeed, give way to the special exigencies of\nextraordinary emergencies, but which resumes its sway when the\nemergency is over, and in normal times is above discussion.\n\nThat conception is written large over the history of the nineteenth\ncentury, both in England and in America.  The doctrine which it\ninherited was that property was held by an absolute right on an\nindividual basis, and to this fundamental it added another, which can\nbe traced in principle far back into history, but which grew to its\nfull stature only after the rise of capitalist industry, that societies\nact both unfairly and unwisely when they limit opportunities of\neconomic enterprise.  Hence every attempt to impose obligations as a\ncondition of the tenure of property or of the exercise of economic\nactivity has been met by uncompromising resistance.  The story of the\nstruggle between humanitarian sentiment and the theory of property\ntransmitted from the eighteenth century is familiar.  No one has\nforgotten the opposition offered in the name of the rights of property\nto factory legislation, to housing reform, to interference with the\nadulteration of goods, even to the compulsory sanitation of private\nhouses.  \"May I not do what I like with my own?\" was the answer to the\nproposal to require a minimum standard of safety and sanitation from\nthe owners of mills and houses.  Even to {22} this day, while an\nEnglish urban landlord can cramp or distort the development of a whole\ncity by withholding land except at fancy prices, English municipalities\nare without adequate powers of compulsory purchase, and must either pay\nthrough the nose or see thousands of their members overcrowded.  The\nwhole body of procedure by which they may acquire land, or indeed new\npowers of any kind, has been carefully designed by lawyers to protect\nowners of property against the possibility that their private rights\nmay be subordinated to the public interest, because their rights are\nthought to be primary and absolute and public interests secondary and\ncontingent.\n\nNo one needs to be reminded, again, of the influence of the same\ndoctrine in the sphere of taxation.  Thus the income tax was excused as\na temporary measure, because the normal society was conceived to be one\nin which the individual spent his whole income for himself and owed no\nobligations to society on account of it.  The death duties were\ndenounced as robbery, because they implied that the right to benefit by\ninheritance was conditional upon a social sanction.  The Budget of 1909\ncreated a storm, not because the taxation of land was heavy--in amount\nthe land-taxes were trifling--but because it was felt to involve the\ndoctrine that property is not an absolute right, but that it may\nproperly be accompanied by special obligations, a doctrine which, if\ncarried to its logical conclusion, would destroy its sanctity by making\nownership no longer absolute but conditional.\n\n{23}\n\nSuch an implication seems intolerable to an influential body of public\nopinion, because it has been accustomed to regard the free disposal of\nproperty and the unlimited exploitation of economic opportunities, as\nrights which are absolute and unconditioned.  On the whole, until\nrecently, this opinion had few antagonists who could not be ignored.\nAs a consequence the maintenance of property rights has not been\nseriously threatened even in those cases in which it is evident that no\nservice is discharged, directly or indirectly, by their exercise.  No\none supposes, that the owner of urban land, performs _qua_ owner, any\nfunction.  He has a right of private taxation; that is all.  But the\nprivate ownership of urban land is as secure to-day as it was a century\nago; and Lord Hugh Cecil, in his interesting little book on\nConservatism, declares that whether private property is mischievous or\nnot, society cannot interfere with it, because to interfere with it is\ntheft, and theft is wicked.  No one supposes that it is for the public\ngood that large areas of land should be used for parks and game.  But\nour country gentlemen are still settled heavily upon their villages and\nstill slay their thousands.  No one can argue that a monopolist is\nimpelled by \"an invisible hand\" to serve the public interest.  But over\na considerable field of industry competition, as the recent Report on\nTrusts shows, has been replaced by combination, and combinations are\nallowed the same unfettered freedom as individuals in the exploitation\nof economic opportunities.  No one really believes that the production\nof coal depends upon the payment of {24} mining royalties or that ships\nwill not go to and fro unless ship-owners can earn fifty per cent. upon\ntheir capital.  But coal mines, or rather the coal miner, still pay\nroyalties, and ship-owners still make fortunes and are made Peers.\n\nAt the very moment when everybody is talking about the importance of\nincreasing the output of wealth, the last question, apparently, which\nit occurs to any statesman to ask is why wealth should be squandered on\nfutile activities, and in expenditure which is either disproportionate\nto service or made for no service at all.  So inveterate, indeed, has\nbecome the practice of payment in virtue of property rights, without\neven the pretense of any service being rendered, that when, in a\nnational emergency, it is proposed to extract oil from the ground, the\nGovernment actually proposes that every gallon shall pay a tax to\nlandowners who never even suspected its existence, and the ingenuous\nproprietors are full of pained astonishment at any one questioning\nwhether the nation is under moral obligation to endow them further.\nSuch rights are, strictly speaking, privileges.  For the definition of\na privilege is a right to which no corresponding function is attached.\n\nThe enjoyment of property and the direction of industry are considered,\nin short, to require no social justification, because they are regarded\nas rights which stand by their own virtue, not functions to be judged\nby the success with which they contribute to a social purpose.  To-day\nthat doctrine, if intellectually discredited, is still the practical\nfoundation of social {25} organization.  How slowly it yields even to\nthe most insistent demonstration of its inadequacy is shown by the\nattitude which the heads of the business world have adopted to the\nrestrictions imposed on economic activity during the war.  The control\nof railways, mines and shipping, the distribution of raw materials\nthrough a public department instead of through competing merchants, the\nregulation of prices, the attempts to check \"profiteering\"--the\ndetailed application of these measures may have been effective or\nineffective, wise or injudicious.  It is evident, indeed, that some of\nthem have been foolish, like the restriction of imports when the world\nhas five years' destruction to repair, and that others, if sound in\nconception, have been questionable in their execution.  If they were\nattacked on the ground that they obstruct the efficient performance of\nfunction--if the leaders of industry came forward and said generally,\nas some, to their honor, have:--\"We accept your policy, but we will\nimprove its execution; we desire payment for service and service only\nand will help the state to see that it pays for nothing else\"--there\nmight be controversy as to the facts, but there could be none as to the\nprinciple.\n\nIn reality, however, the gravamen of the charges brought against these\nrestrictions appears generally to be precisely the opposite.  They are\ndenounced by most of their critics not because they limit the\nopportunity of service, but because they diminish the opportunity for\ngain, not because they prevent the trader enriching the community, but\nbecause they make it {26} more difficult for him to enrich himself;\nnot, in short, because they have failed to convert economic activity\ninto a social function, but because they have come too near succeeding.\nIf the financial adviser to the Coal Controller may be trusted, the\nshareholders in coal mines would appear to have done fairly well during\nthe war.  But the proposal to limit their profits to 1/2 per ton is\ndescribed by Lord Gainford as \"sheer robbery and confiscation.\"  With\nsome honorable exceptions, what is demanded is that in the future as in\nthe past the directors of industry should be free to handle it as an\nenterprise conducted for their own convenience or advancement, instead\nof being compelled, as they have been partially compelled during the\nwar, to subordinate it to a social purpose.  For to admit that the\ncriterion of commerce and industry is its success in discharging a\nsocial purpose is at once to turn property and economic activity from\nrights which are absolute into rights which are contingent and\nderivative, because it is to affirm that they are relative to functions\nand that they may justly be revoked when the functions are not\nperformed.  It is, in short, to imply that property and economic\nactivity exist to promote the ends of society, whereas hitherto society\nhas been regarded in the world of business as existing to promote them.\nTo those who hold their position, not as functionaries, but by virtue\nof their success in making industry contribute to their own wealth and\nsocial influence, such a reversal of means and ends appears little less\nthan a revolution.  For it means that they must justify before a social\ntribunal {27} rights which they have hitherto taken for granted as part\nof an order which is above criticism.\n\nDuring the greater part of the nineteenth century the significance of\nthe opposition between the two principles of individual rights and\nsocial functions was masked by the doctrine of the inevitable harmony\nbetween private interests and public good.  Competition, it was argued,\nwas an effective substitute for honesty.  To-day that subsidiary\ndoctrine has fallen to pieces under criticism; few now would profess\nadherence to the compound of economic optimism and moral bankruptcy\nwhich led a nineteenth century economist to say: \"Greed is held in\ncheck by greed, and the desire for gain sets limits to itself.\"  The\ndisposition to regard individual rights as the center and pivot of\nsociety is still, however, the most powerful element in political\nthought and the practical foundation of industrial organization.  The\nlaborious refutation of the doctrine that private and public interests\nare co-incident, and that man's self-love is God's Providence, which\nwas the excuse of the last century for its worship of economic egotism,\nhas achieved, in fact, surprisingly small results.  Economic egotism is\nstill worshiped; and it is worshiped because that doctrine was not\nreally the center of the position.  It was an outwork, not the citadel,\nand now that the outwork has been captured, the citadel is still to win.\n\nWhat gives its special quality and character, its toughness and\ncohesion, to the industrial system built up in the last century and a\nhalf, is not its exploded theory of economic harmonies.  It is the\ndoctrine that {28} economic rights are anterior to, and independent of\neconomic functions, that they stand by their own virtue, and need\nadduce no higher credentials.  The practical result of it is that\neconomic rights remain, whether economic functions are performed or\nnot.  They remain to-day in a more menacing form than in the age of\nearly industrialism.  For those who control industry no longer compete\nbut combine, and the rivalry between property in capital and property\nin land has long since ended.  The basis of the New Conservatism\nappears to be a determination so to organize society, both by political\nand economic action, as to make it secure against every attempt to\nextinguish payments which are made, not for service, but because the\nowners possess a right to extract income without it.  Hence the fusion\nof the two traditional parties, the proposed \"strengthening\" of the\nsecond chamber, the return to protection, the swift conversion of rival\nindustrialists to the advantages of monopoly, and the attempts to buy\noff with concessions the more influential section of the working\nclasses.  Revolutions, as a long and bitter experience reveals, are apt\nto take their color from the regime which they overthrow.  Is it any\nwonder that the creed which affirms the absolute rights of property\nshould sometimes be met with a counter-affirmation of the absolute\nrights of labor, less anti-social, indeed, and inhuman, but almost as\ndogmatic, almost as intolerant and thoughtless as itself?\n\n\nA society which aimed at making the acquisition of wealth contingent\nupon the discharge of social {29} obligations, which sought to\nproportion remuneration to service and denied it to those by whom no\nservice was performed, which inquired first not what men possess but\nwhat they can make or create or achieve, might be called a Functional\nSociety, because in such a society the main subject of social emphasis\nwould be the performance of functions.  But such a society does not\nexist, even as a remote ideal, in the modern world, though something\nlike it has hung, an unrealized theory, before men's minds in the past.\nModern societies aim at protecting economic rights, while leaving\neconomic functions, except in moments of abnormal emergency, to fulfil\nthemselves.  The motive which gives color and quality to their public\ninstitutions, to their policy and political thought, is not the attempt\nto secure the fulfilment of tasks undertaken for the public service,\nbut to increase the opportunities open to individuals of attaining the\nobjects which they conceive to be advantageous to themselves.  If asked\nthe end or criterion of social organization, they would give an answer\nreminiscent of the formula the greatest happiness of the greatest\nnumber.  But to say that the end of social institutions is happiness,\nis to say that they have no common end at all.  For happiness is\nindividual, and to make happiness the object of society is to resolve\nsociety itself into the ambitions of numberless individuals, each\ndirected towards the attainment of some personal purpose.\n\nSuch societies may be called Acquisitive Societies, because their whole\ntendency and interest and preoccupation is to promote the acquisition\nof wealth.  The {30} appeal of this conception must be powerful, for it\nhas laid the whole modern world under its spell.  Since England first\nrevealed the possibilities of industrialism, it has gone from strength\nto strength, and as industrial civilization invades countries hitherto\nremote from it, as Russia and Japan and India and China are drawn into\nits orbit, each decade sees a fresh extension of its influence.  The\nsecret of its triumph is obvious.  It is an invitation to men to use\nthe powers with which they have been endowed by nature or society, by\nskill or energy or relentless egotism or mere good fortune, without\ninquiring whether there is any principle by which their exercise should\nbe limited.  It assumes the social organization which determines the\nopportunities which different classes shall in fact possess, and\nconcentrates attention upon the right of those who possess or can\nacquire power to make the fullest use of it for their own\nself-advancement.  By fixing men's minds, not upon the discharge of\nsocial obligations, which restricts their energy, because it defines\nthe goal to which it should be directed, but upon the exercise of the\nright to pursue their own self-interest, it offers unlimited scope for\nthe acquisition of riches, and therefore gives free play to one of the\nmost powerful of human instincts.  To the strong it promises unfettered\nfreedom for the exercise of their strength; to the weak the hope that\nthey too one day may be strong.  Before the eyes of both it suspends a\ngolden prize, which not all can attain, but for which each may strive,\nthe enchanting vision of infinite expansion.  It assures men that there\nare no ends other {31} than their ends, no law other than their\ndesires, no limit other than that which they think advisable.  Thus it\nmakes the individual the center of his own universe, and dissolves\nmoral principles into a choice of expediences.  And it immensely\nsimplifies the problems of social life in complex communities.  For it\nrelieves them of the necessity of discriminating between different\ntypes of economic activity and different sources of wealth, between\nenterprise and avarice, energy and unscrupulous greed, property which\nis legitimate and property which is theft, the just enjoyment of the\nfruits of labor and the idle parasitism of birth or fortune, because it\ntreats all economic activities as standing upon the same level, and\nsuggests that excess or defect, waste or superfluity, require no\nconscious effort of the social will to avert them, but are corrected\nalmost automatically by the mechanical play of economic forces.\n\nUnder the impulse of such ideas men do not become religious or wise or\nartistic; for religion and wisdom and art imply the acceptance of\nlimitations.  But they become powerful and rich.  They inherit the\nearth and change the face of nature, if they do not possess their own\nsouls; and they have that appearance of freedom which consists in the\nabsence of obstacles between opportunities for self-advancement and\nthose whom birth or wealth or talent or good fortune has placed in a\nposition to seize them.  It is not difficult either for individuals or\nfor societies to achieve their object, if that object be sufficiently\nlimited and immediate, and if they are not distracted from its {32}\npursuit by other considerations.  The temper which dedicates itself to\nthe cultivation of opportunities, and leaves obligations to take care\nof themselves, is set upon an object which is at once simple and\npracticable.  The eighteenth century defined it.  The twentieth century\nhas very largely attained it.  Or, if it has not attained it, it has at\nleast grasped the possibilities of its attainment.  The national output\nof wealth per head of population is estimated to have been\napproximately $200 in 1914.  Unless mankind chooses to continue the\nsacrifice of prosperity to the ambitions and terrors of nationalism, it\nis possible that by the year 2000 it may be doubled.\n\n\n\n\n{33}\n\nIV\n\nTHE NEMESIS OF INDUSTRIALISM\n\nSuch happiness is not remote from achievement.  In the course of\nachieving it, however, the world has been confronted by a group of\nunexpected consequences, which are the cause of its _malaise_, as the\nobstruction of economic opportunity was the cause of social _malaise_\nin the eighteenth century.  And these consequences are not, as is often\nsuggested, accidental mal-adjustments, but flow naturally from its\ndominant principle: so that there is a sense in which the cause of its\nperplexity is not its failure, but the quality of its success, and its\nlight itself a kind of darkness.  The will to economic power, if it is\nsufficiently single-minded, brings riches.  But if it is single-minded\nit destroys the moral restraints which ought to condition the pursuit\nof riches, and therefore also makes the pursuit of riches meaningless.\nFor what gives meaning to economic activity, as to any other activity\nis, as we have said, the purpose to which it is directed.  But the\nfaith upon which our economic civilization reposes, the faith that\nriches are not a means but an end, implies that all economic activity\nis equally estimable, whether it is subordinated to a social purpose or\nnot.  Hence it divorces gain from service, and justifies rewards for\nwhich no function is performed, or which are out of all proportion to\nit.  Wealth in modern societies is distributed according to {34}\nopportunity; and while opportunity depends partly upon talent and\nenergy, it depends still more upon birth, social position, access to\neducation and inherited wealth; in a word, upon property.  For talent\nand energy can create opportunity.  But property need only wait for it.\nIt is the sleeping partner who draws the dividends which the firm\nproduces, the residuary legatee who always claims his share in the\nestate.\n\nBecause rewards are divorced from services, so that what is prized most\nis not riches obtained in return for labor but riches the economic\norigin of which, being regarded as sordid, is concealed, two results\nfollow.  The first is the creation of a class of pensioners upon\nindustry, who levy toll upon its product, but contribute nothing to its\nincrease, and who are not merely tolerated, but applauded and admired\nand protected with assiduous care, as though the secret of prosperity\nresided in them.  They are admired because in the absence of any\nprinciple of discrimination between incomes which are payment for\nfunctions and incomes which are not, all incomes, merely because they\nrepresent wealth, stand on the same level of appreciation, and are\nestimated solely by their magnitude, so that in all societies which\nhave accepted industrialism there is an upper layer which claims the\nenjoyment of social life, while it repudiates its responsibilities.\nThe _rentier_ and his ways, how familiar they were in England before\nthe war!  A public school and then club life in Oxford and Cambridge,\nand then another club in town; London in June, when London is pleasant,\nthe moors in August, and pheasants in October, Cannes in {35} December\nand hunting in February and March; and a whole world of rising\nbourgeoisie eager to imitate them, sedulous to make their expensive\nwatches keep time with this preposterous calendar!\n\nThe second consequence is the degradation of those who labor, but who\ndo not by their labor command large rewards; that is of the great\nmajority of mankind.  And this degradation follows inevitably from the\nrefusal of men to give the purpose of industry the first place in their\nthought about it.  When they do that, when their minds are set upon the\nfact that the meaning of industry is the service of man, all who labor\nappear to them honorable, because all who labor serve, and the\ndistinction which separates those who serve from those who merely spend\nis so crucial and fundamental as to obliterate all minor distinctions\nbased on differences of income.  But when the criterion of function is\nforgotten, the only criterion which remains is that of wealth, and an\nAcquisitive Society reverences the possession of wealth, as a\nFunctional Society would honor, even in the person of the humblest and\nmost laborious craftsman, the arts of creation.\n\nSo wealth becomes the foundation of public esteem, and the mass of men\nwho labor, but who do not acquire wealth, are thought to be vulgar and\nmeaningless and insignificant compared with the few who acquire wealth\nby good fortune, or by the skilful use of economic opportunities.  They\ncome to be regarded, not as the ends for which alone it is worth while\nto produce wealth at all, but as the instruments of its {36}\nacquisition by a world that declines to be soiled by contact with what\nis thought to be the dull and sordid business of labor.  They are not\nhappy, for the reward of all but the very mean is not merely money, but\nthe esteem of their fellow-men, and they know they are not esteemed, as\nsoldiers, for example, are esteemed, though it is because they give\ntheir lives to making civilization that there is a civilization which\nit is worth while for soldiers to defend.  They are not esteemed,\nbecause the admiration of society is directed towards those who get,\nnot towards those who give; and though workmen give much they get\nlittle.  And the _rentiers_ whom they support are not happy; for in\ndiscarding the idea of function, which sets a limit to the acquisition\nof riches, they have also discarded the principle which alone give\nriches their meaning.  Hence unless they can persuade themselves that\nto be rich is in itself meritorious, they may bask in social\nadmiration, but they are unable to esteem themselves.  For they have\nabolished the principle which makes activity significant, and therefore\nestimable.  They are, indeed, more truly pitiable than some of those\nwho envy them.  For like the spirits in the Inferno, they are punished\nby the attainment of their desires.\n\nA society ruled by these notions is necessarily the victim of an\nirrational inequality.  To escape such inequality it is necessary to\nrecognize that there is some principle which ought to limit the gains\nof particular classes and particular individuals, because gains drawn\nfrom certain sources or exceeding certain amounts are illegitimate.\nBut such a limitation implies a {37} standard of discrimination, which\nis inconsistent with the assumption that each man has a right to what\nhe can get, irrespective of any service rendered for it.  Thus\nprivilege, which was to have been exorcised by the gospel of 1789,\nreturns in a new guise, the creature no longer of unequal legal rights\nthwarting the natural exercise of equal powers of hand and brain, but\nof unequal powers springing from the exercise of equal rights in a\nworld where property and inherited wealth and the apparatus of class\ninstitutions have made opportunities unequal.  Inequality, again, leads\nto the mis-direction of production.  For, since the demand of one\nincome of L50,000 is as powerful a magnet as the demand of 500 incomes\nof L100, it diverts energy from the creation of wealth to the\nmultiplication of luxuries, so that, for example, while one-tenth of\nthe people of England are overcrowded, a considerable part of them are\nengaged, not in supplying that deficiency, but in making rich men's\nhotels, luxurious yachts, and motorcars like that used by the Secretary\nof State for War, \"with an interior inlaid with silver in quartered\nmahogany, and upholstered in fawn suede and morocco,\" which was\nrecently bought by a suburban capitalist, by way of encouraging useful\nindustries and rebuking public extravagance with an example of private\neconomy, for the trifling sum of $14,000.\n\nThus part of the goods which are annually produced, and which are\ncalled wealth, is, strictly speaking, waste, because it consists of\narticles which, though reckoned as part of the income of the nation,\neither should not have been produced until other articles had already\n{38} been produced in sufficient abundance, or should not have been\nproduced at all.  And some part of the population is employed in making\ngoods which no man can make with happiness, or indeed without loss of\nself-respect, because he knows that they had much better not be made;\nand that his life is wasted in making them.  Everybody recognizes that\nthe army contractor who, in time of war, set several hundred navvies to\ndig an artificial lake in his grounds, was not adding to, but\nsubtracting from, the wealth of the nation.  But in time of peace many\nhundred thousand workmen, if they are not digging ponds, are doing work\nwhich is equally foolish and wasteful; though, in peace, as in war,\nthere is important work, which is waiting to be done, and which is\nneglected.  It is neglected because, while the effective demand of the\nmass of men is only too small, there is a small class which wears\nseveral men's clothes, eats several men's dinners, occupies several\nfamilies' houses, and lives several men's lives.  As long as a minority\nhas so large an income that part of it, if spent at all, must be spent\non trivialities, so long will part of the human energy and mechanical\nequipment of the nation be diverted from serious work, which enriches\nit, to making trivialities, which impoverishes it, since they can only\nbe made at the cost of not making other things.  And if the peers and\nmillionaires who are now preaching the duty of production to miners and\ndock laborers desire that more wealth, not more waste, should be\nproduced, the simplest way in which they can achieve their aim is to\ntransfer to the public their whole incomes over (say) $5,000 a year, in\norder that it may {39} be spent in setting to work, not gardeners,\nchauffeurs, domestic servants and shopkeepers in the West End of\nLondon, but builders, mechanics and teachers.\n\nSo to those who clamor, as many now do, \"Produce!  Produce!\" one simple\nquestion may be addressed:--\"Produce what?\"  Food, clothing,\nhouse-room, art, knowledge?  By all means!  But if the nation is\nscantily furnished with these things had it not better stop producing a\ngood many others which fill shop windows in Regent Street?  If it\ndesires to re-equip its industries with machinery and its railways with\nwagons, had it not better refrain from holding exhibitions designed to\nencourage rich men to re-equip themselves with motor-cars?  What can be\nmore childish than to urge the necessity that productive power should\nbe increased, if part of the productive power which exists already is\nmisapplied?  Is not _less_ production of futilities as important as,\nindeed a condition of, _more_ production of things of moment?  Would\nnot \"Spend less on private luxuries\" be as wise a cry as \"produce\nmore\"?  Yet this result of inequality, again, is a phenomenon which\ncannot be prevented, or checked, or even recognized by a society which\nexcludes the idea of purpose from its social arrangements and\nindustrial activity.  For to recognize it is to admit that there is a\nprinciple superior to the mechanical play of economic forces, which\nought to determine the relative importance of different occupations,\nand thus to abandon the view that all riches, however composed, are an\nend, and that all economic activity is equally justifiable.\n\n{40}\n\nThe rejection of the idea of purpose involves another consequence which\nevery one laments, but which no one can prevent, except by abandoning\nthe belief that the free exercise of rights is the main interest of\nsociety and the discharge of obligations a secondary and incidental\nconsequence which may be left to take care of itself.  It is that\nsocial life is turned into a scene of fierce antagonisms and that a\nconsiderable part of industry is carried on in the intervals of a\ndisguised social war.  The idea that industrial peace can be secured\nmerely by the exercise of tact and forbearance is based on the idea\nthat there is a fundamental identity of interest between the different\ngroups engaged in it, which is occasionally interrupted by regrettable\nmisunderstandings.  Both the one idea and the other are an illusion.\nThe disputes which matter are not caused by a misunderstanding of\nidentity of interests, but by a better understanding of diversity of\ninterests.  Though a formal declaration of war is an episode, the\nconditions which issue in a declaration of war are permanent; and what\nmakes them permanent is the conception of industry which also makes\ninequality and functionless incomes permanent.  It is the denial that\nindustry has any end or purpose other than the satisfaction of those\nengaged in it.\n\nThat motive produces industrial warfare, not as a regrettable incident,\nbut as an inevitable result.  It produces industrial war, because its\nteaching is that each individual or group has a right to what they can\nget, and denies that there is any principle, other than the mechanism\nof the market, which determines what {41} they ought to get.  For,\nsince the income available for distribution is limited, and since,\ntherefore, when certain limits have been passed, what one group gains\nanother group must lose, it is evident that if the relative incomes of\ndifferent groups are not to be determined by their functions, there is\nno method other than mutual self-assertion which is left to determine\nthem.  Self-interest, indeed, may cause them to refrain from using\ntheir full strength to enforce their claims, and, in so far as this\nhappens, peace is secured in industry, as men have attempted to secure\nit in international affairs, by a balance of power.  But the\nmaintenance of such a peace is contingent upon the estimate of the\nparties to it that they have more to lose than to gain by an overt\nstruggle, and is not the result of their acceptance of any standard of\nremuneration as an equitable settlement of their claims.  Hence it is\nprecarious, insincere and short.  It is without finality, because there\ncan be no finality in the mere addition of increments of income, any\nmore than in the gratification of any other desire for material goods.\nWhen demands are conceded the old struggle recommences upon a new\nlevel, and will always recommence as long as men seek to end it merely\nby increasing remuneration, not by finding a principle upon which all\nremuneration, whether large or small, should be based.\n\nSuch a principle is offered by the idea of function, because its\napplication would eliminate the surpluses which are the subject of\ncontention, and would make it evident that remuneration is based upon\nservice, {42} not upon chance or privilege or the power to use\nopportunities to drive a hard bargain.  But the idea of function is\nincompatible with the doctrine that every person and organization have\nan unlimited right to exploit their economic opportunities as fully as\nthey please, which is the working faith of modern industry; and, since\nit is not accepted, men resign themselves to the settlement of the\nissue by force, or propose that the State should supersede the force of\nprivate associations by the use of its force, as though the absence of\na principle could be compensated by a new kind of machinery.  Yet all\nthe time the true cause of industrial warfare is as simple as the true\ncause of international warfare.  It is that if men recognize no law\nsuperior to their desires, then they must fight when their desires\ncollide.  For though groups or nations which are at issue with each\nother may be willing to submit to a principle which is superior to them\nboth, there is no reason why they should submit to each other.\n\nHence the idea, which is popular with rich men, that industrial\ndisputes would disappear if only the output of wealth were doubled, and\nevery one were twice as well off, not only is refuted by all practical\nexperience, but is in its very nature founded upon an illusion.  For\nthe question is one not of amounts but of proportions; and men will\nfight to be paid $120 a week, instead of $80, as readily as they will\nfight to be paid $20 instead of $16, as long as there is no reason why\nthey should be paid $80 instead of $120, and as long as other men who\ndo not work are paid anything {43} at all.  If miners demanded higher\nwages when every superfluous charge upon coal-getting had been\neliminated, there would be a principle with which to meet their claim,\nthe principle that one group of workers ought not to encroach upon the\nlivelihood of others.  But as long as mineral owners extract royalties,\nand exceptionally productive mines pay thirty per cent. to absentee\nshareholders, there is no valid answer to a demand for higher wages.\nFor if the community pays anything at all to those who do not work, it\ncan afford to pay more to those who do.  The naive complaint, that\nworkmen are never satisfied, is, therefore, strictly true.  It is true,\nnot only of workmen, but of all classes in a society which conducts its\naffairs on the principle that wealth, instead of being proportioned to\nfunction, belongs to those who can get it.  They are never satisfied,\nnor can they be satisfied.  For as long as they make that principle the\nguide of their individual lives and of their social order, nothing\nshort of infinity could bring them satisfaction.\n\n\nSo here, again, the prevalent insistence upon rights, and prevalent\nneglect of functions, brings men into a vicious circle which they\ncannot escape, without escaping from the false philosophy which\ndominates them.  But it does something more.  It makes that philosophy\nitself seem plausible and exhilarating, and a rule not only for\nindustry, in which it had its birth, but for politics and culture and\nreligion and the whole compass of social life.  The possibility that\none aspect of human life may be so exaggerated as to overshadow, {44}\nand in time to atrophy, every other, has been made familiar to\nEnglishmen by the example of \"Prussian militarism.\"  Militarism is the\ncharacteristic, not of an army, but of a society.  Its essence is not\nany particular quality or scale of military preparation, but a state of\nmind, which, in its concentration on one particular element in social\nlife, ends finally by exalting it until it becomes the arbiter of all\nthe rest.  The purpose for which military forces exist is forgotten.\nThey are thought to stand by their own right and to need no\njustification.  Instead of being regarded as an instrument which is\nnecessary in an imperfect world, they are elevated into an object of\nsuperstitious veneration, as though the world would be a poor insipid\nplace without them, so that political institutions and social\narrangements and intellect and morality and religion are crushed into a\nmold made to fit one activity, which in a sane society is a subordinate\nactivity, like the police, or the maintenance of prisons, or the\ncleansing of sewers, but which in a militarist state is a kind of\nmystical epitome of society itself.\n\nMilitarism, as Englishmen see plainly enough, is fetich worship.  It is\nthe prostration of men's souls before, and the laceration of their\nbodies to appease, an idol.  What they do not see is that their\nreverence for economic activity and industry and what is called\nbusiness is also fetich worship, and that in their devotion to that\nidol they torture themselves as needlessly and indulge in the same\nmeaningless antics as the Prussians did in their worship of militarism.\nFor what the military tradition and spirit have done for Prussia, {45}\nwith the result of creating militarism, the commercial tradition and\nspirit have done for England, with the result of creating\nindustrialism.  Industrialism is no more a necessary characteristic of\nan economically developed society than militarism is a necessary\ncharacteristic of a nation which maintains military forces.  It is no\nmore the result of applying science to industry than militarism is the\nresult of the application of science to war, and the idea that it is\nsomething inevitable in a community which uses coal and iron and\nmachinery, so far from being the truth, is itself a product of the\nperversion of mind which industrialism produces.  Men may use what\nmechanical instruments they please and be none the worse for their use.\nWhat kills their souls is when they allow their instruments to use\n_them_.  The essence of industrialism, in short, is not any particular\nmethod of industry, but a particular estimate of the importance of\nindustry, which results in it being thought the only thing that is\nimportant at all, so that it is elevated from the subordinate place\nwhich it should occupy among human interests and activities into being\nthe standard by which all other interests and activities are judged.\n\nWhen a Cabinet Minister declares that the greatness of this country\ndepends upon the volume of its exports, so that France, with exports\ncomparatively little, and Elizabethan England, which exported next to\nnothing, are presumably to be pitied as altogether inferior\ncivilizations, that is Industrialism.  It is the confusion of one minor\ndepartment of life with the {46} whole of life.  When manufacturers cry\nand cut themselves with knives, because it is proposed that boys and\ngirls of fourteen shall attend school for eight hours a week, and the\nPresident of the Board of Education is so gravely impressed by their\napprehensions, that he at once allows the hours to be reduced to seven,\nthat is Industrialism.  It is fetich worship.  When the Government\nobtains money for a war, which costs $28,000,000 a day, by closing the\nMuseums, which cost $80,000 a year, that is Industrialism.  It is a\ncontempt for all interests which do not contribute obviously to\neconomic activity.  When the Press clamors that the one thing needed to\nmake this island an Arcadia is productivity, and more productivity, and\nyet more productivity, that is Industrialism.  It is the confusion of\nmeans with ends.\n\nMen will always confuse means with ends if they are without any clear\nconception that it is the ends, not the means, which matter--if they\nallow their minds to slip from the fact that it is the social purpose\nof industry which gives it meaning and makes it worth while to carry it\non at all.  And when they do that, they will turn their whole world\nupside down, because they do not see the poles upon which it ought to\nmove.  So when, like England, they are thoroughly industrialized, they\nbehave like Germany, which was thoroughly militarized.  They talk as\nthough man existed for industry, instead of industry existing for man,\nas the Prussians talked of man existing for war.  They resent any\nactivity which is not colored by the predominant interest, because it\nseems a rival to it.  So they {47} destroy religion and art and\nmorality, which cannot exist unless they are disinterested; and having\ndestroyed these, which are the end, for the sake of industry, which is\na means, they make their industry itself what they make their cities, a\ndesert of unnatural dreariness, which only forgetfulness can make\nendurable, and which only excitement can enable them to forget.\n\nTorn by suspicions and recriminations, avid of power, and oblivious of\nduties, desiring peace, but unable to \"seek peace and ensue it,\"\nbecause unwilling to surrender the creed which is the cause of war, to\nwhat can one compare such a society but to the international world,\nwhich also has been called a society and which also is social in\nnothing but name?  And the comparison is more than a play upon words.\nIt is an analogy which has its roots in the facts of history.  It is\nnot a chance that the last two centuries, which saw the new growth of a\nnew system of industry, saw also the growth of the system of\ninternational politics which came to a climax in the period from 1870\nto 1914.  Both the one and the other are the expression of the same\nspirit and move in obedience to similar laws.  The essence of the\nformer was the repudiation of any authority superior to the individual\nreason.  It left men free to follow their own interests or ambitions or\nappetites, untrammeled by subordination to any common center of\nallegiance.  The essence of the latter was the repudiation of any\nauthority superior to the sovereign state, which again was conceived as\na compact self-contained unit--a unit {48} which would lose its very\nessence if it lost its independence of other states.  Just as the one\nemancipated economic activity from a mesh of antiquated traditions, so\nthe other emancipated nations from arbitrary subordination to alien\nraces or Governments, and turned them into nationalities with a right\nto work out their own destiny.\n\nNationalism is, in fact, the counterpart among nations of what\nindividualism is within them.  It has similar origins and tendencies,\nsimilar triumphs and defects.  For nationalism, like individualism,\nlays its emphasis on the rights of separate units, not on their\nsubordination to common obligations, though its units are races or\nnations, not individual men.  Like individualism it appeals to the\nself-assertive instincts, to which it promises opportunities of\nunlimited expansion.  Like individualism it is a force of immense\nexplosive power, the just claims of which must be conceded before it is\npossible to invoke any alternative principle to control its operations.\nFor one cannot impose a supernational authority upon irritated or\ndiscontented or oppressed nationalities any more than one can\nsubordinate economic motives to the control of society, until society\nhas recognized that there is a sphere which they may legitimately\noccupy.  And, like individualism, if pushed to its logical conclusion,\nit is self-destructive.  For as nationalism, in its brilliant youth,\nbegins as a claim that nations, because they are spiritual beings,\nshall determine themselves, and passes too often into a claim that they\nshall dominate others, so individualism begins by asserting the right\nof men to {49} make of their own lives what they can, and ends by\ncondoning the subjection of the majority of men to the few whom good\nfortune or special opportunity or privilege have enabled most\nsuccessfully to use their rights.  They rose together.  It is probable\nthat, if ever they decline, they will decline together.  For life\ncannot be cut in compartments.  In the long run the world reaps in war\nwhat it sows in peace.  And to expect that international rivalry can be\nexorcised as long as the industrial order within each nation is such as\nto give success to those whose existence is a struggle for\nself-aggrandizement is a dream which has not even the merit of being\nbeautiful.\n\nSo the perversion of nationalism is imperialism, as the perversion of\nindividualism is industrialism.  And the perversion comes, not through\nany flaw or vice in human nature, but by the force of the idea, because\nthe principle is defective and reveals its defects as it reveals its\npower.  For it asserts that the rights of nations and individuals are\nabsolute, which is false, instead of asserting that they are absolute\nin their own sphere, but that their sphere itself is contingent upon\nthe part which they play in the community of nations and individuals,\nwhich is true.  Thus it constrains them to a career of indefinite\nexpansion, in which they devour continents and oceans, law, morality\nand religion, and last of all their own souls, in an attempt to attain\ninfinity by the addition to themselves of all that is finite.  In the\nmeantime their rivals, and their subjects, and they themselves are\nconscious of the danger of opposing forces, and seek to {50} purchase\nsecurity and to avoid a collision by organizing a balance of power.\nBut the balance, whether in international politics or in industry, is\nunstable, because it reposes not on the common recognition of a\nprinciple by which the claims of nations and individuals are limited,\nbut on an attempt to find an equipoise which may avoid a conflict\nwithout adjuring the assertion of unlimited claims.  No such equipoise\ncan be found, because, in a world where the possibilities of increasing\nmilitary or industrial power are illimitable, no such equipoise can\nexist.\n\nThus, as long as men move on this plane, there is no solution.  They\ncan obtain peace only by surrendering the claim to the unfettered\nexercise of their rights, which is the cause of war.  What we have been\nwitnessing, in short, during the past five years, both in international\naffairs and in industry, is the breakdown of the organization of\nsociety on the basis of rights divorced from obligations.  Sooner or\nlater the collapse was inevitable, because the basis was too narrow.\nFor a right is simply a power which is secured by legal sanctions, \"a\ncapacity,\" as the lawyers define it, \"residing in one man, of\ncontrolling, with the assistance of the State, the action of others,\"\nand a right should not be absolute for the same reason that a power\nshould not be absolute.  No doubt it is better that individuals should\nhave absolute rights than that the State or the Government should have\nthem; and it was the reaction against the abuses of absolute power by\nthe State which led in the eighteenth century to the declaration of the\nabsolute rights of individuals.  {51} The most obvious defense against\nthe assertion of one extreme was the assertion of the other.  Because\nGovernments and the relics of feudalism had encroached upon the\nproperty of individuals it was affirmed that the right of property was\nabsolute; because they had strangled enterprise, it was affirmed that\nevery man had a natural right to conduct his business as he pleased.\nBut, in reality, both the one assertion and the other are false, and,\nif applied to practice, must lead to disaster.  The State has no\nabsolute rights; they are limited by its commission.  The individual\nhas no absolute rights; they are relative to the function which he\nperforms in the community of which he is a member, because, unless they\nare so limited, the consequences must be something in the nature of\nprivate war.  All rights, in short, are conditional and derivative,\nbecause all power should be conditional and derivative.  They are\nderived from the end or purpose of the society in which they exist.\nThey are conditional on being used to contribute to the attainment of\nthat end, not to thwart it.  And this means in practice that, if\nsociety is to be healthy, men must regard themselves not as the owners\nof rights, but as trustees for the discharge of functions and the\ninstruments of a social purpose.\n\n\n\n\n{52}\n\nV\n\nPROPERTY AND CREATIVE WORK\n\nThe application of the principle that society should be organized upon\nthe basis of functions, is not recondite, but simple and direct.  It\noffers in the first place, a standard for discriminating between those\ntypes of private property which are legitimate and those which are not.\nDuring the last century and a half, political thought has oscillated\nbetween two conceptions of property, both of which, in their different\nways, are extravagant.  On the one hand, the practical foundation of\nsocial organization has been the doctrine that the particular forms of\nprivate property which exist at any moment are a thing sacred and\ninviolable, that anything may properly become the object of property\nrights, and that, when it does, the title to it is absolute and\nunconditioned.  The modern industrial system took shape in an age when\nthis theory of property was triumphant.  The American Constitution and\nthe French Declaration of the Rights of Man both treated property as\none of the fundamental rights which Governments exist to protect.  The\nEnglish Revolution of 1688, undogmatic and reticent though it was, had\nin effect done the same.  The great individualists from Locke to\nTurgot, Adam Smith and Bentham all repeated, in different language, a\nsimilar conception.  Though what gave the Revolution its {53}\ndiabolical character in the eyes of the English upper classes was its\ntreatment of property, the dogma of the sanctity of private property\nwas maintained as tenaciously by French Jacobins as by English Tories;\nand the theory that property is an absolute, which is held by many\nmodern Conservatives, is identical, if only they knew it, with that not\nonly of the men of 1789, but of the Convention itself.\n\nOn the other hand, the attack has been almost as undiscriminating as\nthe defense.  \"Private property\" has been the central position against\nwhich the social movement of the last hundred years has directed its\nforces.  The criticism of it has ranged from an imaginative communism\nin the most elementary and personal of necessaries, to prosaic and\npartially realized proposals to transfer certain kinds of property from\nprivate to public ownership, or to limit their exploitation by\nrestrictions imposed by the State.  But, however varying in emphasis\nand in method, the general note of what may conveniently be called the\nSocialist criticism of property is what the word Socialism itself\nimplies.  Its essence is the statement that the economic evils of\nsociety are primarily due to the unregulated operation, under modern\nconditions of industrial organization, of the institution of private\nproperty.\n\nThe divergence of opinion is natural, since in most discussions of\nproperty the opposing theorists have usually been discussing different\nthings.  Property is the most ambiguous of categories.  It covers a\nmultitude of rights which have nothing in common except that they are\nexercised by persons and enforced by the State.  {54} Apart from these\nformal characteristics, they vary indefinitely in economic character,\nin social effect, and in moral justification.  They may be conditional\nlike the grant of patent rights, or absolute like the ownership of\nground rents, terminable like copyright, or permanent like a freehold,\nas comprehensive as sovereignty or as restricted as an easement, as\nintimate and personal as the ownership of clothes and books, or as\nremote and intangible as shares in a gold mine or rubber plantation.\nIt is idle, therefore, to present a case for or against private\nproperty without specifying the particular forms of property to which\nreference is made, and the journalist who says that \"private property\nis the foundation of civilization\" agrees with Proudhon, who said it\nwas theft, in this respect at least that, without further definition,\nthe words of both are meaningless.  Arguments which support or demolish\ncertain kinds of property may have no application to others;\nconsiderations which are conclusive in one stage of economic\norganization may be almost irrelevant in the next.  The course of\nwisdom is neither to attack private property in general nor to defend\nit in general; for things are not similar in quality, merely because\nthey are identical in name.  It is to discriminate between the various\nconcrete embodiments of what, in itself, is, after all, little more\nthan an abstraction.\n\nThe origin and development of different kinds of proprietary rights is\nnot material to this discussion.  Whatever may have been the historical\nprocess by which they have been established and recognized, the {55}\n_rationale_ of private property traditional in England is that which\nsees in it the security that each man will reap where he has sown.  \"If\nI despair of enjoying the fruits of labor,\" said Bentham, repeating\nwhat were in all essentials the arguments of Locke, \"I shall only live\nfrom day to day; I shall not undertake labors which will only benefit\nmy enemies.\"  Property, it is argued, is a moral right, and not merely\na legal right, because it insures that the producer will not be\ndeprived by violence of the result of his efforts.  The period from\nwhich that doctrine was inherited differed from our own in three\nobvious, but significant, respects.  Property in land and in the simple\ncapital used in most industries was widely distributed.  Before the\nrise of capitalist agriculture and capitalist industry, the ownership,\nor at any rate the secure and effective occupation, of land and tools\nby those who used them, was a condition precedent to effective work in\nthe field or in the workshop.  The forces which threatened property\nwere the fiscal policy of Governments and in some countries, for\nexample France, the decaying relics of feudalism.  The interference\nboth of the one and of the other involved the sacrifice of those who\ncarried on useful labor to those who did not.  To resist them was to\nprotect not only property but industry, which was indissolubly\nconnected with it.  Too often, indeed, resistance was ineffective.\nAccustomed to the misery of the rural proprietor in France, Voltaire\nremarked with astonishment that in England the peasant may be rich, and\n\"does not fear to increase the number of his beasts or to cover his\nroof with tiles.\"  And {56} the English Parliamentarians and the French\nphilosophers who made the inviolability of property rights the center\nof their political theory, when they defended those who owned, were\nincidentally, if sometimes unintentionally, defending those who\nlabored.  They were protecting the yeoman or the master craftsman or\nthe merchant from seeing the fruits of his toil squandered by the\nhangers-on at St. James or the courtly parasites of Versailles.\n\nIn such circumstances the doctrine which found the justification of\nprivate property in the fact that it enabled the industrious man to\nreap where he had sown, was not a paradox, but, as far as the mass of\nthe population was concerned, almost a truism.  Property was defended\nas the most sacred of rights.  But it was defended as a right which was\nnot only widely exercised, but which was indispensable to the\nperformance of the active function of providing food and clothing.  For\nit consisted predominantly of one of two types, land or tools which\nwere used by the owner for the purpose of production, and personal\npossessions which were the necessities or amenities of civilized\nexistence.  The former had its _rationale_ in the fact that the land of\nthe peasant or the tools of the craftsman were the condition of his\nrendering the economic services which society required; the latter\nbecause furniture and clothes are indispensable to a life of decency\nand comfort.  The proprietary rights--and, of course, they were\nnumerous--which had their source, not in work, but in predatory force,\nwere protected from criticism by the wide distribution of some kind\n{57} of property among the mass of the population, and in England, at\nleast, the cruder of them were gradually whittled down.  When property\nin land and what simple capital existed were generally diffused among\nall classes of society, when, in most parts of England, the typical\nworkman was not a laborer but a peasant or small master, who could\npoint to the strips which he had plowed or the cloth which he had\nwoven, when the greater part of the wealth passing at death consisted\nof land, household furniture and a stock in trade which was hardly\ndistinguishable from it, the moral justification of the title to\nproperty was self-evident.  It was obviously, what theorists said that\nit was, and plain men knew it to be, the labor spent in producing,\nacquiring and administering it.\n\nSuch property was not a burden upon society, but a condition of its\nhealth and efficiency, and indeed, of its continued existence.  To\nprotect it was to maintain the organization through which public\nnecessities were supplied.  If, as in Tudor England, the peasant was\nevicted from his holding to make room for sheep, or crushed, as in\neighteenth century France, by arbitrary taxation and seigneurial dues,\nland went out of cultivation and the whole community was short of food.\nIf the tools of the carpenter or smith were seized, plows were not\nrepaired or horses shod.  Hence, before the rise of a commercial\ncivilization, it was the mark of statesmanship, alike in the England of\nthe Tudors and in the France of Henry IV, to cherish the small\nproperty-owner even to the point of offending the great.  Popular\nsentiment idealized the {58} yeoman--\"the Joseph of the country who\nkeeps the poor from starving\"--not merely because he owned property,\nbut because he worked on it, denounced that \"bringing of the livings of\nmany into the hands of one,\" which capitalist societies regard with\nequanimity as an inevitable, and, apparently, a laudable result of\neconomic development, cursed the usurer who took advantage of his\nneighbor's necessities to live without labor, was shocked by the\ncallous indifference to public welfare shown by those who \"not having\nbefore their eyes either God or the profit and advantage of the realm,\nhave enclosed with hedges and dykes towns and hamlets,\" and was\nsufficiently powerful to compel Governments to intervene to prevent the\nlaying of field to field, and the engrossing of looms--to set limits,\nin short, to the scale to which property might grow.\n\nWhen Bacon, who commended Henry VII for protecting the tenant right of\nthe small farmer, and pleaded in the House of Commons for more drastic\nland legislation, wrote \"Wealth is like muck.  It is not good but if it\nbe spread,\" he was expressing in an epigram what was the commonplace of\nevery writer on politics from Fortescue at the end of the fifteenth\ncentury to Harrington in the middle of the seventeenth.  The modern\nconservative, who is inclined to take _au pied de la lettre_ the\nvigorous argument in which Lord Hugh Cecil denounces the doctrine that\nthe maintenance of proprietary rights ought to be contingent upon the\nuse to which they are put, may be reminded that Lord Hugh's own theory\nis of a kind to make his ancestors turn in their graves.  Of the two\nmembers of the {59} family who achieved distinction before the\nnineteenth century, the elder advised the Crown to prevent landlords\nevicting tenants, and actually proposed to fix a pecuniary maximum to\nthe property which different classes might possess, while the younger\nattacked enclosing in Parliament, and carried legislation compelling\nlandlords to build cottages, to let them with small holdings, and to\nplow up pasture.\n\nWilliam and Robert Cecil were sagacious and responsible men, and their\nview that the protection of property should be accompanied by the\nenforcement of obligations upon its owners was shared by most of their\ncontemporaries.  The idea that the institution of private property\ninvolves the right of the owner to use it, or refrain from using it, in\nsuch a way as he may please, and that its principal significance is to\nsupply him with an income, irrespective of any duties which he may\ndischarge, would not have been understood by most public men of that\nage, and, if understood, would have been repudiated with indignation by\nthe more reputable among them.  They found the meaning of property in\nthe public purposes to which it contributed, whether they were the\nproduction of food, as among the peasantry, or the management of public\naffairs, as among the gentry, and hesitated neither to maintain those\nkinds of property which met these obligations nor to repress those uses\nof it which appeared likely to conflict with them.  Property was to be\nan aid to creative work, not an alternative to it.  The patentee was\nsecured protection for a new invention, in order to secure him the\nfruits of his own brain, but the monopolist who grew {60} fat on the\nindustry of others was to be put down.  The law of the village bound\nthe peasant to use his land, not as he himself might find most\nprofitable, but to grow the corn the village needed.  Long after\npolitical changes had made direct interference impracticable, even the\nhigher ranks of English landowners continued to discharge, however\ncapriciously and tyrannically, duties which were vaguely felt to be the\ncontribution which they made to the public service in virtue of their\nestates.  When as in France, the obligations of ownership were\nrepudiated almost as completely as they have been by the owner of\nto-day, nemesis came in an onslaught upon the position of a _noblesse_\nwhich had retained its rights and abdicated its functions.  Property\nreposed, in short, not merely upon convenience, or the appetite for\ngain, but on a moral principle.  It was protected not only for the sake\nof those who owned, but for the sake of those who worked and of those\nfor whom their work provided.  It was protected, because, without\nsecurity for property, wealth could not be produced or the business of\nsociety carried on.\n\n\nWhatever the future may contain, the past has shown no more excellent\nsocial order than that in which the mass of the people were the masters\nof the holdings which they plowed and of the tools with which they\nworked, and could boast, with the English freeholder, that \"it is a\nquietness to a man's mind to live upon his own and to know his heir\ncertain.\"  With this conception of property and its practical\nexpression in social institutions those who urge that society should be\n{61} organized on the basis of function have no quarrel.  It is in\nagreement with their own doctrine, since it justifies property by\nreference to the services which it enables its owner to perform.  All\nthat they need ask is that it should be carried to its logical\nconclusion.\n\nFor the argument has evidently more than one edge.  If it justifies\ncertain types of property, it condemns others; and in the conditions of\nmodern industrial civilization, what it justifies is less than what it\ncondemns.  The truth is, indeed, that this theory of property and the\ninstitutions in which it is embodied have survived into an age in which\nthe whole structure of society is radically different from that in\nwhich it was formulated, and which made it a valid argument, if not for\nall, at least for the most common and characteristic kinds of property.\nIt is not merely that the ownership of any substantial share in the\nnational wealth is concentrated to-day in the hands of a few hundred\nthousand families, and that at the end of an age which began with an\naffirmation of the rights of property, proprietary rights are, in fact,\nfar from being widely distributed.  Nor is it merely that what makes\nproperty insecure to-day is not the arbitrary taxation of\nunconstitutional monarchies or the privileges of an idle _noblesse_,\nbut the insatiable expansion and aggregation of property itself, which\nmenaces with absorption all property less than the greatest, the small\nmaster, the little shopkeeper, the country bank, and has turned the\nmass of mankind into a proletariat working under the agents and for the\nprofit of those who own.\n\nThe characteristic fact, which differentiates most {62} modern property\nfrom that of the pre-industrial age, and which turns against it the\nvery reasoning by which formerly it was supported, is that in modern\neconomic conditions ownership is not active, but passive, that to most\nof those who own property to-day it is not a means of work but an\ninstrument for the acquisition of gain or the exercise of power, and\nthat there is no guarantee that gain bears any relation to service, or\npower to responsibility.  For property which can be regarded as a\ncondition of the performance of function, like the tools of the\ncraftsman, or the holding of the peasant, or the personal possessions\nwhich contribute to a life of health and efficiency, forms an\ninsignificant proportion, as far as its value is concerned, of the\nproperty rights existing at present.  In modern industrial societies\nthe great mass of property consists, as the annual review of wealth\npassing at death reveals, neither of personal acquisitions such as\nhousehold furniture, nor of the owner's stock-in-trade, but of rights\nof various kinds, such as royalties, ground-rents, and, above all, of\ncourse shares in industrial undertakings which yield an income\nirrespective of any personal service rendered by their owners.\nOwnership and use are normally divorced.  The greater part of modern\nproperty has been attenuated to a pecuniary lien or bond on the product\nof industry which carries with it a right to payment, but which is\nnormally valued precisely because it relieves the owner from any\nobligation to perform a positive or constructive function.\n\nSuch property may be called passive property, or property for\nacquisition, for exploitation, or for power, {63} to distinguish it\nfrom the property which is actively used by its owner for the conduct\nof his profession or the upkeep of his household.  To the lawyer the\nfirst is, of course, as fully property as the second.  It is\nquestionable, however, whether economists shall call it \"Property\" at\nall, and not rather, as Mr. Hobson has suggested, \"Improperty,\" since\nit is not identical with the rights which secure the owner the produce\nof his toil, but is opposite of them.  A classification of proprietary\nrights based upon this difference would be instructive.  If they were\narranged according to the closeness with which they approximate to one\nor other of these two extremes, it would be found that they were spread\nalong a line stretching from property which is obviously the payment\nfor, and condition of, personal services, to property which is merely a\nright to payment from the services rendered by others, in fact a\nprivate tax.  The rough order which would emerge, if all details and\nqualification were omitted, might be something as follows:--\n\n1.  Property in payments made for personal services.\n\n2.  Property in personal possessions necessary to health and comfort.\n\n3.  Property in land and tools used by their owners.\n\n4.  Property in copyright and patent rights owned by authors and\ninventors.\n\n5.  Property in pure interest, including much agricultural rent.\n\n6.  Property in profits of luck and good fortune: \"quasi-rents.\"\n\n7.  Property in monopoly profits.\n\n{64}\n\n8.  Property in urban ground rents.\n\n9.  Property in royalties.\n\nThe first four kinds of property obviously accompany, and in some sense\ncondition, the performance of work.  The last four obviously do not.\nPure interest has some affinities with both.  It represents a necessary\neconomic cost, the equivalent of which must be born, whatever the legal\narrangements under which property is held, and is thus unlike the\nproperty represented by profits (other than the equivalent of salaries\nand payment for necessary risk), urban ground-rents and royalties.  It\nrelieves the recipient from personal services, and thus resembles them.\n\nThe crucial question for any society is, under which each of these two\nbroad groups of categories the greater part (measured in value) of the\nproprietary rights which it maintains are at any given moment to be\nfound.  If they fall in the first group creative work will be\nencouraged and idleness will be depressed; if they fall in the second,\nthe result will be the reverse.  The facts vary widely from age to age\nand from country to country.  Nor have they ever been fully revealed;\nfor the lords of the jungle do not hunt by daylight.  It is probable,\nat least, that in the England of 1550 to 1750, a larger proportion of\nthe existing property consisted of land and tools used by their owners\nthan either in contemporary France, where feudal dues absorbed a\nconsiderable proportion of the peasants' income, or than in the England\nof 1800 to 1850, where the new capitalist manufacturers made hundreds\nper cent. while manual workers were goaded by starvation into\nineffectual {65} revolt.  It is probable that in the nineteenth\ncentury, thanks to the Revolution, France and England changed places,\nand that in this respect not only Ireland but the British Dominions\nresemble the former rather than the latter.  The transformation can be\nstudied best of all in the United States, in parts of which the\npopulation of peasant proprietors and small masters of the early\nnineteenth century were replaced in three generations by a propertyless\nproletariat and a capitalist plutocracy.  The abolition of the economic\nprivileges of agrarian feudalism, which, under the name of equality,\nwas the driving force of the French Revolution, and which has taken\nplace, in one form or another, in all countries touched by its\ninfluence, has been largely counter-balanced since 1800 by the growth\nof the inequalities springing from Industrialism.\n\nIn England the general effect of recent economic development has been\nto swell proprietary rights which entitle the owners to payment without\nwork, and to diminish those which can properly be described as\nfunctional.  The expansion of the former, and the process by which the\nsimpler forms of property have been merged in them, are movements the\nsignificance of which it is hardly possible to over-estimate.  There\nis, of course, a considerable body of property which is still of the\nolder type.  But though working landlords, and capitalists who manage\ntheir own businesses, are still in the aggregate a numerous body, the\norganization for which they stand is not that which is most\nrepresentative of the modern economic world.  The general tendency for\nthe ownership and administration of {66} property to be separated, the\ngeneral refinement of property into a claim on goods produced by an\nunknown worker, is as unmistakable as the growth of capitalist industry\nand urban civilization themselves.  Villages are turned into towns and\nproperty in land changes from the holding worked by a farmer or the\nestate administered by a landlord into \"rents,\" which are advertised\nand bought and sold like any other investment.  Mines are opened and\nthe rights of the landowner are converted into a tribute for every ton\nof coal which is brought to the surface.  As joint-stock companies take\nthe place of the individual enterprise which was typical of the earlier\nyears of the factory system, organization passes from the employer who\nboth owns and manages his business, into the hands of salaried\nofficials, and again the mass of property-owners is swollen by the\nmultiplication of _rentiers_ who put their wealth at the disposal of\nindustry, but who have no other connection with it.  The change is\ntaking place in our day most conspicuously, perhaps, through the\ndisplacement in retail trade of the small shopkeeper by the multiple\nstore, and the substitution in manufacturing industry of combines and\namalgamations for separate businesses conducted by competing employers.\nAnd, of course, it is not only by economic development that such claims\nare created.  \"Out of the eater came forth meat, and out of the strong\ncame forth sweetness.\"  It is probable that war, which in barbarous\nages used to be blamed as destructive of property, has recently created\nmore titles to property than almost all other causes put together.\n\nInfinitely diverse as are these proprietary rights, they {67} have the\ncommon characteristic of being so entirely separated from the actual\nobjects over which they are exercised, so rarified and generalized, as\nto be analogous almost to a form of currency rather than to the\nproperty which is so closely united to its owner as to seem a part of\nhim.  Their isolation from the rough environment of economic life,\nwhere the material objects of which they are the symbol are shaped and\nhandled, is their charm.  It is also their danger.  The hold which a\nclass has upon the future depends on the function which it performs.\nWhat nature demands is work: few working aristocracies, however\ntyrannical, have fallen; few functionless aristocracies have survived.\nIn society, as in the world of organic life, atrophy is but one stage\nremoved from death.  In proportion as the landowner becomes a mere\n_rentier_ and industry is conducted, not by the rude energy of the\ncompeting employers who dominated its infancy, but by the salaried\nservants of shareholders, the argument for private property which\nreposes on the impossibility of finding any organization to supersede\nthem loses its application, for they are already superseded.\n\nWhatever may be the justification of these types of property, it cannot\nbe that which was given for the property of the peasant or the\ncraftsman.  It cannot be that they are necessary in order to secure to\neach man the fruits of his own labor.  For if a legal right which gives\n$200,000 a year to a mineral owner in the North of England and to a\nground landlord in London \"secures the fruits of labor\" at all, the\nfruits are the proprietor's and the labor that of some one else.\nProperty {68} has no more insidious enemies than those well-meaning\nanarchists who, by defending all forms of it as equally valid, involve\nthe institution in the discredit attaching to its extravagances.  In\nreality, whatever conclusion may be drawn from the fact, the greater\npart of modern property, whether, like mineral rights and urban\nground-rents, it is merely a form of private taxation which the law\nallows certain persons to levy on the industry of others, or whether,\nlike property in capital, it consists of rights to payment for\ninstruments which the capitalist cannot himself use but puts at the\ndisposal of those who can, has as its essential feature that it confers\nupon its owners income unaccompanied by personal service.  In this\nrespect the ownership of land and the ownership of capital are normally\nsimilar, though from other points of view their differences are\nimportant.  To the economist rent and interest are distinguished by the\nfact that the latter, though it is often accompanied by surplus\nelements which are merged with it in dividends, is the price of an\ninstrument of production which would not be forthcoming for industry if\nthe price were not paid, while the former is a differential surplus\nwhich does not affect the supply.  To the business community and the\nsolicitor land and capital are equally investments, between which,\nsince they possess the common characteristic of yielding income without\nlabor, it is inequitable to discriminate; and though their significance\nas economic categories may be different, their effect as social\ninstitutions is the same.  It is to separate property from creative\nability, and to divide society into two classes, of which one has its\n{69} primary interest in passive ownership, while the other is mainly\ndependent upon active work.\n\nHence the real analogy to many kinds of modern property is not the\nsimple property of the small land-owner or the craftsman, still less\nthe household goods and dear domestic amenities, which is what the word\nsuggests to the guileless minds of clerks and shopkeepers, and which\nstampede them into displaying the ferocity of terrified sheep when the\ncry is raised that \"Property\" is threatened.  It is the feudal dues\nwhich robbed the French peasant of part of his produce till the\nRevolution abolished them.  How do royalties differ from _quintaines_\nand _lods et ventes_?  They are similar in their origin and similar in\nbeing a tax levied on each increment of wealth which labor produces.\nHow do urban ground-rents differ from the payments which were made to\nEnglish sinecurists before the Reform Bill of 1832?  They are equally\ntribute paid by those who work to those who do not.  If the monopoly\nprofits of the owner of _banalites_, whose tenant must grind corn at\nhis mill and make wine at his press, were an intolerable oppression,\nwhat is the sanctity attaching to the monopoly profits of the\ncapitalists, who, as the Report of the Government Committee on trusts\ntells us, \"in soap, tobacco, wallpaper, salt, cement and in the textile\ntrades ... are in a position to control output and prices\" or, in other\nwords, can compel the consumer to buy from them, at the figure they\nfix, on pain of not buying at all?\n\nAll these rights--royalties, ground-rents, monopoly profits--are\n\"Property.\"  The criticism most fatal to them is not that of\nSocialists.  It is contained in the {70} arguments by which property is\nusually defended.  For if the meaning of the institution is to\nencourage industry by securing that the worker shall receive the\nproduce of his toil, then precisely in proportion as it is important to\npreserve the property which a man has in the results of his own\nefforts, is it important to abolish that which he has in the results of\nthe efforts of some one else.  The considerations which justify\nownership as a function are those which condemn it as a tax.  Property\nis not theft, but a good deal of theft becomes property.  The owner of\nroyalties who, when asked why he should be paid L50,000 a year from\nminerals which he has neither discovered nor developed nor worked but\nonly owned, replies \"But it's Property!\" may feel all the awe which his\nlanguage suggests.  But in reality he is behaving like the snake which\nsinks into its background by pretending that it is the dead branch of a\ntree, or the lunatic who tried to catch rabbits by sitting behind a\nhedge and making a noise like a turnip.  He is practising\nprotective--and sometimes aggressive--mimicry.  His sentiments about\nproperty are those of the simple toiler who fears that what he has sown\nanother may reap.  His claim is to be allowed to continue to reap what\nanother has sown.\n\nIt is sometimes suggested that the less attractive characteristics of\nour industrial civilization, its combination of luxury and squalor, its\nclass divisions and class warfare, are accidental maladjustments which\nare not rooted in the center of its being, but are excrescences which\neconomic progress itself may in time be expected to correct.  That\nagreeable optimism will not survive an {71} examination of the\noperation of the institution of private property in land and capital in\nindustrialized communities.  In countries where land is widely\ndistributed, in France or in Ireland, its effect may be to produce a\ngeneral diffusion of wealth among a rural middle class who at once work\nand own.  In countries where the development of industrial organization\nhas separated the ownership of property and the performance of work,\nthe normal effect of private property is to transfer to functionless\nowners the surplus arising from the more fertile sites, the better\nmachinery, the more elaborate organization.  No clearer\nexemplifications of this \"law of rent\" has been given than the figures\nsupplied to the Coal Industry Commission by Sir Arthur Lowes Dickenson,\nwhich showed that in a given quarter the costs per ton of producing\ncoal varied from $3.12 to $12 per ton, and the profits from nil to\n$4.12.  The distribution in dividends to shareholders of the surplus\naccruing from the working of richer and more accessible seams, from\nspecial opportunities and access to markets, from superior machinery,\nmanagement and organization, involves the establishment of Privilege as\na national institution, as much as the most arbitrary exactions of a\nfeudal _seigneur_.  It is the foundation of an inequality which is not\naccidental or temporary, but necessary and permanent.  And on this\ninequality is erected the whole apparatus of class institutions, which\nmake not only the income, but the housing, education, health and\nmanners, indeed the very physical appearance of different classes of\nEnglishmen almost as different from each other as though the minority\nwere {72} alien settlers established amid the rude civilization of a\nrace of impoverished aborigines.\n\n\nSo the justification of private property traditional in England, which\nsaw in it the security that each man would enjoy the fruits of his own\nlabor, though largely applicable to the age in which it was formulated,\nhas undergone the fate of most political theories.  It has been refuted\nnot by the doctrines of rival philosophers, but by the prosaic course\nof economic development.  As far as the mass of mankind are concerned,\nthe need which private property other than personal possessions does\nstill often satisfy, though imperfectly and precariously, is the need\nfor security.  To the small investors, who are the majority of\nproperty-owners, though owning only an insignificant fraction of the\nproperty in existence, its meaning is simple.  It is not wealth or\npower, or even leisure from work.  It is safety.  They work hard.  They\nsave a little money for old age, or for sickness, or for their\nchildren.  They invest it, and the interest stands between them and all\nthat they dread most.  Their savings are of convenience to industry,\nthe income from them is convenient to themselves.  \"Why,\" they ask,\n\"should we not reap in old age the advantage of energy and thrift in\nyouth?\"  And this hunger for security is so imperious that those who\nsuffer most from the abuses of property, as well as those who, if they\ncould profit by them, would be least inclined to do so, will tolerate\nand even defend them, for fear lest the knife which trims dead matter\nshould cut into the quick.  They have seen too many men drown to be\n{73} critical of dry land, though it be an inhospitable rock.  They are\nhaunted by the nightmare of the future, and, if a burglar broke it,\nwould welcome a burglar.\n\nThis need for security is fundamental, and almost the gravest\nindictment of our civilization is that the mass of mankind are without\nit.  Property is one way of organizing it.  It is quite comprehensible\ntherefore, that the instrument should be confused with the end, and\nthat any proposal to modify it should create dismay.  In the past,\nhuman beings, roads, bridges and ferries, civil, judicial and clerical\noffices, and commissions in the army have all been private property.\nWhenever it was proposed to abolish the rights exercised over them, it\nwas protested that their removal would involve the destruction of an\ninstitution in which thrifty men had invested their savings, and on\nwhich they depended for protection amid the chances of life and for\ncomfort in old age.  In fact, however, property is not the only method\nof assuring the future, nor, when it is the way selected, is security\ndependent upon the maintenance of all the rights which are at present\nnormally involved in ownership.  In so far as its psychological\nfoundation is the necessity for securing an income which is stable and\ncertain, which is forthcoming when its recipient cannot work, and which\ncan be used to provide for those who cannot provide for themselves,\nwhat is really demanded is not the command over the fluctuating\nproceeds of some particular undertaking, which accompanies the\nownership of capital, but the security which is offered by an annuity.\nProperty is the instrument, security is the object, and when some\nalternative way is forthcoming {74} of providing the latter, it does\nnot appear in practice that any loss of confidence, or freedom or\nindependence is caused by the absence of the former.\n\nHence not only the manual workers, who since the rise of capitalism,\nhave rarely in England been able to accumulate property sufficient to\nact as a guarantee of income when their period of active earning is\npast, but also the middle and professional classes, increasingly seek\nsecurity to-day, not in investment, but in insurance against sickness\nand death, in the purchase of annuities, or in what is in effect the\nsame thing, the accumulation of part of their salary towards a pension\nwhich is paid when their salary ceases.  The professional man may buy\nshares in the hope of making a profit on the transaction.  But when\nwhat he desires to buy is security, the form which his investment takes\nis usually one kind or another of insurance.  The teacher, or nurse, or\ngovernment servant looks forward to a pension.  Women, who fifty years\nago would have been regarded as dependent almost as completely as if\nfemininity were an incurable disease with which they had been born, and\nwhose fathers, unless rich men, would have been tormented with anxiety\nfor fear lest they should not save sufficient to provide for them, now\nreceive an education, support themselves in professions, and save in\nthe same way.  It is still only in comparatively few cases that this\ntype of provision is made; almost all wage-earners outside government\nemployment, and many in it, as well as large numbers of professional\nmen, have nothing to fall back upon in sickness or old age.  But that\ndoes not alter the fact {75} that, when it is made, it meets the need\nfor security, which, apart, of course, from personal possessions and\nhousehold furniture, is the principal meaning of property to by far the\nlargest element in the population, and that it meets it more completely\nand certainly than property itself.\n\nNor, indeed, even when property is the instrument used to provide for\nthe future, is such provision dependent upon the maintenance in its\nentirety of the whole body of rights which accompany ownership to-day.\nProperty is not simple but complex.  That of a man who has invested his\nsavings as an ordinary shareholder comprises at least three rights, the\nright to interest, the right to profits, the right to control.  In so\nfar as what is desired is the guarantee for the maintenance of a stable\nincome, not the acquisition of additional wealth without labor--in so\nfar as his motive is not gain but security--the need is met by interest\non capital.  It has no necessary connection either with the right to\nresiduary profits or the right to control the management of the\nundertaking from which the profits are derived, both of which are\nvested to-day in the shareholder.  If all that were desired were to use\nproperty as an instrument for purchasing security, the obvious\ncourse--from the point of view of the investor desiring to insure his\nfuture the safest course--would be to assimilate his position as far as\npossible to that of a debenture holder or mortgagee, who obtains the\nstable income which is his motive for investment, but who neither\nincurs the risks nor receives the profits of the speculator.  To insist\nthat the elaborate apparatus of proprietary rights which {76}\ndistributes dividends of thirty per cent to the shareholders in Coats,\nand several thousands a year to the owner of mineral royalties and\nground-rents, and then allows them to transmit the bulk of gains which\nthey have not earned to descendants who in their turn will thus be\nrelieved from the necessity of earning, must be maintained for the sake\nof the widow and the orphan, the vast majority of whom have neither and\nwould gladly part with them all for a safe annuity if they had, is, to\nsay the least of it, extravagantly _mal-a-propos_.  It is like pitching\na man into the water because he expresses a wish for a bath, or\npresenting a tiger cub to a householder who is plagued with mice, on\nthe ground that tigers and cats both belong to the genus _felis_.  The\ntiger hunts for itself not for its masters, and when game is scarce\nwill hunt them.  The classes who own little or no property may\nreverence it because it is security.  But the classes who own much\nprize it for quite different reasons, and laugh in their sleeve at the\ninnocence which supposes that anything as vulgar as the savings of the\n_petite bourgeoisie_ have, except at elections, any interest for them.\nThey prize it because it is the order which quarters them on the\ncommunity and which provides for the maintenance of a leisure class at\nthe public expense.\n\n\"Possession,\" said the Egoist, \"without obligation to the object\npossessed, approaches felicity.\"  Functionless property appears natural\nto those who believe that society should be organized for the\nacquisition of private wealth, and attacks upon it perverse or\nmalicious, because the question which they ask of any institution is,\n\"What does it yield?\"  And such property yields much {77} to those who\nown it.  Those, however, who hold that social unity and effective work\nare possible only if society is organized and wealth distributed on the\nbasis of function, will ask of an institution, not, \"What dividends\ndoes it pay?\" but \"What service does it perform?\"  To them the fact\nthat much property yields income irrespective of any service which is\nperformed or obligation which is recognized by its owners will appear\nnot a quality but a vice.  They will see in the social confusion which\nit produces, payments disproportionate to service here, and payments\nwithout any service at all there, and dissatisfaction everywhere, a\nconvincing confirmation of their argument that to build on a foundation\nof rights and of rights alone is to build on a quicksand.\n\nFrom the portentous exaggeration into an absolute of what once was, and\nstill might be, a sane and social institution most other social evils\nfollow the power of those who do not work over those who do, the\nalternate subservience and rebelliousness of those who work towards\nthose who do not, the starving of science and thought and creative\neffort for fear that expenditure upon them should impinge on the\ncomfort of the sluggard and the _faineant_, and the arrangement of\nsociety in most of its subsidiary activities to suit the convenience\nnot of those who work usefully but of those who spend gaily, so that\nthe most hideous, desolate and parsimonious places in the country are\nthose in which the greatest wealth is produced, the Clyde valley, or\nthe cotton towns of Lancashire, or the mining villages of Scotland and\nWales, and the gayest and most luxurious {78} those in which it is\nconsumed.  From the point of view of social health and economic\nefficiency, society should obtain its material equipment at the\ncheapest price possible, and after providing for depreciation and\nexpansion should distribute the whole product to its working members\nand their dependents.  What happens at present, however, is that its\nworkers are hired at the cheapest price which the market (as modified\nby organization) allows, and that the surplus, somewhat diminished by\ntaxation, is distributed to the owners of property.  Profits may vary\nin a given year from a loss to 100 per cent.  But wages are fixed at a\nlevel which will enable the marginal firm to continue producing one\nyear with another; and the surplus, even when due partly to efficient\nmanagement, goes neither to managers nor manual workers, but to\nshareholders.  The meaning of the process becomes startlingly apparent\nwhen, as in Lancashire to-day, large blocks of capital change hands at\na period of abnormal activity.  The existing shareholders receive the\nequivalent of the capitalized expectation of future profits.  The\nworkers, as workers, do not participate in the immense increment in\nvalue; and when, in the future, they demand an advance in wages, they\nwill be met by the answer that profits, which before the transaction\nwould have been reckoned large, yield shareholders after it only a low\nrate of interest on their investment.\n\nThe truth is that whereas in earlier ages the protection of property\nwas normally the protection of work, the relationship between them has\ncome in the course of the economic development of the last two\ncenturies to {79} be very nearly reversed.  The two elements which\ncompose civilization are active effort and passive property, the labor\nof human things and the tools which human beings use.  Of these two\nelements those who supply the first maintain and improve it, those who\nown the second normally dictate its character, its development and its\nadministration.  Hence, though politically free, the mass of mankind\nlive in effect under rules imposed to protect the interests of the\nsmall section among them whose primary concern is ownership.  From this\nsubordination of creative activity to passive property, the worker who\ndepends upon his brains, the organizer, inventor, teacher or doctor\nsuffers almost as much embarrassment as the craftsman.  The real\neconomic cleavage is not, as is often said, between employers and\nemployed, but between all who do constructive work, from scientist to\nlaborer, on the one hand, and all whose main interest is the\npreservation of existing proprietary rights upon the other,\nirrespective of whether they contribute to constructive work or not.\n\nIf, therefore, under the modern conditions which have concentrated any\nsubstantial share of property in the hands of a small minority of the\npopulation, the world is to be governed for the advantages of those who\nown, it is only incidentally and by accident that the results will be\nagreeable to those who work.  In practice there is a constant collision\nbetween them.  Turned into another channel, half the wealth distributed\nin dividends to functionless shareholders, could secure every child a\ngood education up to 18, could re-endow English Universities, and\n(since more efficient production is {80} important) could equip English\nindustries for more efficient production.  Half the ingenuity now\napplied to the protection of property could have made most industrial\ndiseases as rare as smallpox, and most English cities into places of\nhealth and even of beauty.  What stands in the way is the doctrine that\nthe rights of property are absolute, irrespective of any social\nfunction which its owners may perform.  So the laws which are most\nstringently enforced are still the laws which protect property, though\nthe protection of property is no longer likely to be equivalent to the\nprotection of work, and the interests which govern industry and\npredominate in public affairs are proprietary interests.  A mill-owner\nmay poison or mangle a generation of operatives; but his brother\nmagistrates will let him off with a caution or a nominal fine to poison\nand mangle the next.  For he is an owner of property.  A landowner may\ndraw rents from slums in which young children die at the rate of 200\nper 1000; but he will be none the less welcome in polite society.  For\nproperty has no obligations and therefore can do no wrong.  Urban land\nmay be held from the market on the outskirts of cities in which human\nbeings are living three to a room, and rural land may be used for sport\nwhen villagers are leaving it to overcrowd them still more.  No public\nauthority intervenes, for both are property.  To those who believe that\ninstitutions which repudiate all moral significance must sooner or\nlater collapse, a society which confuses the protection of property\nwith the preservation of its functionless perversions will appear as\nprecarious as that which has left the memorials of its {81} tasteless\nfrivolity and more tasteless ostentation in the gardens of Versailles.\n\nDo men love peace?  They will see the greatest enemy of social unity in\nrights which involve no obligation to co-operate for the service of\nsociety.  Do they value equality?  Property rights which dispense their\nowners from the common human necessity of labor make inequality an\ninstitution permeating every corner of society, from the distribution\nof material wealth to the training of intellect itself.  Do they desire\ngreater industrial efficiency?  There is no more fatal obstacle to\nefficiency than the revelation that idleness has the same privileges as\nindustry, and that for every additional blow with the pick or hammer an\nadditional profit will be distributed among shareholders who wield\nneither.\n\nIndeed, functionless property is the greatest enemy of legitimate\nproperty itself.  It is the parasite which kills the organism that\nproduced it.  Bad money drives out good, and, as the history of the\nlast two hundred years shows, when property for acquisition or power\nand property for service or for use jostle each other freely in the\nmarket, without restrictions such as some legal systems have imposed on\nalienation and inheritance, the latter tends normally to be absorbed by\nthe former, because it has less resisting power.  Thus functionless\nproperty grows, and as it grows it undermines the creative energy which\nproduced property and which in earlier ages it protected.  It cannot\nunite men, for what unites them is the bond of service to a common\npurpose, and that bond it repudiates, since its very {82} essence is\nthe maintenance of rights irrespective of service.  It cannot create;\nit can only spend, so that the number of scientists, inventors, artists\nor men of letters who have sprung in the course of the last century\nfrom hereditary riches can be numbered on one hand.  It values neither\nculture nor beauty, but only the power which belongs to wealth and the\nostentation which is the symbol of it.\n\nSo those who dread these qualities, energy and thought and the creative\nspirit--and they are many--will not discriminate, as we have tried to\ndiscriminate, between different types and kinds of property, in order\nthat they may preserve those which are legitimate and abolish those\nwhich are not.  They will endeavor to preserve all private property,\neven in its most degenerate forms.  And those who value those things\nwill try to promote them by relieving property of its perversions, and\nthus enabling it to return to its true nature.  They will not desire to\nestablish any visionary communism, for they will realize that the free\ndisposal of a sufficiency of personal possessions is the condition of a\nhealthy and self-respecting life, and will seek to distribute more\nwidely the property rights which make them to-day the privilege of a\nminority.  But they will refuse to submit to the naive philosophy which\nwould treat all proprietary rights as equal in sanctity merely because\nthey are identical in name.  They will distinguish sharply between\nproperty which is used by its owner for the conduct of his profession\nor the upkeep of his household, and property which is merely a claim on\nwealth produced by another's labor.  They will insist that {83}\nproperty is moral and healthy only when it is used as a condition not\nof idleness but of activity, and when it involves the discharge of\ndefinite personal obligations.  They will endeavor, in short, to base\nit upon the principle of function.\n\n\n\n\n{84}\n\nVI\n\nTHE FUNCTIONAL SOCIETY\n\nThe application to property and industry of the principle of function\nis compatible with several different types of social organization, and\nis as unlikely as more important revelations to be the secret of those\nwho cry \"Lo here!\" and \"Lo there!\"  The essential thing is that men\nshould fix their minds upon the idea of purpose, and give that idea\npre-eminence over all subsidiary issues.  If, as is patent, the purpose\nof industry is to provide the material foundation of a good social\nlife, then any measure which makes that provision more effective, so\nlong as it does not conflict with some still more important purpose, is\nwise, and any institution which thwarts or encumbers it is foolish.  It\nis foolish, for example, to cripple education, as it is crippled in\nEngland for the sake of industry; for one of the uses of industry is to\nprovide the wealth which may make possible better education.  It is\nfoolish to maintain property rights for which no service is performed,\nfor payment without service is waste; and if it is true, as\nstatisticians affirm, that, even were income equally divided, income\nper head would be small, then it is all the more foolish, for sailors\nin a boat have no room for first-class passengers, and it is all the\nmore important that none of the small national income should be\nmisapplied.  It is foolish to leave the direction of industry {85} in\nthe hands of servants of private property-owners who themselves know\nnothing about it but its balance sheets, because this is to divert it\nfrom the performance of service to the acquisition of gain, and to\nsubordinate those who do creative work to those who do not.\n\nThe course of wisdom in the affairs of industry is, after all, what it\nis in any other department of organized life.  It is to consider the\nend for which economic activity is carried on and then to adapt\neconomic organization to it.  It is to pay for service and for service\nonly, and when capital is hired to make sure that it is hired at the\ncheapest possible price.  It is to place the responsibility for\norganizing industry on the shoulders of those who work and use, not of\nthose who own, because production is the business of the producer and\nthe proper person to see that he discharges his business is the\nconsumer for whom, and not for the owner of property, it ought to be\ncarried on.  Above all it is to insist that all industries shall be\nconducted in complete publicity as to costs and profits, because\npublicity ought to be the antiseptic both of economic and political\nabuses, and no man can have confidence in his neighbor unless both work\nin the light.\n\nAs far as property is concerned, such a policy would possess two edges.\nOn the one hand, it would aim at abolishing those forms of property in\nwhich ownership is divorced from obligations.  On the other hand, it\nwould seek to encourage those forms of economic organization under\nwhich the worker, whether owner or not, is free to carry on his work\nwithout sharing its control or its profits with the mere _rentier_.\nThus, if in certain {86} spheres it involved an extension of public\nownership, it would in others foster an extension of private property.\nFor it is not private ownership, but private ownership divorced from\nwork, which is corrupting to the principle of industry; and the idea of\nsome socialists that private property in land or capital is necessarily\nmischievous is a piece of scholastic pedantry as absurd as that of\nthose conservatives who would invest all property with some kind of\nmysterious sanctity.  It all depends what sort of property it is and\nfor what purpose it is used.  Provided that the State retains its\neminent domain, and controls alienation, as it does under the Homestead\nlaws of the Dominions, with sufficient stringency to prevent the\ncreation of a class of functionless property-owners, there is no\ninconsistency between encouraging simultaneously a multiplication of\npeasant farmers and small masters who own their own farms or shops, and\nthe abolition of private ownership in those industries, unfortunately\nto-day the most conspicuous, in which the private owner is an absentee\nshareholder.\n\nIndeed, the second reform would help the first.  In so far as the\ncommunity tolerates functionless property it makes difficult, if not\nimpossible, the restoration of the small master in agriculture or in\nindustry, who cannot easily hold his own in a world dominated by great\nestates or capitalist finance.  In so far as it abolishes those kinds\nof property which are merely parasitic, it facilitates the restoration\nof the small property-owner in those kinds of industry for which small\nownership is adapted.  A socialistic policy towards the former is not\n{87} antagonistic to the \"distributive state,\" but, in modern economic\nconditions, a necessary preliminary to it, and if by \"Property\" is\nmeant the personal possessions which the word suggests to nine-tenths\nof the population, the object of socialists is not to undermine\nproperty but to protect and increase it.  The boundary between large\nscale and small scale production will always be uncertain and\nfluctuating, depending, as it does, on technical conditions which\ncannot be foreseen: a cheapening of electrical power, for example,\nmight result in the decentralization of manufactures, as steam resulted\nin their concentration.  The fundamental issue, however, is not between\ndifferent scales of ownership, but between ownership of different\nkinds, not between the large farmer or master and the small, but\nbetween property which is used for work and property which yields\nincome without it.  The Irish landlord was abolished, not because he\nowned a large scale, but because he was an owner and nothing more; if,\nand when English land-ownership has been equally attenuated, as in\ntowns it already has been, it will deserve to meet the same fate.  Once\nthe issue of the character of ownership has been settled, the question\nof the size of the economic unit can be left to settle itself.\n\nThe first step, then, towards the organization of economic life for the\nperformance of function is to abolish those types of private property\nin return for which no function is performed.  The man who lives by\nowning without working is necessarily supported by the industry of some\none else, and is, therefore, too expensive a luxury to be encouraged.\nThough he deserves to be {88} treated with the leniency which ought to\nbe, and usually is not, shown to those who have been brought up from\ninfancy to any other disreputable trade, indulgence to individuals must\nnot condone the institution of which both they and their neighbors are\nthe victims.  Judged by this standard, certain kinds of property are\nobviously anti-social.  The rights in virtue of which the owner of the\nsurface is entitled to levy a tax, called a royalty, on every ton of\ncoal which the miner brings to the surface, to levy another tax, called\na way-leave, on every ton of coal transported under the surface of his\nland though its amenity and value may be quite unaffected, to distort,\nif he pleases, the development of a whole district by refusing access\nto the minerals except upon his own terms, and to cause some 3,500 to\n4,000 million tons to be wasted in barriers between different\nproperties, while he in the meantime contributes to a chorus of\nlamentation over the wickedness of the miners in not producing more\ntons of coal for the public and incidentally more private taxes for\nhimself--all this adds an agreeable touch of humor to the drab quality\nof our industrial civilization for which mineral owners deserve perhaps\nsome recognition, though not the $400,000 odd a year which is paid to\neach of the four leading players, or the $24,000,000 a year which is\ndistributed among the crowd.\n\nThe alchemy by which a gentleman who has never seen a coal mine\ndistills the contents of that place of gloom into elegant chambers in\nLondon and a place in the country is not the monopoly of royalty\nowners.  A similar feat of prestidigitation is performed by the {89}\nowner of urban ground-rents.  In rural districts some landlords,\nperhaps many landlords, are partners in the hazardous and difficult\nbusiness of agriculture, and, though they may often exercise a power\nwhich is socially excessive, the position which they hold and the\nincome which they receive are, in part at last, a return for the\nfunctions which they perform.  The ownership of urban land has been\nrefined till of that crude ore only the pure gold is left.  It is the\nperfect sinecure, for the only function it involves is that of\ncollecting its profits, and in an age when the struggle of Liberalism\nagainst sinecures was still sufficiently recent to stir some chords of\nmemory, the last and greatest of liberal thinkers drew the obvious\ndeduction.  \"The reasons which form the justification ... of property\nin land,\" wrote Mill in 1848, \"are valid only in so far as the\nproprietor of land is its improver....  In no sound theory of private\nproperty was it ever contemplated that the proprietor of land should be\nmerely a sinecurist quartered on it.\"  Urban ground-rents and royalties\nare, in fact, as the Prime Minister in his unregenerate days suggested,\na tax which some persons are permitted by the law to levy upon the\nindustry of others.  They differ from public taxation only in that\ntheir amount increases in proportion not to the nation's need of\nrevenue but to its need of the coal and space on which they are levied,\nthat their growth inures to private gain not to public benefit, and\nthat if the proceeds are wasted on frivolous expenditure no one has any\nright to complain, because the arrangement by which Lord Smith spends\nwealth produced by Mr. Brown on objects which do no good to either is\npart {90} of the system which, under the name of private property, Mr.\nBrown as well as Lord Smith have learned to regard as essential to the\nhigher welfare of mankind.\n\nBut if we accept the principle of function we shall ask what is the\n_purpose_ of this arrangement, and for what end the inhabitants of, for\nexample, London pay $64,000,000 a year to their ground landlords.  And\nif we find that it is for no purpose and no end, but that these things\nare like the horseshoes and nails which the City of London presents to\nthe Crown on account of land in the Parish of St. Clement Danes, then\nwe shall not deal harshly with a quaint historical survival, but\nneither shall we allow it to distract us from the business of the\npresent, as though there had been history but there were not history\nany longer.  We shall close these channels through which wealth leaks\naway by resuming the ownership of minerals and of urban land, as some\ncommunities in the British Dominions and on the Continent of Europe\nhave resumed it already.  We shall secure that such large accumulations\nas remain change hands at least once in every generation, by increasing\nour taxes on inheritance till what passes to the heir is little more\nthan personal possessions, not the right to a tribute from industry\nwhich, though qualified by death-duties, is what the son of a rich man\ninherits to-day.  We shall treat mineral owners and land-owners, in\nshort, as Plato would have treated the poets, whom in their ability to\nmake something out of nothing and to bewitch mankind with words they a\nlittle resemble, and crown them with flowers and usher them politely\nout of the State.\n\n\n\n\n{91}\n\nVII\n\nINDUSTRY AS A PROFESSION\n\nRights without functions are like the shades in Homer which drank blood\nbut scattered trembling at the voice of a man.  To extinguish royalties\nand urban ground-rents is merely to explode a superstition.  It needs\nas little--and as much--resolution as to put one's hand through any\nother ghost.  In all industries except the diminishing number in which\nthe capitalist is himself the manager, property in capital is almost\nequally passive.  Almost, but not quite.  For, though the majority of\nits owners do not themselves exercise any positive function, they\nappoint those who do.  It is true, of course, that the question of how\ncapital is to be owned is distinct from the question of how it is to be\nadministered, and that the former can be settled without prejudice to\nthe latter.  To infer, because shareholders own capital which is\nindispensable to industry, that therefore industry is dependent upon\nthe maintenance of capital in the hands of shareholders, to write, with\nsome economists, as though, if private property in capital were further\nattenuated or abolished altogether, the constructive energy of the\nmanagers who may own capital or may not, but rarely, in the more\nimportant industries, own more than a small fraction of it, must\nnecessarily be impaired, is to be guilty of a robust _non-sequitur_ and\nto ignore the most obvious facts of {92} contemporary industry.  The\nless the mere capitalist talks about the necessity for the consumer of\nan efficient organization of industry, the better; for, whatever the\nfuture of industry may be, an efficient organization is likely to have\nno room for _him_.  But though shareholders do not govern, they reign,\nat least to the extent of saying once a year \"_le roy le veult_.\"  If\ntheir rights are pared down or extinguished, the necessity for some\norgan to exercise them will still remain.  And the question of the\nownership of capital has this much in common with the question of\nindustrial organization, that the problem of the constitution under\nwhich industry is to be conducted is common to both.\n\nThat constitution must be sought by considering how industry can be\norganized to express most perfectly the principle of purpose.  The\napplication to industry of the principle of purpose is simple, however\ndifficult it may be to give effect to it.  It is to turn it into a\nProfession.  A Profession may be defined most simply as a trade which\nis organized, incompletely, no doubt, but genuinely, for the\nperformance of function.  It is not simply a collection of individuals\nwho get a living for themselves by the same kind of work.  Nor is it\nmerely a group which is organized exclusively for the economic\nprotection of its members, though that is normally among its purposes.\nIt is a body of men who carry on their work in accordance with rules\ndesigned to enforce certain standards both for the better protection of\nits members and for the better service of the public.  The standards\nwhich it maintains may be high or low: all professions have some rules\nwhich protect the interests {93} of the community and others which are\nan imposition on it.  Its essence is that it assumes certain\nresponsibilities for the competence of its members or the quality of\nits wares, and that it deliberately prohibits certain kinds of conduct\non the ground that, though they may be profitable to the individual,\nthey are calculated to bring into disrepute the organization to which\nhe belongs.  While some of its rules are trade union regulations\ndesigned primarily to prevent the economic standards of the profession\nbeing lowered by unscrupulous competition, others have as their main\nobject to secure that no member of the profession shall have any but a\npurely professional interest in his work, by excluding the incentive of\nspeculative profit.\n\nThe conception implied in the words \"unprofessional conduct\" is,\ntherefore, the exact opposite of the theory and practice which assume\nthat the service of the public is best secured by the unrestricted\npursuit on the part of rival traders of their pecuniary self-interest,\nwithin such limits as the law allows.  It is significant that at the\ntime when the professional classes had deified free competition as the\narbiter of commerce and industry, they did not dream of applying it to\nthe occupations in which they themselves were primarily interested, but\nmaintained, and indeed, elaborated machinery through which a\nprofessional conscience might find expression.  The rules themselves\nmay sometimes appear to the layman arbitrary and ill-conceived.  But\ntheir object is clear.  It is to impose on the profession itself the\nobligation of maintaining the quality of the service, and to prevent\nits common purpose being frustrated through {94} the undue influence of\nthe motive of pecuniary gain upon the necessities or cupidity of the\nindividual.\n\nThe difference between industry as it exists to-day and a profession\nis, then, simple and unmistakable.  The essence of the former is that\nits only criterion is the financial return which it offers to its\nshareholders.  The essence of the latter, is that, though men enter it\nfor the sake of livelihood, the measure of their success is the service\nwhich they perform, not the gains which they amass.  They may, as in\nthe case of a successful doctor, grow rich; but the meaning of their\nprofession, both for themselves and for the public, is not that they\nmake money but that they make health, or safety, or knowledge, or good\ngovernment or good law.  They depend on it for their income, but they\ndo not consider that any conduct which increases their income is on\nthat account good.  And while a boot-manufacturer who retires with half\na million is counted to have achieved success, whether the boots which\nhe made were of leather or brown paper, a civil servant who did the\nsame would be impeached.\n\nSo, if they are doctors, they recognize that there are certain kinds of\nconduct which cannot be practised, however large the fee offered for\nthem, because they are unprofessional; if scholars and teachers, that\nit is wrong to make money by deliberately deceiving the public, as is\ndone by makers of patent medicines, however much the public may clamor\nto be deceived; if judges or public servants, that they must not\nincrease their incomes by selling justice for money; if soldiers, that\nthe service comes first, and their private inclinations, {95} even the\nreasonable preference of life to death, second.  Every country has its\ntraitors, every army its deserters, and every profession its blacklegs.\nTo idealize the professional spirit would be very absurd; it has its\nsordid side, and, if it is to be fostered in industry, safeguards will\nbe needed to check its excesses.  But there is all the difference\nbetween maintaining a standard which is occasionally abandoned, and\naffirming as the central truth of existence that there is no standard\nto maintain.  The meaning of a profession is that it makes the traitors\nthe exception, not as they are in industry, the rule.  It makes them\nthe exception by upholding as the criterion of success the end for\nwhich the profession, whatever it may be, is carried on, and\nsubordinating the inclination, appetites and ambitions of individuals\nto the rules of an organization which has as its object to promote the\nperformance of function.\n\n\nThere is no sharp line between the professions and the industries.  A\nhundred years ago the trade of teaching, which to-day is on the whole\nan honorable public service, was rather a vulgar speculation upon\npublic credulity; if Mr. Squeers was a caricature, the Oxford of Gibbon\nand Adam Smith was a solid port-fed reality; no local authority could\nhave performed one-tenth of the duties which are carried out by a\nmodern municipal corporation every day, because there was no body of\npublic servants to perform them, and such as there were took bribes.\nIt is conceivable, at least, that some branches of medicine might have\ndeveloped on the lines of industrial capitalism, with hospitals as\nfactories, {96} doctors hired at competitive wages as their \"hands,\"\nlarge dividends paid to shareholders by catering for the rich, and the\npoor, who do not offer a profitable market, supplied with an inferior\nservice or with no service at all.\n\nThe idea that there is some mysterious difference between making\nmunitions of war and firing them, between building schools and teaching\nin them when built, between providing food and providing health, which\nmakes it at once inevitable and laudable that the former should be\ncarried on with a single eye to pecuniary gain, while the latter are\nconducted by professional men who expect to be paid for service but who\nneither watch for windfalls nor raise their fees merely because there\nare more sick to be cured, more children to be taught, or more enemies\nto be resisted, is an illusion only less astonishing than that the\nleaders of industry should welcome the insult as an honor and wear\ntheir humiliation as a kind of halo.  The work of making boots or\nbuilding a house is in itself no more degrading than that of curing the\nsick or teaching the ignorant.  It is as necessary and therefore as\nhonorable.  It should be at least equally bound by rules which have as\ntheir object to maintain the standards of professional service.  It\nshould be at least equally free from the vulgar subordination of moral\nstandards to financial interests.\n\nIf industry is to be organized as a profession, two changes are\nrequisite, one negative and one positive.  The first, is that it should\ncease to be conducted by the agents of property-owners for the\nadvantage of property-owners, {97} and should be carried on, instead,\nfor the service of the public.  The second, is that, subject to\nrigorous public supervision, the responsibility for the maintenance of\nthe service should rest upon the shoulders of those, from organizer and\nscientist to laborer, by whom, in effect, the work is conducted.\n\nThe first change is necessary because the conduct of industry for the\npublic advantage is impossible as long as the ultimate authority over\nits management is vested in those whose only connection with it, and\ninterest in it, is the pursuit of gain.  As industry is at present\norganized, its profits and its control belong by law to that element in\nit which has least to do with its success.  Under the joint-stock\norganization which has become normal in all the more important\nindustries except agriculture, it is managed by the salaried agents of\nthose by whom the property is owned.  It is successful if it returns\nlarge sums to shareholders, and unsuccessful if it does not.  If an\nopportunity presents itself to increase dividends by practices which\ndeteriorate the service or degrade the workers, the officials who\nadminister industry act strictly within their duty if they seize it,\nfor they are the servants of their employers, and their obligation to\ntheir employers is to provide dividends not to provide service.  But\nthe owners of the property are, _qua_ property-owners functionless, not\nin the sense, of course, that the tools of which they are proprietors\nare not useful, but in the sense that since work and ownership are\nincreasingly separated, the efficient use of the tools is not dependent\non the maintenance of the proprietary rights exercised over them.  {98}\nOf course there are many managing directors who both own capital and\nadminister the business.  But it is none the less the case that most\nshareholders in most large industries are normally shareholders and\nnothing more.\n\nNor is their economic interest identical, as is sometimes assumed, with\nthat of the general public.  A society is rich when material goods,\nincluding capital, are cheap, and human beings dear: indeed the word\n\"riches\" has no other meaning.  The interest of those who own the\nproperty used in industry, though not, of course, of the managers who\nadminister industry and who themselves are servants, and often very\nill-paid servants at that, is that their capital should be dear and\nhuman beings cheap.  Hence, if the industry is such as to yield a\nconsiderable return, or if one unit in the industry, owing to some\nspecial advantage, produces more cheaply than its neighbors, while\nselling at the same price, or if a revival of trade raises prices, or\nif supplies are controlled by one of the combines which are now the\nrule in many of the more important industries, the resulting surplus\nnormally passes neither to the managers, nor to the other employees,\nnor to the public, but to the shareholders.  Such an arrangement is\npreposterous in the literal sense of being the reverse of that which\nwould be established by considerations of equity and common sense, and\ngives rise (among other things) to what is called \"the struggle between\nlabor and capital.\"  The phrase is apposite, since it is as absurd as\nthe relations of which it is intended to be a description.  To deplore\n\"ill-feeling\" or to advocate {99} \"harmony\" between \"labor and capital\"\nis as rational as to lament the bitterness between carpenters and\nhammers or to promote a mission for restoring amity between mankind and\nits boots.  The only significance of these _cliches_ is that their\nrepetition tends to muffle their inanity, even to the point of\npersuading sensible men that capital \"employs\" labor, much as our pagan\nancestors imagined that the other pieces of wood and iron, which they\ndeified in their day, sent their crops and won their battles.  When men\nhave gone so far as to talk as though their idols have come to life, it\nis time that some one broke them.  Labor consists of persons, capital\nof things.  The only use of things is to be applied to the service of\npersons.  The business of persons is to see that they are there to use,\nand that no more than need be is paid for using them.\n\nThus the application to industry of the principle of function involves\nan alteration of proprietary rights, because those rights do not\ncontribute, as they now are, to the end which industry exists to serve.\nWhat gives unity to any activity, what alone can reconcile the\nconflicting claims of the different groups engaged in it, is the\npurpose for which it is carried on.  If men have no common goal it is\nno wonder that they should fall out by the way, nor are they likely to\nbe reconciled by a redistribution of their provisions.  If they are not\ncontent both to be servants, one or other must be master, and it is\nidle to suppose that mastership can be held in a state of suspense\nbetween the two.  There can be a division of functions between\ndifferent grades of workers, or between worker and consumer, and each\ncan {100} have in his own sphere the authority needed to enable him to\nfill it.  But there cannot be a division of functions between the\nworker and the owner who is owner and nothing else, for what function\ndoes such an owner perform?  The provision of capital?  Then pay him\nthe sum needed to secure the use of his capital, but neither pay him\nmore nor admit him to a position of authority over production for which\nmerely as an owner he is not qualified.  For this reason, while an\nequilibrium between worker and manager is possible, because both are\nworkers, that which it is sought to establish between worker and owner\nis not.  It is like the proposal of the Germans to negotiate with\nBelgium from Brussels.  Their proposals may be excellent: but it is not\nevident why they are where they are, or how, since they do not\ncontribute to production, they come to be putting forward proposals at\nall.  As long as they are in territory where they have no business to\nbe, their excellence as individuals will be overlooked in annoyance at\nthe system which puts them where they are.\n\nIt is fortunate indeed, if nothing worse than this happens.  For one\nway of solving the problem of the conflict of rights in industry is not\nto base rights on functions, as we propose, but to base them on force.\nIt is to re-establish in some veiled and decorous form the institution\nof slavery, by making labor compulsory.  In nearly all countries a\nconcerted refusal to work has been made at one time or another a\ncriminal offense.  There are to-day parts of the world in which\nEuropean capitalists, unchecked by any public opinion or authority\n{101} independent of themselves, are free to impose almost what terms\nthey please upon workmen of ignorant and helpless races.  In those\ndistricts of America where capitalism still retains its primitive\nlawlessness, the same result appears to be produced upon immigrant\nworkmen by the threat of violence.\n\nIn such circumstances the conflict of rights which finds expression in\nindustrial warfare does not arise, because the rights of one party have\nbeen extinguished.  The simplicity of the remedy is so attractive that\nit is not surprising that the Governments of industrial nations should\ncoquet from time to time with the policy of compulsory arbitration.\nAfter all, it is pleaded, it is only analogous to the action of a\nsupernational authority which should use its common force to prevent\nthe outbreak of war.  In reality, compulsory arbitration is the\nopposite of any policy which such an authority could pursue either with\njustice or with hope of success.  For it takes for granted the\nstability of existing relationships and intervenes to adjust incidental\ndisputes upon the assumption that their equity is recognized and their\npermanence desired.  In industry, however, the equity of existing\nrelationships is precisely the point at issue.  A League of Nations\nwhich adjusted between a subject race and its oppressors, between Slavs\nand Magyars, or the inhabitants of what was once Prussian Poland and\nthe Prussian Government, on the assumption that the subordination of\nSlavs to Magyars and Poles to Prussians was part of an unchangeable\norder, would rightly be resisted by all those who think liberty more\nprecious than peace.  A State which, in the {102} name of peace, should\nmake the concerted cessation of work a legal offense would be guilty of\na similar betrayal of freedom.  It would be solving the conflict of\nrights between those who own and those who work by abolishing the\nrights of those who work.\n\n\nSo here again, unless we are prepared to re-establish some form of\nforced labor, we reach an impasse.  But it is an impasse only in so\nlong as we regard the proprietary rights of those who own the capital\nused in industry as absolute and an end in themselves.  If, instead of\nassuming that all property, merely because it is property, is equally\nsacred, we ask what is the _purpose_ for which capital is used, what is\nits _function_, we shall realize that it is not an end but a means to\nan end, and that its function is to serve and assist (as the economists\ntell us) the labor of human beings, not the function of human beings to\nserve those who happen to own it.  And from this truth two consequences\nfollow.  The first is that since capital is a thing, which ought to be\nused to help industry as a man may use a bicycle to get more quickly to\nhis work, it ought, when it is employed, to be employed on the cheapest\nterms possible.  The second is that those who own it should no more\ncontrol production than a man who lets a house controls the meals which\nshall be cooked in the kitchen, or the man who lets a boat the speed at\nwhich the rowers shall pull.  In other words, capital should always be\ngot at cost price, which means, unless the State finds it wise, as it\nvery well may, to own the capital used in certain industries, it should\nbe paid the lowest interest {103} for which it can be obtained, but\nshould carry no right either to residuary dividends or to the control\nof industry.\n\nThere are, in theory, five ways by which the control of industry by the\nagents of private property-owners can be terminated.  They may be\nexpropriated without compensation.  They may voluntarily surrender it.\nThey may be frozen out by action on the part of the working\n_personnel_, which itself undertakes such functions, if any, as they\nhave performed, and makes them superfluous by conducting production\nwithout their assistance.  Their proprietary interest may be limited or\nattenuated to such a degree that they become mere _rentiers_, who are\nguaranteed a fixed payment analogous to that of the debenture-holder,\nbut who receive no profits and bear no responsibility for the\norganization of industry.  They may be bought out.  The first\nalternative is exemplified by the historical confiscations of the past,\nsuch as, for instance, by the seizure of ecclesiastical property by the\nruling classes of England, Scotland and most other Protestant states.\nThe second has rarely, if ever, been tried--the nearest approach to it,\nperhaps, was the famous abdication of August 4th, 1789.  The third is\nthe method apparently contemplated by the building guilds which are now\nin process of formation in Great Britain.  The fourth method of\ntreating the capitalist is followed by the co-operative movement.  It\nis also that proposed by the committee of employers and trade-unionists\nin the building industry over which Mr. Foster presided, and which\nproposed that employers should be paid a fixed salary, and a fixed rate\nof {104} interest on their capital, but that all surplus profits should\nbe pooled and administered by a central body representing employers and\nworkers.  The fifth has repeatedly been practised by municipalities,\nand somewhat less often by national governments.\n\nWhich of these alternative methods of removing industry from the\ncontrol of the property-owner is adopted is a matter of expediency to\nbe decided in each particular case.  \"Nationalization,\" therefore,\nwhich is sometimes advanced as the only method of extinguishing\nproprietary rights, is merely one species of a considerable genus.  It\ncan be used, of course, to produce the desired result.  But there are\nsome industries, at any rate, in which nationalization is not necessary\nin order to bring it about, and since it is at best a cumbrous process,\nwhen other methods are possible, other methods should be used.\nNationalization is a means to an end, not an end in itself.  Properly\nconceived its object is not to establish state management of industry,\nbut to remove the dead hand of private ownership, when the private\nowner has ceased to perform any positive function.  It is unfortunate,\ntherefore, that the abolition of obstructive property rights, which is\nindispensable, should have been identified with a single formula, which\nmay be applied with advantage in the special circumstances of some\nindustries, but need not necessarily be applied in all.  Ownership is\nnot a right, but a bundle of rights, and it is possible to strip them\noff piecemeal as well as to strike them off simultaneously.  The\nownership of capital involves, as we have said, three main claims; the\nright to interest as the price of capital, the right to {105} profits,\nand the right to control, in virtue of which managers and workmen are\nthe servants of shareholders.  These rights in their fullest degree are\nnot the invariable accompaniment of ownership, nor need they\nnecessarily co-exist.  The ingenuity of financiers long ago devised\nmethods of grading stock in such a way that the ownership of some\ncarries full control, while that of others does not, that some bear all\nthe risk and are entitled to all the profits, while others are limited\nin respect to both.  All are property, but not all carry proprietary\nrights of the same degree.\n\nAs long as the private ownership of industrial capital remains, the\nobject of reformers should be to attenuate its influence by insisting\nthat it shall be paid not more than a rate of interest fixed in\nadvance, and that it should carry with it no right of control.  In such\ncircumstances the position of the ordinary shareholder would\napproximate to that of the owner of debentures; the property in the\nindustry would be converted into a mortgage on its profits, while the\ncontrol of its administration and all profits in excess of the minimum\nwould remain to be vested elsewhere.  So, of course, would the risks.\nBut risks are of two kinds, those of the individual business and those\nof the industry.  The former are much heavier than the latter, for\nthough a coal mine is a speculative investment, coal mining is not, and\nas long as each business is managed as a separate unit, the payments\nmade to shareholders must cover both.  If the ownership of capital in\neach industry were unified, which does not mean centralized, those\nrisks which are incidental to individual competition would be {106}\neliminated, and the credit of each unit would be that of the whole.\n\nSuch a change in the character of ownership would have three\nadvantages.  It would abolish the government of industry by property.\nIt would end the payment of profits to functionless shareholders by\nturning them into creditors paid a fixed rate of interest.  It would\nlay the only possible foundations for industrial peace by making it\npossible to convert industry into a profession carried on by all grades\nof workers for the service of the public, not for the gain of those who\nown capital.  The organization which it would produce will be\ndescribed, of course, as impracticable.  It is interesting, therefore,\nto find it is that which experience has led practical men to suggest as\na remedy for the disorders of one of the most important of national\nindustries, that of building.  The question before the Committee of\nemployers and workmen, which issued last August a Report upon the\nBuilding Trade, was \"Scientific Management and the Reduction of\nCosts.\"[1]  These are not phrases which suggest an economic revolution;\nbut it is something little short of a revolution that the signatories\nof the report propose.  For, as soon as they came to grips with the\nproblem, they found that it was impossible to handle it effectively\nwithout reconstituting the general fabric of industrial relationships\nwhich is its setting.  Why is the service supplied by the industry\nineffective?  Partly because the workers do not give their full\nenergies to the performance of their part in production.  {107} Why do\nthey not give their best energies?  Because of \"the fear of\nunemployment, the disinclination of the operatives to make unlimited\nprofit for private employers, the lack of interest evinced by\noperatives owing to their non-participation in control, inefficiency\nboth managerial and operative.\"  How are these psychological obstacles\nto efficiency to be counteracted?  By increased supervision and\nspeeding up, by the allurements of a premium bonus system, or the other\ndevices by which men who are too ingenious to have imagination or moral\ninsight would bully or cajole poor human nature into doing what--if\nonly the systems they invent would let it!--it desires to do, simple\nduties and honest work?  Not at all.  By turning the building of houses\ninto what teaching now is, and Mr. Squeers thought it could never be,\nan honorable profession.\n\n\"We believe,\" they write, \"that the great task of our Industrial\nCouncil is to develop an entirely new system of industrial control by\nthe members of the industry itself--the actual producers, whether by\nhand or brain, and to bring them into co-operation with the State as\nthe central representative of the community whom they are organized to\nserve.\"  Instead of unlimited profits, so \"indispensable as an\nincentive to efficiency,\" the employer is to be paid a salary for his\nservices as manager, and a rate of interest on his capital which is to\nbe both fixed and (unless he fails to earn it through his own\ninefficiency) guaranteed; anything in excess of it, any \"profits\" in\nfact, which in other industries are distributed as dividends to\nshareholders, he is to {108} surrender to a central fund to be\nadministered by employers and workmen for the benefit of the industry\nas a whole.  Instead of the financial standing of each firm being\ntreated as an inscrutable mystery to the public, with the result that\nit is sometimes a mystery to itself, there is to be a system of public\ncosting and audit, on the basis of which the industry will assume a\ncollective liability for those firms which are shown to be competently\nmanaged.  Instead of the workers being dismissed in slack times to\nstruggle along as best they can, they are to be maintained from a fund\nraised by a levy on employers and administered by the trade unions.\nThere is to be publicity as to costs and profits, open dealing and\nhonest work and mutual helpfulness, instead of the competition which\nthe nineteenth century regarded as an efficient substitute for them.\n\"Capital\" is not to \"employ labor.\"  Labor, which includes managerial\nlabor, is to employ capital; and to employ it at the cheapest rate at\nwhich, in the circumstances of the trade, it can be got.  If it employs\nit so successfully that there is a surplus when it has been fairly paid\nfor its own services, then that surplus is not to be divided among\nshareholders, for, when they have been paid interest, they have been\npaid their due; it is to be used to equip the industry to provide still\nmore effective service in the future.\n\nSo here we have the majority of a body of practical men, who care\nnothing for socialist theories, proposing to establish \"organized\nPublic Service in the Building Industry,\" recommending, in short, that\ntheir industry shall be turned into a profession.  And they do it, it\n{109} will be observed, by just that functional organization, just that\nconversion of full proprietary rights into a mortgage secured (as far\nas efficient firms are concerned) on the industry as a whole, just that\ntransference of the control of production from the owner of capital to\nthose whose business is production, which we saw is necessary if\nindustry is to be organized for the performance of service, not for the\npecuniary advantage of those who hold proprietary rights.  Their Report\nis of the first importance as offering a policy for attenuating private\nproperty in capital in the important group of industries in which\nprivate ownership, in one form or another, is likely for some\nconsiderable time to continue, and a valuable service would be rendered\nby any one who would work out in detail the application of its\nprinciple to other trades.\n\nNot, of course, that this is the only way, or in highly capitalized\nindustries the most feasible way, in which the change can be brought\nabout.  Had the movement against the control of production by property\ntaken place before the rise of limited companies, in which ownership is\nseparated from management, the transition to the organization of\nindustry as a profession might also have taken place, as the employers\nand workmen in the building trade propose that it should, by limiting\nthe rights of private ownership without abolishing it.  But that is not\nwhat has actually happened, and therefore the proposals of the building\ntrade are not of universal application.  It is possible to retain\nprivate ownership in building and in industries like building, {110}\nwhile changing its character, precisely because in building the\nemployer is normally not merely an owner, but something else as well.\nHe is a manager; that is, he is a workman.  And because he is a\nworkman, whose interests, and still more whose professional spirit as a\nworkman may often outweigh his interests and merely financial spirit as\nan owner, he can form part of the productive organization of the\nindustry, after his rights as an owner have been trimmed and limited.\n\nBut that dual position is abnormal, and in the highly organized\nindustries is becoming more abnormal every year.  In coal, in cotton,\nin ship-building, in many branches of engineering the owner of capital\nis not, as he is in building, an organizer or manager.  His connection\nwith the industry and interest in it is purely financial.  He is an\nowner and nothing more.  And because his interest is merely financial,\nso that his concern is dividends and production only as a means to\ndividends, he cannot be worked into an organization of industry which\nvests administration in a body representing all grades of producers, or\nproducers and consumers together, for he has no purpose in common with\nthem; so that while joint councils between workers and managers may\nsucceed, joint councils between workers and owners or agents of owners,\nlike most of the so-called Whitley Councils, will not, because the\nnecessity for the mere owner is itself one of the points in dispute.\nThe master builder, who owns the capital used, can be included, not\n_qua_ capitalist, but _qua_ builder, if he surrenders some of the\nrights of ownership, as the Building Industry Committee proposed that\nhe should.  But {111} if the shareholder in a colliery or a shipyard\nabdicates the control and unlimited profits to which, _qua_ capitalist,\nhe is at present entitled, he abdicates everything that makes him what\nhe is, and has no other standing in the industry.  He cannot share,\nlike the master builder, in its management, because he has no\nqualifications which would enable him to do so.  His object is profit;\nand if industry is to become, as employers and workers in the building\ntrade propose, an \"organized public service,\" then its subordination to\nthe shareholder whose object is profit, is, as they clearly see,\nprecisely what must be eliminated.  The master builders propose to give\nit up.  They can do so because they have their place in the industry in\nvirtue of their function as workmen.  But if the shareholder gave it\nup, he would have no place at all.\n\nHence in coal mining, where ownership and management are sharply\nseparated, the owners will not admit the bare possibility of any system\nin which the control of the administration of the mines is shared\nbetween the management and the miners.  \"I am authorized to state on\nbehalf of the Mining Association,\" Lord Gainford, the chief witness on\nbehalf of the mine-owners, informed the Coal Commission, \"that if the\nowners are not to be left complete executive control they will decline\nto accept the responsibility for carrying on the industry.\"[2]  So the\nmine-owners blow away in a sentence the whole body of plausible\nmake-believe which rests on the idea that, while private ownership\nremains {112} unaltered, industrial harmony can be produced by the\nmagic formula of joint control.  And they are right.  The\nrepresentatives of workmen and shareholders, in mining and in other\nindustries, can meet and negotiate and discuss.  But joint\nadministration of the shareholders' property by a body representing\nshareholders and workmen is impossible, because there is no purpose in\ncommon between them.  For the only purpose which could unite all\npersons engaged in industry, and overrule their particular and\ndivergent interests, is the provision of service.  And the object of\nshareholders, the whole significance and _metier_ of industry to them,\nis not the provision of service but the provision of dividends.\n\n\nIn industries where management is divorced from ownership, as in most\nof the highly organized trades it is to-day, there is no obvious\nhalfway house, therefore, between the retention of the present system\nand the complete extrusion of the capitalist from the control of\nproduction.  The change in the character of ownership, which is\nnecessary in order that coal or textiles and ship-building may be\norganized as professions for the service of the public, cannot easily\nspring from within.  The stroke needed to liberate them from the\ncontrol of the property-owner must come from without.  In theory it\nmight be struck by action on the part of organized workers, who would\nabolish residuary profits and the right of control by the mere\nprocedure of refusing to work as long as they were maintained, on the\nhistorical analogy offered by peasants who have destroyed {113}\npredatory property in the past by declining to pay its dues and admit\nits government, in which case Parliament would intervene only to\nregister the community's assent to the _fait accompli_.  In practice,\nhowever, the conditions of modern industry being what they are, that\ncourse, apart from its other disadvantages, is so unlikely to be\nattempted, or, if attempted, to succeed, that it can be neglected.  The\nalternative to it is that the change in the character of property\nshould be affected by legislation in virtue of which the rights of\nownership in an industry are bought out simultaneously.\n\nIn either case, though the procedure is different, the result of the\nchange, once it is accomplished, is the same.  Private property in\ncapital, in the sense of the right to profits and control, is\nabolished.  What remains of it is, at most, a mortgage in favor of the\nprevious proprietors, a dead leaf which is preserved, though the sap of\nindustry no longer feeds it, as long as it is not thought worth while\nto strike it off.  And since the capital needed to maintain and equip a\nmodern industry could not be provided by any one group of workers, even\nwere it desirable on other grounds that they should step completely\ninto the position of the present owners, the complex of rights which\nconstitutes ownership remains to be shared between them and whatever\norgan may act on behalf of the general community.  The former, for\nexample, may be the heir of the present owners as far as the control of\nthe routine and administration of industry is concerned: the latter may\nsucceed to their right to dispose of residuary profits.  The elements\ncomposing property, have, in fact, to be {114} disentangled: and the\nfact that to-day, under the common name of ownership, several different\npowers are vested in identical hands, must not be allowed to obscure\nthe probability that, once private property in capital has been\nabolished, it may be expedient to re-allocate those powers in detail as\nwell as to transfer them _en bloc_.\n\nThe essence of a profession is, as we have suggested, that its members\norganize themselves for the performance of function.  It is essential\ntherefore, if industry is to be professionalized, that the abolition of\nfunctionless property should not be interpreted to imply a continuance\nunder public ownership of the absence of responsibility on the part of\nthe _personnel_ of industry, which is the normal accompaniment of\nprivate ownership working through the wage-system.  It is the more\nimportant to emphasize that point, because such an implication has\nsometimes been conveyed in the past by some of those who have presented\nthe case for some such change in the character of ownership as has been\nurged above.  The name consecrated by custom to the transformation of\nproperty by public and external action is nationalization.  But\nnationalization is a word which is neither very felicitous nor free\nfrom ambiguity.  Properly used, it means merely ownership by a body\nrepresenting the nation.  But it has come in practice to be used as\nequivalent to a particular method of administration, under which\nofficials employed by the State step into the position of the present\ndirectors of industry, and exercise all the power which they exercised.\nSo those who desire to maintain the system under which industry is\ncarried on, not as a profession {115} serving the public, but for the\nadvantage of shareholders, attack nationalization on the ground that\nstate management is necessarily inefficient, and tremble with\napprehension whenever they post a letter in a letter-box; and those who\ndesire to change it reply that state services are efficient and praise\nGod whenever they use a telephone; as though either private or public\nadministration had certain peculiar and unalterable characteristics,\ninstead of depending for its quality, like an army or railway company\nor school, and all other undertakings, public and private alike, not on\nwhether those who conduct it are private officials or state officials,\nbut on whether they are properly trained for their work and can command\nthe good will and confidence of their subordinates.\n\nThe arguments on both sides are ingenious, but in reality nearly all of\nthem are beside the point.  The merits of nationalization do not stand\nor fall with the efficiency or inefficiency of existing state\ndepartments as administrators of industry.  For nationalization, which\nmeans public ownership, is compatible with several different types of\nmanagement.  The constitution of the industry may be \"unitary,\" as is\n(for example) that of the post-office.  Or it may be \"federal,\" as was\nthat designed by Mr. Justice Sankey for the Coal Industry.\nAdministration may be centralized or decentralized.  The authorities to\nwhom it is intrusted may be composed of representatives of the\nconsumers, or of representatives of professional associations, or of\nstate officials, or of all three in several different proportions.\nExecutive work may be placed in the hands of civil {116} servants,\ntrained, recruited and promoted as in the existing state departments,\nor a new service may be created with a procedure and standards of its\nown.  It may be subject to Treasury control, or it may be financially\nautonomous.  The problem is, in fact, of a familiar, though difficult,\norder.  It is one of constitution-making.\n\nIt is commonly assumed by controversialists that the organization and\nmanagement of a nationalized industry must, for some undefined reason,\nbe similar to that of the post-office.  One might as reasonably suggest\nthat the pattern exemplar of private enterprise must be the Steel\nCorporation or the Imperial Tobacco Company.  The administrative\nsystems obtaining in a society which has nationalized its foundation\nindustries will, in fact, be as various as in one that resigns them to\nprivate ownership; and to discuss their relative advantages without\ndefining what particular type of each is the subject of reference is\nto-day as unhelpful as to approach a modern political problem in terms\nof the Aristotelian classification of constitutions.  The highly\nabstract dialectics as to \"enterprise,\" \"initiative,\" \"bureaucracy,\"\n\"red tape,\" \"democratic control,\" \"state management,\" which fill the\npress of countries occupied with industrial problems, really belong to\nthe dark ages of economic thought.  The first task of the student,\nwhatever his personal conclusions, is, it may be suggested, to\ncontribute what he can to the restoration of sanity by insisting that\ninstead of the argument being conducted with the counters of a highly\ninflated and rapidly depreciating verbal currency, the exact situation,\n{117} in so far as is possible, shall be stated as it is; uncertainties\n(of which there are many) shall be treated as uncertain, and the\nprecise meaning of alternative proposals shall be strictly defined.\nNot the least of the merits of Mr. Justice Sankey's report was that, by\nstating in great detail the type of organization which he recommended\nfor the Coal Industry, he imparted a new precision and reality into the\nwhole discussion.  Whether his conclusions are accepted or not, it is\nfrom the basis of clearly defined proposals such as his that the future\ndiscussion of these problems must proceed.  It may not find a solution.\nIt will at least do something to create the temper in which alone a\nreasonable solution can be sought.\n\nNationalization, then, is not an end, but a means to an end, and when\nthe question of ownership has been settled the question of\nadministration remains for solution.  As a means it is likely to be\nindispensable in those industries in which the rights of private\nproprietors cannot easily be modified without the action of the State,\njust as the purchase of land by county councils is a necessary step to\nthe establishment of small holders, when landowners will not\nvoluntarily part with their property for the purpose.  But the object\nin purchasing land is to establish small holders, not to set up farms\nadministered by state officials; and the object of nationalizing mining\nor railways or the manufacture of steel should not be to establish any\nparticular form of state management, but to release those who do\nconstructive work from the control of those whose sole interest is\npecuniary gain, in order that they may be free to {118} apply their\nenergies to the true purpose of industry, which is the provision of\nservice, not the provision of dividends.  When the transference of\nproperty has taken place, it will probably be found that the necessary\nprovision for the government of industry will involve not merely the\nfreedom of the producers to produce, but the creation of machinery\nthrough which the consumer, for whom he produces, can express his\nwishes and criticize the way in which they are met, as at present he\nnormally cannot.  But that is the second stage in the process of\nreorganizing industry for the performance of function, not the first.\nThe first is to free it from subordination to the pecuniary interests\nof the owner of property, because they are the magnetic pole which sets\nall the compasses wrong, and which causes industry, however swiftly it\nmay progress, to progress in the wrong direction.\n\nNor does this change in the character of property involve a breach with\nthe existing order so sharp as to be impracticable.  The phraseology of\npolitical controversy continues to reproduce the conventional\nantitheses of the early nineteenth century; \"private enterprise\" and\n\"public ownership\" are still contrasted with each other as light with\ndarkness or darkness with light.  But, in reality, behind the formal\nshell of the traditional legal system the elements of a new body of\nrelationship have already been prepared, and find piece-meal\napplication through policies devised, not by socialists, but by men who\nrepeat the formulae of individualism, at the very moment when they are\nundermining it.  The Esch-Cummins Act in America, the {119} Act\nestablishing a Ministry of Transport in England, Sir Arthur Duckham's\nscheme for the organization of the coal mines, the proposals with\nregard to the coal industry of the British Government itself, appear to\nhave the common characteristic of retaining private ownership in name,\nwhile attenuating it in fact, by placing its operators under the\nsupervision, accompanied sometimes by a financial guarantee, of a\npublic authority.  Schemes of this general character appear, indeed, to\nbe the first instinctive reaction produced by the discovery that\nprivate enterprise is no longer functioning effectively; it is probable\nthat they possess certain merits of a technical order analogous to\nthose associated with the amalgamation of competing firms into a single\ncombination.  It is questionable, however, whether the compromise which\nthey represent is permanently tenable.  What, after all, it may be\nasked, are the advantages of private ownership when it has been pared\ndown to the point which policies of this order propose?  May not the\n\"owner\" whose rights they are designed to protect not unreasonably\nreply to their authors, \"Thank you for nothing\"?  Individual enterprise\nhas its merits: so also, perhaps, has public ownership.  But, by the\ntime these schemes have done with it, not much remains of \"the simple\nand obvious system of natural liberty,\" while their inventors are\nprecluded from appealing to the motives which are emphasized by\nadvocates of nationalization.  It is one thing to be an entrepreneur\nwith a world of adventure and unlimited profits--if they can be\nachieved--before one.  It is quite another to be a director of a\nrailway company or coal {120} corporation with a minimum rate of profit\nguaranteed by the State, and a maximum rate of profit which cannot be\nexceeded.  Hybrids are apt to be sterile.  It may be questioned\nwhether, in drawing the teeth of private capitalism, this type of\ncompromise does not draw out most of its virtues as well.\n\nSo, when a certain stage of economic development has been reached,\nprivate ownership, by the admission of its defenders, can no longer be\ntolerated in the only form in which it is free to display the\ncharacteristic, and quite genuine, advantages for the sake of which it\nused to be defended.  And, as step by step it is whittled down by tacit\nconcessions to the practical necessity of protecting the consumer, or\neliminating waste, or meeting the claims of the workers, public\nownership becomes, not only on social grounds, but for reasons of\neconomic efficiency, the alternative to a type of private ownership\nwhich appears to carry with it few rights of ownership and to be\nsingularly devoid of privacy.  Inevitably and unfortunately the change\nmust be gradual.  But it should be continuous.  When, as in the last\nfew years, the State has acquired the ownership of great masses of\nindustrial capital, it should retain it, instead of surrendering it to\nprivate capitalists, who protest at once that it will be managed so\ninefficiently that it will not pay and managed so efficiently that it\nwill undersell them.  When estates are being broken up and sold, as\nthey are at present, public bodies should enter the market and acquire\nthem.  Most important of all, the ridiculous barrier, inherited from an\nage in which municipal corporations were corrupt oligarchies, which\n{121} at present prevents England's Local Authorities from acquiring\nproperty in land and industrial capital, except for purposes specified\nby Act of Parliament, should be abolished, and they should be free to\nundertake such services as the citizens may desire.  The objection to\npublic ownership, in so far as it is intelligent, is in reality largely\nan objection to over-centralization.  But the remedy for\nover-centralization, is not the maintenance of functionless property in\nprivate hands, but the decentralized ownership of public property, and\nwhen Birmingham and Manchester and Leeds are the little republics which\nthey should be, there is no reason to anticipate that they will tremble\nat a whisper from Whitehall.\n\nThese things should be done steadily and continuously quite apart from\nthe special cases like that of the mines and railways, where the\nprivate ownership of capital is stated by the experts to have been\nresponsible for intolerable waste, or the manufacture of ornaments\n[Transcriber's note: armaments?] and alcoholic liquor, which are\npolitically and socially too dangerous to be left in private hands.\nThey should be done not in order to establish a single form of\nbureaucratic management, but in order to release the industry from the\ndomination of proprietary interests, which, whatever the form of\nmanagement, are not merely troublesome in detail but vicious in\nprinciple, because they divert it from the performance of function to\nthe acquisition of gain.  If at the same time private ownership is\nshaken, as recently it has been, by action on the part of particular\ngroups of workers, so much the better.  There are more ways of killing\na cat than {122} drowning it in cream, and it is all the more likely to\nchoose the cream if they are explained to it.  But the two methods are\ncomplementary, not alternative, and the attempt to found rival schools\non an imaginary incompatibility between them is a bad case of the\n_odium sociologicum_ which afflicts reformers.\n\n\n\n[1] Reprinted in _The Industrial Council for the Building Industry_.\n\n[2] _Coal Industry Commission, Minutes of Evidence_, Vol. I, p. 2506.\n\n\n\n\n{123}\n\nVIII\n\nTHE \"VICIOUS CIRCLE\"\n\nWhat form of management should replace the administration of industry\nby the agents of shareholders?  What is most likely to hold it to its\nmain purpose, and to be least at the mercy of predatory interests and\nfunctionless supernumeraries, and of the alternations of sullen\ndissatisfaction and spasmodic revolt which at present distract it?\nWhatever the system upon which industry is administered, one thing is\ncertain.  Its economic processes and results must be public, because\nonly if they are public can it be known whether the service of industry\nis vigilant, effective and honorable, whether its purpose is being\nrealized and its function carried out.  The defense of secrecy in\nbusiness resembles the defense of adulteration on the ground that it is\na legitimate weapon of competition; indeed it has even less\njustification than that famous doctrine, for the condition of effective\ncompetition is publicity, and one motive for secrecy is to prevent it.\n\nThose who conduct industry at the present time and who are most\nemphatic that, as the Duke of Wellington said of the unreformed House\nof Commons, they \"have never read or heard of any measure up to the\npresent moment which can in any degree satisfy the mind\" that the\nmethod of conducting it can in any way be improved, are also those\napparently who, with some {124} honorable exceptions, are most\nreluctant that the full facts about it should be known.  And it is\ncrucial that they should be known.  It is crucial not only because, in\nthe present ignorance of the real economic situation, all industrial\ndisagreements tend inevitably to be battles in the dark, in which\n\"ignorant armies clash by night,\" but because, unless there is complete\npublicity as to profits and costs, it is impossible to form any\njudgment either of the reasonableness of the prices which are charged\nor of the claims to remuneration of the different parties engaged in\nproduction.  For balance sheets, with their opportunities for\nconcealing profits, give no clear light upon the first, and no light at\nall upon the second.  And so, when the facts come out, the public is\naghast at revelations which show that industry is conducted with\nbewildering financial extravagance.  If the full facts had been\npublished, as they should have been, quarter by quarter, these\nrevelations would probably not have been made at all, because publicity\nitself would have been an antiseptic and there would have been nothing\nsensational to reveal.\n\nThe events of the last few years are a lesson which should need no\nrepetition.  The Government, surprised at the price charged for making\nshells at a time when its soldiers were ordered by Headquarters not to\nfire more than a few rounds per day, whatever the need for retaliation,\nbecause there were not more than a few to fire, establishes a costing\ndepartment to analyze the estimates submitted by manufacturers and to\ncompare them, item by item, with the costs in its own factories.  It\nfinds that, through the mere pooling of knowledge, {125} \"some of the\nreductions made in the price of shells and similar munitions,\" as the\nChartered Accountant employed by the Department tells us, \"have been as\nhigh as 50% of the original price.\"  The household consumer grumbles at\nthe price of coal.  For once in a way, amid a storm of indignation from\ninfluential persons engaged in the industry, the facts are published.\nAnd what do they show?  That, after 2/6 has been added to the already\nhigh price of coal because the poorer mines are alleged not to be\npaying their way, 21% of the output examined by the Commission was\nproduced at a profit of 1/- to 3/- per ton, 32% at a profit of 3/- to\n5/-, 13% at a profit of 5/- to 7/-, and 14% at a profit of 7/- per ton\nand over, while the profits of distributors in London alone amount in\nthe aggregate to over $3,200,000, and the co-operative movement, which\naims not at profit, but at service, distributes household coal at a\ncost of from 2/- to 4/- less per ton than is charged by the coal\ntrade![1]\n\n\"But these are exceptions.\"  They may be.  It is possible that in the\nindustries, in which, as the recent Committee on Trusts has told us,\n\"powerful Combinations or Consolidations of one kind or another are in\na position effectively to control output and prices,\" not only costs\nare cut to the bare minimum but profits are inconsiderable.  But then\nwhy insist on this humiliating tradition of secrecy with regard to\nthem, when every one who uses their products, and every one who renders\nhonest service to production, stands to gain by publicity?  If industry\nis to become a profession, whatever its {126} management, the first of\nits professional rules should be, as Sir John Mann told the Coal\nCommission, that \"all cards should be placed on the table.\"  If it were\nthe duty of a Public Department to publish quarterly exact returns as\nto costs of production and profits in all the firms throughout an\nindustry, the gain in mere productive efficiency, which should appeal\nto our enthusiasts for output, would be considerable; for the\norganization whose costs were least would become the standard with\nwhich all other types of organization would be compared.  The gain in\n_morale_, which is also, absurd though it may seem, a condition of\nefficiency, would be incalculable.  For industry would be conducted in\nthe light of day.  Its costs, necessary or unnecessary, the\ndistribution of the return to it, reasonable or capricious, would be a\nmatter of common knowledge.  It would be held to its purpose by the\nmere impossibility of persuading those who make its products or those\nwho consume them to acquiesce, as they acquiesce now, in expenditure\nwhich is meaningless because it has contributed nothing to the service\nwhich the industry exists to perform.\n\nThe organization of industry as a profession does not involve only the\nabolition of functionless property, and the maintenance of publicity as\nthe indispensable condition of a standard of professional honor.  It\nimplies also that those who perform its work should undertake that its\nwork is performed effectively.  It means that they should not merely be\nheld to the service of the public by fear of personal inconvenience or\npenalties, but that they should treat the discharge of professional\n{127} responsibilities as an obligation attaching not only to a small\n_elite_ of intellectuals, managers or \"bosses,\" who perform the\ntechnical work of \"business management,\" but as implied by the mere\nentry into the industry and as resting on the corporate consent and\ninitiative of the rank and file of workers.  It is precisely, indeed,\nin the degree to which that obligation is interpreted as attaching to\nall workers, and not merely to a select class, that the difference\nbetween the existing industrial order, collectivism and the\norganization of industry as a profession resides.  The first involves\nthe utilization of human beings for the purpose of private gain; the\nsecond their utilization for the purpose of public service; the third\nthe association in the service of the public of their professional\npride, solidarity and organization.\n\nThe difference in administrative machinery between the second and third\nmight not be considerable.  Both involve the drastic limitation or\ntransference to the public of the proprietary rights of the existing\nowners of industrial capital.  Both would necessitate machinery for\nbringing the opinion of the consumers to bear upon the service supplied\nthem by the industry.  The difference consists in the manner in which\nthe obligations of the producer to the public are conceived.  He may\neither be the executant of orders transmitted to him by its agents; or\nhe may, through his organization, himself take a positive part in\ndetermining what those orders should be.  In the former case he is\nresponsible for his own work, but not for anything else.  If he hews\nhis stint of coal, it is no business of his whether the pit is a {128}\nfailure; if he puts in the normal number of rivets, he disclaims all\nfurther interest in the price or the sea-worthiness of the ship.  In\nthe latter his function embraces something more than the performance of\nthe specialized piece of work allotted to him.  It includes also a\nresponsibility for the success of the undertaking as a whole.  And\nsince responsibility is impossible without power, his position would\ninvolve at least so much power as is needed to secure that he can\naffect in practice the conduct of the industry.  It is this collective\nliability for the maintenance of a certain quality of service which is,\nindeed, the distinguishing feature of a profession.  It is compatible\nwith several different kinds of government, or indeed, when the unit of\nproduction is not a group, but an individual, with hardly any\ngovernment at all.  What it does involve is that the individual, merely\nby entering the profession should have committed himself to certain\nobligations in respect of its conduct, and that the professional\norganization, whatever it may be, should have sufficient power to\nenable it to maintain them.\n\nThe demand for the participation of the workers in the control of\nindustry is usually advanced in the name of the producer, as a plea for\neconomic freedom or industrial democracy.  \"Political freedom,\" writes\nthe Final Report of the United States Commission of Industrial\nRelations, which was presented in 1916, \"can exist only where there is\nindustrial freedom....  There are now within the body of our Republic\nindustrial communities which are virtually Principalities, oppressive\nto those dependent upon them for a livelihood {129} and a dreadful\nmenace to the peace and welfare of the nation.\"  The vanity of\nEnglishmen may soften the shadows and heighten the lights.  But the\nconcentration of authority is too deeply rooted in the very essence of\nCapitalism for differences in the degree of the arbitrariness with\nwhich it is exercised to be other than trivial.  The control of a large\nworks does, in fact, confer a kind of private jurisdiction in matters\nconcerning the life and livelihood of the workers, which, as the United\nStates' Commission suggests, may properly be described as \"industrial\nfeudalism.\"  It is not easy to understand how the traditional liberties\nof Englishmen are compatible with an organization of industry which,\nexcept in so far as it has been qualified by law or trade unionism,\npermits populations almost as large as those of some famous cities of\nthe past to be controlled in their rising up and lying down, in their\nwork, economic opportunities, and social life by the decisions of a\nCommittee of half-a-dozen Directors.\n\nThe most conservative thinkers recognize that the present organization\nof industry is intolerable in the sacrifice of liberty which it entails\nupon the producer.  But each effort which he makes to emancipate\nhimself is met by a protest that if the existing system is incompatible\nwith freedom, it at least secures efficient service, and that efficient\nservice is threatened by movements which aim at placing a greater\nmeasure of industrial control in the hands of the workers.  The attempt\nto drive a wedge between the producer and the consumer is obviously the\ncue of all the interests which are conscious that by themselves they\nare unable to hold back {130} the flood.  It is natural, therefore,\nthat during the last few months they should have concentrated their\nefforts upon representing that every advance in the demands and in the\npower of any particular group of workers is a new imposition upon the\ngeneral body of the public.  Eminent persons, who are not obviously\nproducing more than they consume, explain to the working classes that\nunless they produce more they must consume less.  Highly syndicated\ncombinations warn the public against the menace of predatory\nsyndicalism.  The owners of mines and minerals, in their new role as\nprotectors of the poor, lament the \"selfishness\" of the miners, as\nthough nothing but pure philanthropy had hitherto caused profits and\nroyalties to be reluctantly accepted by themselves.\n\nThe assumption upon which this body of argument rests is simple.  It is\nthat the existing organization of industry is the safeguard of\nproductive efficiency, and that from every attempt to alter it the\nworkers themselves lose more as consumers than they can gain as\nproducers.  The world has been drained of its wealth and demands\nabundance of goods.  The workers demand a larger income, greater\nleisure, and a more secure and dignified status.  These two demands, it\nis argued, are contradictory.  For how can the consumer be supplied\nwith cheap goods, if, as a worker, he insists on higher wages and\nshorter hours?  And how can the worker secure these conditions, if as a\nconsumer, he demands cheap goods?  So industry, it is thought, moves in\na vicious circle of shorter hours and higher wages and less production,\nwhich in time must mean {131} longer hours and lower wages; and every\none receives less, because every one demands more.\n\nThe picture is plausible, but it is fallacious.  It is fallacious not\nmerely in its crude assumption that a rise in wages necessarily\ninvolves an increase in costs, but for another and more fundamental\nreason.  In reality the cause of economic confusion is not that the\ndemands of producer and consumer meet in blunt opposition; for, if they\ndid, their incompatibility, when they were incompatible, would be\nobvious, and neither could deny his responsibility to the other,\nhowever much he might seek to evade it.  It is that they do not, but\nthat, as industry is organized to-day, what the worker foregoes the\ngeneral body of consumers does not necessarily gain, and what the\nconsumer pays the general body of workers does not necessarily receive.\nIf the circle is vicious, its vice is not that it is closed, but that\nit is always half open, so that part of production leaks away in\nconsumption which adds nothing to productive energies, and that the\nproducer, because he knows this, does not fully use even the productive\nenergy which he commands.\n\nIt is the consciousness of this leak which sets every one at cross\npurposes.  No conceivable system of industrial organization can secure\nindustrial peace, if by \"peace\" is meant a complete absence of\ndisagreement.  What could be secured would be that disagreements should\nnot flare up into a beacon of class warfare.  If every member of a\ngroup puts something into a common pool on condition of taking\nsomething out, they may still quarrel about the size of the shares, as\nchildren quarrel {132} over cake; but if the total is known and the\nclaims admitted, that is all they can quarrel about, and, since they\nall stand on the same footing, any one who holds out for more than his\nfellows must show some good reason why he should get it.  But in\nindustry the claims are not all admitted, for those who put nothing in\ndemand to take something out; both the total to be divided and the\nproportion in which the division takes place are sedulously concealed;\nand those who preside over the distribution of the pool and control\nwhat is paid out of it have a direct interest in securing as large a\nshare as possible for themselves and in allotting as small a share as\npossible to others.  If one contributor takes less, so far from it\nbeing evident that the gain will go to some one who has put something\nin and has as good a right as himself, it may go to some one who has\nput in nothing and has no right at all.  If another claims more, he may\nsecure it, without plundering a fellow-worker, at the expense of a\nsleeping partner who is believed to plunder both.  In practice, since\nthere is no clear principle determining what they ought to take, both\ntake all that they can get.\n\nIn such circumstances denunciations of the producer for exploiting the\nconsumer miss the mark.  They are inevitably regarded as an economic\nversion of the military device used by armies which advance behind a\nscreen of women and children, and then protest at the brutality of the\nenemy in shooting non-combatants.  They are interpreted as evidence,\nnot that a section of the producers are exploiting the remainder, but\nthat a minority of property-owners, which is in opposition to {133}\nboth, can use its economic power to make efforts directed against those\nwho consume much and produce little rebound on those who consume little\nand produce much.  And the grievance, of which the Press makes so much,\nthat some workers may be taking too large a share compared with others,\nis masked by the much greater grievance, of which it says nothing\nwhatever, that some idlers take any share at all.  The abolition of\npayments which are made without any corresponding economic service is\nthus one of the indispensable conditions both of economic efficiency\nand industrial peace, because their existence prevents different\nclasses of workers from restraining each other, by uniting them all\nagainst the common enemy.  Either the principle of industry is that of\nfunction, in which case slack work is only less immoral than no work at\nall; or it is that of grab, in which case there is no morality in the\nmatter.  But it cannot be both.  And it is useless either for\nproperty-owners or for Governments to lament the mote in the eye of the\ntrade unions as long as, by insisting on the maintenance of\nfunctionless property, they decline to remove the beam in their own.\n\nThe truth is that only workers can prevent the abuse of power by\nworkers, because only workers are recognized as possessing any title to\nhave their claims considered.  And the first step to preventing the\nexploitation of the consumer by the producer is simple.  It is to turn\nall men into producers, and thus to remove the temptation for\nparticular groups of workers to force their claims at the expense of\nthe public, by removing the valid excuse that such gains as they may\nget are {134} taken from those who at present have no right to them,\nbecause they are disproportionate to service or obtained for no service\nat all.  Indeed, if work were the only title to payment, the danger of\nthe community being exploited by highly organized groups of producers\nwould largely disappear.  For, when no payments were made to\nnon-producers, there would be no debatable ground for which to\nstruggle, and it would become evident that if any one group of\nproducers took more, another must put up with less.\n\nUnder such conditions a body of workers who used their strong strategic\nposition to extort extravagant terms for themselves at the expense of\ntheir fellow-workers might properly be described as exploiting the\ncommunity.  But at present such a statement is meaningless.  It is\nmeaningless because before the community can be exploited the community\nmust exist, and its existence in the sphere of economics is to-day not\na fact but only an aspiration.  The procedure by which, whenever any\nsection of workers advance demands which are regarded as inconvenient\nby their masters, they are denounced as a band of anarchists who are\npreying on the public may be a convenient weapon in an emergency, but,\nonce it is submitted to analysis, it is logically self-destructive.  It\nhas been applied within recent years, to the postmen, to the engineers,\nto the policemen, to the miners and to the railway men, a population\nwith their dependents, of some eight million persons; and in the case\nof the last two the whole body of organized labor made common cause\nwith those of whose exorbitant demands it was alleged to be the victim.\nBut when these {135} workers and their sympathizers are deducted, what\nis \"the community\" which remains?  It is a naive arithmetic which\nproduces a total by subtracting one by one all the items which compose\nit; and the art which discovers the public interest by eliminating the\ninterests of successive sections of the public smacks of the\nrhetorician rather than of the statesman.\n\nThe truth is that at present it is idle to seek to resist the demands\nof any group of workers by appeals to \"the interests of society,\"\nbecause to-day, as long as the economic plane alone is considered,\nthere is not one society but two, which dwell together in uneasy\njuxtaposition, like Sinbad and the Old Man of the Sea, but which in\nspirit, in ideals, and in economic interest, are worlds asunder.  There\nis the society of those who live by labor, whatever their craft or\nprofession, and the society of those who live on it.  All the latter\ncannot command the sacrifices or the loyalty which are due to the\nformer, for they have no title which will bear inspection.  The\ninstinct to ignore that tragic division instead of ending it is\namiable, and sometimes generous.  But it is a sentimentality which is\nlike the morbid optimism of the consumptive who dares not admit even to\nhimself the virulence of his disease.  As long as the division exists,\nthe general body of workers, while it may suffer from the struggles of\nany one group within it, nevertheless supports them by its sympathy,\nbecause all are interested in the results of the contest carried on by\neach.  Different sections of workers will exercise mutual restraint\nonly when the termination of the {136} struggle leaves them face to\nface with each other, and not as now, with the common enemy.  The ideal\nof a united society in which no one group uses its power to encroach\nupon the standards of another is, in short, unattainable, except\nthrough the preliminary abolition of functionless property.\n\nThose to whom a leisure class is part of an immutable order without\nwhich civilization is inconceivable, dare not admit, even to\nthemselves, that the world is poorer, not richer, because of its\nexistence.  So, when, as now it is important that productive energy\nshould be fully used, they stamp and cry, and write to _The Times_\nabout the necessity for increased production, though all the time they\nthemselves, their way of life and expenditure, and their very existence\nas a leisure class, are among the causes why production is not\nincreased.  In all their economic plans they make one reservation,\nthat, however necessitous the world may be, it shall still support\nthem.  But men who work do not make that reservation, nor is there any\nreason why they should; and appeals to them to produce more wealth\nbecause the public needs it usually fall upon deaf ears, even when such\nappeals are not involved in the ignorance and misapprehensions which\noften characterize them.\n\nFor the workman is not the servant of the consumer, for whose sake\ngreater production is demanded, but of shareholders, whose primary aim\nis dividends, and to whom all production, however futile or frivolous,\nso long as it yields dividends, is the same.  It is useless to urge\nthat he should produce more wealth for the {137} community, unless at\nthe same time he is assured that it is the community which will benefit\nin proportion as more wealth is produced.  If every unnecessary charge\nupon coal-getting had been eliminated, it would be reasonable that the\nminers should set a much needed example by refusing to extort better\nterms for themselves at the expense of the public.  But there is no\nreason why they should work for lower wages or longer hours as long as\nthose who are to-day responsible for the management of the industry\nconduct it with \"the extravagance and waste\" stigmatized by the most\neminent official witness before the Coal Commission, or why the\nconsumer should grumble at the rapacity of the miner as long as he\nallows himself to be mulcted by swollen profits, the costs of an\nineffective organization, and unnecessary payments to superfluous\nmiddlemen.\n\nIf to-day the miner or any other workman produces more, he has no\nguarantee that the result will be lower prices rather than higher\ndividends and larger royalties, any more than, as a workman, he can\ndetermine the quality of the wares which his employer supplies to\ncustomers, or the price at which they are sold.  Nor, as long as he is\ndirectly the servant of a profit-making company, and only indirectly\nthe servant of the community, can any such guarantee be offered him.\nIt can be offered only in so far as he stands in an immediate and\ndirect relation to the public for whom industry is carried on, so that,\nwhen all costs have been met, any surplus will pass to it, and not to\nprivate individuals.  It will be accepted only in so far as the workers\nin each industry are not merely servants executing orders, but {138}\nthemselves have a collective responsibility for the character of the\nservice, and can use their organizations not merely to protect\nthemselves against exploitation, but to make positive contributions to\nthe administration and development of their industry.\n\n\n\n[1] _Coal Industry Commission, Minutes of Evidence_, pp. 9261-9.\n\n\n\n\n{139}\n\nIX\n\nTHE CONDITION OF EFFICIENCY\n\nThus it is not only for the sake of the producers, on whom the old\nindustrial order weighed most heavily, that a new industrial order is\nneeded.  It is needed for the sake of the consumers, because the\nability on which the old industrial order prided itself most and which\nis flaunted most as an argument against change, the ability to serve\nthem effectively, is itself visibly breaking down.  It is breaking down\nat what was always its most vulnerable point, the control of the human\nbeings whom, with characteristic indifference to all but their economic\nsignificance, it distilled for its own purposes into an abstraction\ncalled \"Labor.\"  The first symptom of its collapse is what the first\nsymptom of economic collapses has usually been in the past--the failure\nof customary stimuli to evoke their customary response in human effort.\n\nTill that failure is recognized and industry reorganized so that new\nstimuli may have free play, the collapse will not correct itself, but,\ndoubtless with spasmodic revivals and flickerings of energy, will\ncontinue and accelerate.  The cause of it is simple.  It is that those\nwhose business it is to direct economic activity are increasingly\nincapable of directing the men upon whom economic activity depends.\nThe fault is not that of individuals, but of a system, of Industrialism\nitself.  {140} During the greater part of the nineteenth century\nindustry was driven by two forces, hunger and fear, and the employer\ncommanded them both.  He could grant or withhold employment as he\npleased.  If men revolted against his terms he could dismiss them, and\nif they were dismissed what confronted them was starvation or the\nworkhouse.  Authority was centralized; its instruments were passive;\nthe one thing which they dreaded was unemployment.  And since they\ncould neither prevent its occurrence nor do more than a little to\nmitigate its horrors when it occurred, they submitted to a discipline\nwhich they could not resist, and industry pursued its course through\ntheir passive acquiescence in a power which could crush them\nindividually if they attempted to oppose it.\n\nThat system might be lauded as efficient or denounced as inhuman.  But,\nat least, as its admirers were never tired of pointing out, it worked.\nAnd, like the Prussian State, which alike in its virtues and\ndeficiencies it not a little resembled, as long as it worked it\nsurvived denunciations of its methods, as a strong man will throw off a\ndisease.  But to-day it is ceasing to have even the qualities of its\ndefects.  It is ceasing to be efficient.  It no longer secures the\never-increasing output of wealth which it offered in its golden prime,\nand which enabled it to silence criticism by an imposing spectacle of\nmaterial success.  Though it still works, it works unevenly, amid\nconstant friction and jolts and stoppages, without the confidence of\nthe public and without full confidence even in itself, a tyrant who\nmust intrigue and cajole where formerly he commanded, a gaoler who, if\nnot yet {141} deprived of whip, dare only administer moderate\nchastisement, and who, though he still protests that he alone can keep\nthe treadmill moving and get the corn ground, is compelled to surrender\nso much of his authority as to make it questionable whether he is worth\nhis keep.  For the instruments through which Capitalism exercised\ndiscipline are one by one being taken from it.  It cannot pay what\nwages it likes or work what hours it likes.  In well-organized\nindustries the power of arbitrary dismissal, the very center of its\nauthority, is being shaken, because men will no longer tolerate a\nsystem which makes their livelihood dependent on the caprices of an\nindividual.  In all industries alike the time is not far distant when\nthe dread of starvation can no longer be used to cow dissatisfied\nworkers into submission, because the public will no longer allow\ninvoluntary unemployment to result in starvation.\n\nAnd if Capitalism is losing its control of men's bodies, still more has\nit lost its command of their minds.  The product of a civilization\nwhich regarded \"the poor\" as instruments, at worst of the luxuries, at\nbest of the virtues, of the rich, its psychological foundation fifty\nyears ago was an ignorance in the mass of mankind which led them to\nreverence as wisdom the very follies of their masters, and an almost\nanimal incapacity for responsibility.  Education and experience have\ndestroyed the passivity which was the condition of the perpetuation of\nindustrial government in the hands of an oligarchy of private\ncapitalists.  The workman of to-day has as little belief in the\nintellectual superiority of many of those who direct industry as he has\nin the morality of {142} the system.  It appears to him to be not only\noppressive, but wasteful, unintelligent and inefficient.  In the light\nof his own experience in the factory and the mine, he regards the claim\nof the capitalist to be the self-appointed guardian of public interests\nas a piece of sanctimonious hypocrisy.  For he sees every day that\nefficiency is sacrificed to shortsighted financial interests; and while\nas a man he is outraged by the inhumanity of the industrial order, as a\nprofessional who knows the difference between good work and bad he has\na growing contempt at once for its misplaced parsimony and its\nmisplaced extravagance, for the whole apparatus of adulteration,\nadvertisement and quackery which seems inseparable from the pursuit of\nprofit as the main standard of industrial success.\n\nSo Capitalism no longer secures strenuous work by fear, for it is\nceasing to be formidable.  And it cannot secure it by respect, for it\nhas ceased to be respected.  And the very victories by which it seeks\nto reassert its waning prestige are more disastrous than defeats.\nEmployers may congratulate themselves that they have maintained intact\ntheir right to freedom of management, or opposed successfully a demand\nfor public ownership, or broken a movement for higher wages and shorter\nhours.  But what is success in a trade dispute or in a political\nstruggle is often a defeat in the workshop: the workmen may have lost,\nbut it does not follow that their employers, still less that the\npublic, which is principally composed of workmen, have won.  For the\nobject of industry is to produce goods, and to produce them at the\nlowest cost in human effort.  {143} But there is no alchemy which will\nsecure efficient production from the resentment or distrust of men who\nfeel contempt for the order under which they work.  It is a commonplace\nthat credit is the foundation of industry.  But credit is a matter of\npsychology, and the workman has his psychology as well as the\ncapitalist.  If confidence is necessary to the investment of capital,\nconfidence is not less necessary to the effective performance of labor\nby men whose sole livelihood depends upon it.  If they are not yet\nstrong enough to impose their will, they are strong enough to resist\nwhen their masters would impose theirs.  They may work rather than\nstrike.  But they will work to escape dismissal, not for the greater\nglory of a system in which they do not believe; and, if they are\ndismissed, those who take their place will do the same.\n\nThat this is one cause of a low output has been stated both by\nemployers and workers in the building industry, and by the\nrepresentatives of the miners before the Coal Commission.  It was\nreiterated with impressive emphasis by Mr. Justice Sankey.  Nor is it\nseriously contested by employers themselves.  What else, indeed, do\ntheir repeated denunciations of \"restriction of output\" mean except\nthat they have failed to organize industry so as to secure the\nefficient service which it is their special function to provide?  Nor\nis it appropriate to the situation to indulge in full-blooded\ndenunciations of the \"selfishness\" of the working classes.  \"To draw an\nindictment against a whole nation\" is a procedure which is as\nimpossible in industry as it is in politics.  Institutions must be\nadapted to human nature, not {144} human nature to institutions.  If\nthe effect of the industrial system is such that a large and increasing\nnumber of ordinary men and women find that it offers them no adequate\nmotive for economic effort, it is mere pedantry to denounce men and\nwomen instead of amending the system.\n\nThus the time has come when absolutism in industry may still win its\nbattles, but loses the campaign, and loses it on the very ground of\neconomic efficiency which was of its own selection.  In the period of\ntransition, while economic activity is distracted by the struggle\nbetween those who have the name and habit of power, but no longer the\nfull reality of it, and those who are daily winning more of the reality\nof power but are not yet its recognized repositories, it is the\nconsumer who suffers.  He has neither the service of docile obedience,\nnor the service of intelligent co-operation.  For slavery will work--as\nlong as the slaves will let it; and freedom will work when men have\nlearned to be free; but what will not work is a combination of the two.\nSo the public goes short of coal not only because of the technical\ndeficiencies of the system under which it is raised and distributed,\nbut because the system itself has lost its driving force--because the\ncoal owners can no longer persuade the miners into producing more\ndividends for them and more royalties for the owners of minerals, while\nthe public cannot appeal to them to put their whole power into serving\nitself, because it has chosen that they should be the servants, not of\nitself, but of shareholders.\n\nAnd, this dilemma is not, as some suppose, temporary, {145} the\naftermath of war, or peculiar to the coal industry, as though the\nminers alone were the children of sin which in the last few months they\nhave been described to be.  It is permanent; it has spread far; and, as\nsleeping spirits are stirred into life by education and one industry\nafter another develops a strong corporate consciousness, it will spread\nfurther.  Nor will it be resolved by lamentations or menaces or\ndenunciations of leaders whose only significance is that they say\nopenly what plain men feel privately.  For the matter at bottom is one\nof psychology.  What has happened is that the motives on which the\nindustrial system relied for several generations to secure efficiency,\nsecure it no longer.  And it is as impossible to restore them, to\nrevive by mere exhortation the complex of hopes and fears and ignorance\nand patient credulity and passive acquiescence, which together made\nmen, fifty years ago, plastic instruments in the hands of\nindustrialism, as to restore innocence to any others of those who have\neaten of the tree of knowledge.\n\nThe ideal of some intelligent and respectable business men, the\nrestoration of the golden sixties, when workmen were docile and\nconfiding, and trade unions were still half illegal, and foreign\ncompetition meant English competition in foreign countries, and prices\nwere rising a little and not rising too much, is the one Utopia which\ncan never be realized.  The King may walk naked as long as his\ncourtiers protest that he is clad; but when a child or a fool has\nbroken the spell a tailor is more important than all their admiration.\nIf the public, which suffers from the slackening of economic activity,\n{146} desires to end its _malaise_, it will not laud as admirable and\nall-sufficient the operation of motives which are plainly ceasing to\nmove.  It will seek to liberate new motives and to enlist them in its\nservice.  It will endeavor to find an alternative to incentives which\nwere always degrading, to those who used them as much as to those upon\nwhom they were used, and which now are adequate incentives no longer.\nAnd the alternative to the discipline which Capitalism exercised\nthrough its instruments of unemployment and starvation is the\nself-discipline of responsibility and professional pride.\n\nSo the demand which aims at stronger organization, fuller\nresponsibility, larger powers for the sake of the producer as a\ncondition of economic liberty, the demand for freedom, is not\nantithetic to the demand for more effective work and increased output\nwhich is being made in the interests of the consumer.  It is\ncomplementary to it, as the insistence by a body of professional men,\nwhether doctors or university teachers, on the maintenance of their\nprofessional independence and dignity against attempts to cheapen the\nservice is not hostile to an efficient service, but, in the long run, a\ncondition of it.  The course of wisdom for the consumer would be to\nhasten, so far as he can, the transition.  For, as at present\nconducted, industry is working against the grain.  It is compassing sea\nand land in its efforts to overcome, by ingenious financial and\ntechnical expedients, obstacles which should never have existed.  It is\ntrying to produce its results by conquering professional feeling\ninstead of using it.  It is carrying not only its inevitable economic\nburdens, but an ever increasing {147} load of ill will and skepticism.\nIt has in fact \"shot the bird which caused the wind to blow\" and goes\nabout its business with the corpse round its neck.  Compared with that\npsychological incubus, the technical deficiencies of industry, serious\nthough they often are, are a bagatelle, and the business men who preach\nthe gospel of production without offering any plan for dealing with\nwhat is now the central fact in the economic situation, resemble a\nChristian apologist who should avoid disturbing the equanimity of his\naudience by carefully omitting all reference either to the fall of man\nor the scheme of salvation.  If it is desired to increase the output of\nwealth, it is not a paradox, but the statement of an elementary\neconomic truism to say that active and constructive co-operation on the\npart of the rank and file of workers would do more to contribute to\nthat result than the discovery of a new coal-field or a generation of\nscientific invention.\n\n\nThe first condition of enlisting on the side of constructive work the\nprofessional feeling which is now apathetic, or even hostile to it, is\nto secure that when it is given its results accrue to the public, not\nto the owner of property in capital, in land, or in other resources.\nFor this reason the attenuation of the rights at present involved in\nthe private ownership of industrial capital, or their complete\nabolition, is not the demand of idealogues, but an indispensable\nelement in a policy of economic efficiency, since it is the condition\nof the most effective functioning of the human beings upon whom,\nthough, like other truisms, it is often forgotten, {148} economic\nefficiency ultimately depends.  But it is only one element.\nCo-operation may range from mere acquiescence to a vigilant and zealous\ninitiative.  The criterion of an effective system of administration is\nthat it should succeed in enlisting in the conduct of industry the\nlatent forces of professional pride to which the present industrial\norder makes little appeal, and which, indeed, Capitalism, in its war\nupon trade union organization, endeavored for many years to stamp out\naltogether.\n\nNor does the efficacy of such an appeal repose upon the assumption of\nthat \"change in human nature,\" which is the triumphant _reductio ad\nabsurdum_ advanced by those who are least satisfied with the working of\nhuman nature as it is.  What it does involve is that certain elementary\nfacts should be taken into account, instead of, as at present, being\nignored.  That all work is distasteful and that \"every man desires to\nsecure the largest income with the least effort\" may be as axiomatic as\nit is assumed to be.  But in practice it makes all the difference to\nthe attitude of the individual whether the collective sentiment of the\ngroup to which he belongs is on the side of effort or against it, and\nwhat standard of effort it sets.  That, as employers complain, the\npublic opinion of considerable groups of workers is against an\nintensification of effort as long as part of its result is increased\ndividends for shareholders, is no doubt, as far as mere efficiency is\nconcerned, the gravest indictment of the existing industrial order.\nBut, even when public ownership has taken the place of private\ncapitalism, its ability to command {149} effective service will depend\nultimately upon its success in securing not merely that professional\nfeeling is no longer an opposing force, but that it is actively\nenlisted upon the side of maintaining the highest possible standard of\nefficiency which can reasonably be demanded.\n\nTo put the matter concretely, while the existing ownership of mines is\na positive inducement to inefficient work, public ownership\nadministered by a bureaucracy, if it would remove the technical\ndeficiencies emphasized by Sir Richard Redmayne as inseparable from the\nseparate administration of 3,000 pits by 1,500 different companies,\nwould be only too likely to miss a capital advantage which a different\ntype of administration would secure.  It would lose both the assistance\nto be derived from the technical knowledge of practical men who know by\ndaily experience the points at which the details of administration can\nbe improved, and the stimulus to efficiency springing from the\ncorporate pride of a profession which is responsible for maintaining\nand improving the character of its service.  Professional spirit is a\nforce like gravitation, which in itself is neither good nor bad, but\nwhich the engineer uses, when he can, to do his work for him.  If it is\nfoolish to idealize it, it is equally shortsighted to neglect it.  In\nwhat are described _par excellence_ as \"the services\" it has always\nbeen recognized that _esprit de corps_ is the foundation of efficiency,\nand all means, some wise and some mischievous, are used to encourage\nit: in practice, indeed, the power upon which the country relied as its\nmain safeguard in an emergency was the professional zeal of the navy\nand nothing else.  Nor is {150} that spirit peculiar to the professions\nwhich are concerned with war.  It is a matter of common training,\ncommon responsibilities, and common dangers.  In all cases where\ndifficult and disagreeable work is to be done, the force which elicits\nit is normally not merely money, but the public opinion and tradition\nof the little society in which the individual moves, and in the esteem\nof which he finds that which men value in success.\n\nTo ignore that most powerful of stimuli as it is ignored to-day, and\nthen to lament that the efforts which it produces are not forthcoming,\nis the climax of perversity.  To aim at eliminating from industry the\ngrowth and action of corporate feeling, for fear lest an organized body\nof producers should exploit the public, is a plausible policy.  But it\nis short-sighted.  It is \"to pour away the baby with the bath,\" and to\nlower the quality of the service in an attempt to safeguard it.  A wise\nsystem of administration would recognize that professional solidarity\ncan do much of its work for it more effectively than it can do it\nitself, because the spirit of his profession is part of the individual\nand not a force outside him, and would make it its object to enlist\nthat temper in the public service.  It is only by that policy, indeed,\nthat the elaboration of cumbrous regulations to prevent men doing what\nthey should not, with the incidental result of sometimes preventing\nthem from doing what they should--it is only by that policy that what\nis mechanical and obstructive in bureaucracy can be averted.  For\nindustry cannot run without laws.  It must either control itself by\nprofessional standards, or it must be controlled by officials who are\nnot of the {151} craft and who, however zealous and well-meaning, can\nhardly have the feel of it in their fingers.  Public control and\ncriticism are indispensable.  But they should not be too detailed, or\nthey defeat themselves.  It would be better that, once fair standards\nhave been established, the professional organization should check\noffenses against prices and quality than that it should be necessary\nfor the State to do so.  The alternative to minute external supervision\nis supervision from within by men who become imbued with the public\nobligations of their trade in the very process of learning it.  It is,\nin short, professional in industry.\n\nFor this reason collectivism by itself is too simple a solution.  Its\nfailure is likely to be that of other rationalist systems.\n\n  \"Dann hat er die Theile in seiner Hand,\n  Fehlt leider! nur das geistige Band.\"\n\nIf industrial reorganization is to be a living reality, and not merely\na plan upon paper, its aim must be to secure not only that industry is\ncarried on for the service of the public, but that it shall be carried\non with the active co-operation of the organizations of producers.  But\nco-operation involves responsibility, and responsibility involves\npower.  It is idle to expect that men will give their best to any\nsystem which they do not trust, or that they will trust any system in\nthe control of which they do not share.  Their ability to carry\nprofessional obligations depends upon the power which they possess to\nremove the obstacles which prevent those obligations from being\ndischarged, and upon their willingness, when they possess the power, to\nuse it.\n\n{152}\n\nTwo causes appear to have hampered the committees which were\nestablished in connection with coal mines during the war to increase\nthe output of coal.  One was the reluctance of some of them to\ndischarge the invidious task of imposing penalties for absenteeism on\ntheir fellow-workmen.  The other was the exclusion of faults of\nmanagement from the control of many committees.  In some cases all went\nwell till they demanded that, if the miners were penalized for\nabsenteeism which was due to them, the management should be penalized\nsimilarly when men who desired to work were sent home because, as a\nresult of defective organization, there was no work for them to do.\nTheir demand was resisted as \"interference with the management,\" and\nthe attempt to enforce regularity of attendance broke down.  Nor, to\ntake another example from the same industry, is it to be expected that\nthe weight of the miners' organization will be thrown on to the side of\ngreater production, if it has no power to insist on the removal of the\ndefects of equipment and organization, the shortage of trams, rails,\ntubs and timber, the \"creaming\" of the pits by the working of easily\ngot coal to their future detriment, their wasteful layout caused by the\nvagaries of separate ownership, by which at present the output is\nreduced.\n\nThe public cannot have it both ways.  If it allows workmen to be\ntreated as \"hands\" it cannot claim the service of their wills and their\nbrains.  If it desires them to show the zeal of skilled professionals,\nit must secure that they have sufficient power to allow of their\ndischarging professional responsibilities.  In order that workmen may\nabolish any restrictions on output which {153} may be imposed by them,\nthey must be able to insist on the abolition of the restrictions, more\nmischievous because more effective, which, as the Committee on Trusts\nhas recently told us, are imposed by organizations of employers.  In\norder that the miners' leaders, instead of merely bargaining as to\nwages, hours and working conditions, may be able to appeal to their\nmembers to increase the supply of coal, they must be in a position to\nsecure the removal of the causes of low output which are due to the\ndeficiencies of the management, and which are to-day a far more serious\nobstacle than any reluctance on the part of the miner.  If the workmen\nin the building trade are to take combined action to accelerate\nproduction, they must as a body be consulted as to the purpose to which\ntheir energy is to be applied, and must not be expected to build\nfashionable houses, when what are required are six-roomed cottages to\nhouse families which are at present living with three persons to a room.\n\nIt is deplorable, indeed, that any human beings should consent to\ndegrade themselves by producing the articles which a considerable\nnumber of workmen turn out to-day, boots which are partly brown paper,\nand furniture which is not fit to use.  The revenge of outraged\nhumanity is certain, though it is not always obvious; and the penalty\npaid by the consumer for tolerating an organization of industry which,\nin the name of efficiency, destroyed the responsibility of the workman,\nis that the service with which he is provided is not even efficient.\nHe has always paid it, though he has not seen it, in quality.  To-day\nhe is beginning to {154} realize that he is likely to pay it in\nquantity as well.  If the public is to get efficient service, it can\nget it only from human beings, with the initiative and caprices of\nhuman beings.  It will get it, in short, in so far as it treats\nindustry as a responsible profession.\n\nThe collective responsibility of the workers for the maintenance of the\nstandards of their profession is, then, the alternative to the\ndiscipline which Capitalism exercised in the past, and which is now\nbreaking down.  It involves a fundamental change in the position both\nof employers and of trade unions.  As long as the direction of industry\nis in the hands of property-owners or their agents, who are concerned\nto extract from it the maximum profit for themselves, a trade union is\nnecessarily a defensive organization.  Absorbed, on the one hand, in\nthe struggle to resist the downward thrust of Capitalism upon the\nworkers' standard of life, and denounced, on the other, if it presumes,\nto \"interfere with management,\" even when management is most obviously\ninefficient, it is an opposition which never becomes a government and\nwhich has neither the will nor the power to assume responsibility for\nthe quality of the service offered to the consumer.  If the abolition\nof functionless property transferred the control of production to\nbodies representing those who perform constructive work and those who\nconsume the goods produced, the relation of the worker to the public\nwould no longer be indirect but immediate, and associations which are\nnow purely defensive would be in a position not merely to criticize and\noppose but to advise, to initiate and to enforce upon their own members\nthe obligations of the craft.\n\n{155}\n\nIt is obvious that in such circumstances the service offered the\nconsumer, however carefully safeguarded by his representation on the\nauthorities controlling each industry, would depend primarily upon the\nsuccess of professional organizations in finding a substitute for the\ndiscipline exercised to-day by the agents of property-owners.  It would\nbe necessary for them to maintain by their own action the zeal,\nefficiency and professional pride which, when the barbarous weapons of\nthe nineteenth century have been discarded, would be the only guarantee\nof a high level of production.  Nor, once this new function has been\nmade possible for professional organizations, is there any extravagance\nin expecting them to perform it with reasonable competence.  How far\neconomic motives are balked to-day and could be strengthened by a\ndifferent type of industrial organization, to what extent, and under\nwhat conditions, it is possible to enlist in the services of industry\nmotives which are not purely economic, can be ascertained only after a\nstudy of the psychology of work which has not yet been made.  Such a\nstudy, to be of value, must start by abandoning the conventional\nassumptions, popularized by economic textbooks and accepted as\nself-evident by practical men, that the motives to effort are simple\nand constant in character, like the pressure of steam in a boiler, that\nthey are identical throughout all ranges of economic activity, from the\nstock exchange to the shunting of wagons or laying of bricks, and that\nthey can be elicited and strengthened only by directly economic\nincentives.  In so far as motives in industry have been considered\nhitherto, it has usually been done {156} by writers who, like most\nexponents of scientific management, have started by assuming that the\ncategories of business psychology could be offered with equal success\nto all classes of workers and to all types of productive work.  Those\ncategories appear to be derived from a simplified analysis of the\nmental processes of the company promoter, financier or investor, and\ntheir validity as an interpretation of the motives and habits which\ndetermine the attitude to his work of the bricklayer, the miner, the\ndock laborer or the engineer, is precisely the point in question.\n\nClearly there are certain types of industry to which they are only\npartially relevant.  It can hardly be assumed, for example, that the\ndegree of skill and energy brought to his work by a surgeon, a\nscientific investigator, a teacher, a medical officer of health, an\nIndian civil servant and a peasant proprietor are capable of being\nexpressed precisely and to the same degree in terms of the economic\nadvantage which those different occupations offer.  Obviously those who\npursue them are influenced to some considerable, though uncertain,\nextent by economic incentives.  Obviously, again, the precise character\nof each process or step in the exercise of their respective avocations,\nthe performance of an operation, the carrying out of a piece of\ninvestigation, the selection of a particular type of educational\nmethod, the preparation of a report, the decision of a case or the care\nof live stock, is not immediately dependent upon an exact calculation\nof pecuniary gain or loss.  What appears to be the case is that in\ncertain walks of life, while the occupation is chosen after a\nconsideration of {157} its economic advantages, and while economic\nreasons exact the minimum degree of activity needed to avert dismissal\nfrom it or \"failure,\" the actual level of energy or proficiency\ndisplayed depend largely upon conditions of a different order.  Among\nthem are the character of the training received before and after\nentering the occupation, the customary standard of effort demanded by\nthe public opinion of one's fellows, the desire for the esteem of the\nsmall circle in which the individual moves and to be recognized as\nhaving \"made good\" and not to have \"failed,\" interest in one's work,\nranging from devotion to a determination to \"do justice\" to it, the\npride of the craftsman, the \"tradition of the service.\"\n\nIt would be foolish to suggest that any considerable body of men are\nuninfluenced by economic considerations.  But to represent them as\namenable to such incentives only is to give a quite unreal and bookish\npicture of the actual conditions under which the work of the world is\ncarried on.  How large a part such considerations play varies from one\noccupation to another, according to the character of the work which it\ndoes and the manner in which it is organized.  In what is called _par\nexcellence_ industry, calculations of pecuniary gain and loss are more\npowerful than in most of the so-called professions, though even in\nindustry they are more constantly present to the minds of the business\nmen who \"direct\" it, than to those of the managers and technicians,\nmost of whom are paid fixed salaries, or to the rank and file of\nwage-workers.  In the professions of teaching and medicine, in many\nbranches of the {158} public service, the necessary qualities are\nsecured, without the intervention of the capitalist employer, partly by\npecuniary incentives, partly by training and education, partly by the\nacceptance on the part of those entering them of the traditional\nobligations of their profession as part of the normal framework of\ntheir working lives.  But this difference is not constant and\nunalterable.  It springs from the manner in which different types of\noccupation are organized, on the training which they offer, and the\n_morale_ which they cultivate among their members.  The psychology of a\nvocation can in fact be changed; new motives can be elicited, provided\nsteps are taken to allow them free expression.  It is as feasible to\nturn building into an organized profession, with a relatively high code\nof public honor, as it was to do the same for medicine or teaching.\n\nThe truth is that we ought radically to revise the presuppositions as\nto human motives on which current presentations of economic theory are\nordinarily founded and in terms of which the discussion of economic\nquestion is usually carried on.  The assumption that the stimulus of\nimminent personal want is either the only spur, or a sufficient spur,\nto productive effort is a relic of a crude psychology which has little\nwarrant either in past history or in present experience.  It derives\nwhat plausibility it possesses from a confusion between work in the\nsense of the lowest _quantum_ of activity needed to escape actual\nstarvation, and the work which is given, irrespective of the fact that\nelementary wants may already have been satisfied, through the natural\ndisposition of ordinary men to maintain, and of extraordinary {159} men\nto improve upon, the level of exertion accepted as reasonable by the\npublic opinion of the group of which they are members.  It is the old\ndifference, forgotten by society as often as it is learned, between the\nlabor of the free man and that of the slave.  Economic fear may secure\nthe minimum effort needed to escape economic penalties.  What, however,\nhas made progress possible in the past, and what, it may be suggested,\nmatters to the world to-day, is not the bare minimum which is required\nto avoid actual want, but the capacity of men to bring to bear upon\ntheir tasks a degree of energy, which, while it can be stimulated by\neconomic incentives, yields results far in excess of any which are\nnecessary merely to avoid the extremes of hunger or destitution.\n\nThat capacity is a matter of training, tradition and habit, at least as\nmuch as of pecuniary stimulus, and the ability of a professional\nassociation representing the public opinion of a group of workers to\nraise it is, therefore, considerable.  Once industry has been liberated\nfrom its subservience to the interests of the functionless\nproperty-owner, it is in this sphere that trade unions may be expected\nincreasingly to find their function.  Its importance both for the\ngeneral interests of the community and for the special interests of\nparticular groups of workers can hardly be exaggerated.  Technical\nknowledge and managerial skill are likely to be available as readily\nfor a committee appointed by the workers in an industry as for a\ncommittee appointed, as now, by the shareholders.  But it is more and\nmore evident to-day that the crux of the economic situation is not\n{160} the technical deficiencies of industrial organization, but the\ngrowing inability of those who direct industry to command the active\ngood will of the _personnel_.  Their co-operation is promised by the\nconversion of industry into a profession serving the public, and\npromised, as far as can be judged, by that alone.\n\nNor is the assumption of the new and often disagreeable obligations of\ninternal discipline and public responsibility one which trade unionism\ncan afford, once the change is accomplished, to shirk, however alien\nthey may be to its present traditions.  For ultimately, if by slow\ndegrees, power follows the ability to wield it; authority goes with\nfunction.  The workers cannot have it both ways.  They must choose\nwhether to assume the responsibility for industrial discipline and\nbecome free, or to repudiate it and continue to be serfs.  If,\norganized as professional bodies, they can provide a more effective\nservice than that which is now, with increasing difficulty, extorted by\nthe agents of capital, they will have made good their hold upon the\nfuture.  If they cannot, they will remain among the less calculable\ninstruments of production which many of them are to-day.  The instinct\nof mankind warns it against accepting at their face value spiritual\ndemands which cannot justify themselves by practical achievements.  And\nthe road along which the organized workers, like any other class, must\nclimb to power, starts from the provision of a more effective economic\nservice than their masters, as their grip upon industry becomes\nincreasingly vacillating and uncertain, are able to supply.\n\n\n\n\n{161}\n\nX\n\nTHE POSITION OF THE BRAIN WORKER\n\nThe conversion of industry into a profession will involve at least as\ngreat a change in the position of the management as in that of the\nmanual workers.  As each industry is organized for the performance of\nfunction, the employer will cease to be a profit maker and become what,\nin so far as he holds his position by a reputable title, he already is,\none workman among others.  In some industries, where the manager is a\ncapitalist as well, the alteration may take place through such a\nlimitation of his interest as a capitalist as it has been proposed by\nemployers and workers to introduce into the building industry.  In\nothers, where the whole work of administration rests on the shoulders\nof salaried managers, it has already in part been carried out.  The\neconomic conditions of this change have, indeed, been prepared by the\nseparation of ownership from management, and by the growth of an\nintellectual proletariat to whom the scientific and managerial work of\nindustry is increasingly intrusted.  The concentration of businesses,\nthe elaboration of organization, and the developments springing from\nthe application of science to industry have resulted in the\nmultiplication of a body of industrial brain workers who make the old\nclassifications into \"employers and workmen,\" which is still current in\ncommon speech, an absurdly {162} misleading description of the\nindustrial system as it exists to-day.\n\nTo complete the transformation all that is needed is that this new\nclass of officials, who fifty years ago were almost unknown, should\nrecognize that they, like the manual workers, are the victims of the\ndomination of property, and that both professional pride and economic\ninterest require that they should throw in their lot with the rest of\nthose who are engaged in constructive work.  Their position to-day is\noften, indeed, very far from being a happy one.  Many of them, like\nsome mine managers, are miserably paid.  Their tenure of their posts is\nsometimes highly insecure.  Their opportunities for promotion may be\nfew, and distributed with a singular capriciousness.  They see the\nprizes of industry awarded by favoritism, or by the nepotism which\nresults in the head of a business unloading upon it a family of sons\nwhom it would be economical to pay to keep out of it, and which,\nindignantly denounced on the rare occasions on which it occurs in the\npublic service, is so much the rule in private industry that no one\neven questions its propriety.  During the war they have found that,\nwhile the organized workers have secured advances, their own salaries\nhave often remained almost stationary, because they have been too\ngenteel to take part in trade unionism, and that to-day they are\nsometimes paid less than the men for whose work they are supposed to be\nresponsible.  Regarded by the workmen as the hangers-on of the masters,\nand by their employers as one section among the rest of the \"hands,\"\nthey have the odium of capitalism without its power or its profits.\n\n{163}\n\nFrom the conversion of industry into a profession those who at present\ndo its intellectual work have as much to gain as the manual workers.\nFor the principle of function, for which we have pleaded as the basis\nof industrial organization, supplies the only intelligible standard by\nwhich the powers and duties of the different groups engaged in industry\ncan be determined.  At the present time no such standard exists.  The\nsocial order of the pre-industrial era, of which faint traces have\nsurvived in the forms of academic organization, was marked by a careful\ngrading of the successive stages in the progress from apprentice to\nmaster, each of which was distinguished by clearly defined rights and\nduties, varying from grade to grade and together forming a hierarchy of\nfunctions.  The industrial system which developed in the course of the\nnineteenth century did not admit any principle of organization other\nthan the convenience of the individual, who by enterprise, skill, good\nfortune, unscrupulous energy or mere nepotism, happened at any moment\nto be in a position to wield economic authority.  His powers were what\nhe could exercise; his rights were what at any time he could assert.\nThe Lancashire mill-owner of the fifties was, like the Cyclops, a law\nunto himself.  Hence, since subordination and discipline are\nindispensable in any complex undertaking, the subordination which\nemerged in industry was that of servant to master, and the discipline\nsuch as economic strength could impose upon economic weakness.\n\nThe alternative to the allocation of power by the struggle of\nindividuals for self-aggrandizement is its {164} allocation according\nto function, that each group in the complex process of production\nshould wield so much authority as, and no more authority than, is\nneeded to enable it to perform the special duties for which it is\nresponsible.  An organization of industry based on this principle does\nnot imply the merging of specialized economic functions in an\nundifferentiated industrial democracy, or the obliteration of the brain\nworkers beneath the sheer mass of artisans and laborers.  But it is\nincompatible with the unlimited exercise of economic power by any class\nor individual.  It would have as its fundamental rule that the only\npowers which a man can exercise are those conferred upon him in virtue\nof his office.  There would be subordination.  But it would be\nprofoundly different from that which exists to-day.  For it would not\nbe the subordination of one man to another, but of all men to the\npurpose for which industry is carried on.  There would be authority.\nBut it would not be the authority of the individual who imposes rules\nin virtue of his economic power for the attainment of his economic\nadvantage.  It would be the authority springing from the necessity of\ncombining different duties to attain a common end.  There would be\ndiscipline.  But it would be the discipline involved in pursuing that\nend, not the discipline enforced upon one man for the convenience or\nprofit of another.  Under such an organization of industry the brain\nworker might expect, as never before, to come to his own.  He would be\nestimated and promoted by his capacity, not by his means.  He would be\nless likely than at present to find doors closed to him because of\npoverty.  His {165} judges would be his colleagues, not an owner of\nproperty intent on dividends.  He would not suffer from the perversion\nof values which rates the talent and energy by which wealth is created\nlower than the possession of property, which is at best their pensioner\nand at worst the spend-thrift of what intelligence has produced.  In a\nsociety organized for the encouragement of creative activity those who\nare esteemed most highly will be those who create, as in a world\norganized for enjoyment they are those who own.\n\nSuch considerations are too general and abstract to carry conviction.\nGreater concreteness may be given them by comparing the present\nposition of mine-managers with that which they would occupy were effect\ngiven to Mr. Justice Sankey's scheme for the nationalization of the\nCoal Industry.  A body of technicians who are weighing the probable\neffects of such a reorganization will naturally consider them in\nrelation both to their own professional prospects and to the efficiency\nof the service of which they are the working heads.  They will properly\ntake into account questions of salaries, pensions, security of status\nand promotion.  At the same time they will wish to be satisfied as to\npoints which, though not less important, are less easily defined.\nUnder which system, private or public ownership, will they have most\npersonal discretion or authority over the conduct of matters within\ntheir professional competence?  Under which will they have the best\nguarantees that their special knowledge will carry due weight, and\nthat, when handling matters of art, they will not be overridden or\nobstructed by amateurs?\n\n{166}\n\nAs far as the specific case of the Coal Industry is concerned the\nquestion of security and salaries need hardly be discussed.  The\ngreatest admirer of the present system would not argue that security of\nstatus is among the advantages which it offers to its employees.  It is\nnotorious that in some districts, at least, managers are liable to be\ndismissed, however professionally competent they may be, if they\nexpress in public views which are not approved by the directors of\ntheir company.  Indeed, the criticism which is normally made on the\npublic services, and made not wholly without reason, is that the\nsecurity which they offer is excessive.  On the question of salaries\nrather more than one-half of the colliery companies of Great Britain\nthemselves supplied figures to the Coal Industry Commission.[1]  If\ntheir returns may be trusted, it would appear that mine-managers are\npaid, as a class, salaries the parsimony of which is the more\nsurprising in view of the emphasis laid, and quite properly laid, by\nthe mine-owners on the managers' responsibilities.  The service of the\nState does not normally offer, and ought not to offer, financial prizes\ncomparable with those of private industry.  But it is improbable, had\nthe mines been its property during {167} the last ten years, that more\nthan one-half the managers would have been in receipt of salaries of\nunder L301 per year, and of less than L500 in 1919, by which time\nprices had more than doubled, and the aggregate profits of the\nmine-owners (of which the greater part was, however, taken by the State\nin taxation) had amounted in five years to L160,000,000.  It would be\nmisleading to suggest that the salaries paid to mine-managers are\ntypical of private industry, nor need it be denied that the probable\neffect of turning an industry into a public service would be to reduce\nthe size of the largest prizes at present offered.  What is to be\nexpected is that the lower and medium salaries would be raised, and the\nlargest somewhat diminished.  It is hardly to be denied, at any rate,\nthat the majority of brain workers in industry have nothing to fear on\nfinancial grounds from such a change as is proposed by Mr. Justice\nSankey.  Under the normal organization of industry, profits, it cannot\nbe too often insisted, do not go to them but to shareholders.  There\ndoes not appear to be any reason to suppose that the salaries of\nmanagers in the mines making more than 5/- profit a ton were any larger\nthan those making under 3/-.\n\nThe financial aspect of the change is not, however, the only point\nwhich a group of managers or technicians have to consider.  They have\nalso to weigh its effect on their professional status.  Will they have\nas much freedom, initiative and authority in the service of the\ncommunity as under private ownership?  How that question is answered\ndepends upon the form given to the administrative system through which\na public service is {168} conducted.  It is possible to conceive an\narrangement under which the life of a mine-manager would be made a\nburden to him by perpetual recalcitrance on the part of the men at the\npit for which he is responsible.  It is possible to conceive one under\nwhich he would be hampered to the point of paralysis by irritating\ninterference from a bureaucracy at headquarters.  In the past some\nmanagers of \"co-operative workshops\" suffered, it would seem, from the\nformer: many officers of Employment Exchanges are the victims, unless\ncommon rumor is misleading, of the latter.  It is quite legitimate,\nindeed it is indispensable, that these dangers should be emphasized.\nThe problem of reorganizing industry is, as has been said above, a\nproblem of constitution making.  It is likely to be handled\nsuccessfully only if the defects to which different types of\nconstitutional machinery are likely to be liable are pointed out in\nadvance.  Once, however, these dangers are realized, to devise\nprecautions against them appears to be a comparatively simple matter.\nIf Mr. Justice Sankey's proposals be taken as a concrete example of the\nposition which would be occupied by the managers in a nationalized\nindustry, it will be seen that they do not involve either of the two\ndangers which are pointed out above.  The manager will, it is true,\nwork with a Local Mining Council or pit committee, which is to \"meet\nfortnightly, or oftener if need be, to advise the manager on all\nquestions concerning the direction and safety of the mine,\" and \"if the\nmanager refuses to take the advice of the Local Mining Council on any\nquestion concerning the safety and health of the mine, such question\nshall be referred to {169} the District Mining Council.\"  It is true\nalso that, once such a Local Mining Council is formally established,\nthe manager will find it necessary to win its confidence, to lead by\npersuasion, not by mere driving, to establish, in short, the same\nrelationships of comradeship and good will as ought to exist between\nthe colleagues in any common undertaking.  But in all this there is\nnothing to undermine his authority, unless \"authority\" be understood to\nmean an arbitrary power which no man is fit to exercise, and which few\nmen, in their sober moments, would claim.  The manager will be\nappointed by, and responsible to, not the men whose work he supervises,\nbut the District Mining Council, which controls all the pits in a\ndistrict, and on that council he will be represented.  Nor will he be\nat the mercy of a distant \"clerkocracy,\" overwhelming him with\ncirculars and overriding his expert knowledge with impracticable\nmandates devised in London.  The very kernel of the schemes advanced\nboth by Justice Sankey and by the Miners' Federation is decentralized\nadministration within the framework of a national system.  There is no\nquestion of \"managing the industry from Whitehall.\"  The\ncharacteristics of different coal-fields vary so widely that reliance\non local knowledge and experience are essential, and it is to local\nknowledge and experience that it is proposed to intrust the\nadministration of the industry.  The constitution which is recommended\nis, in short, not \"Unitary\" but \"Federal.\"  There will be a division of\nfunctions and power between central authorities and district\nauthorities.  The former will lay down general rules as to those\nmatters which must necessarily {170} be dealt with on a national basis.\nThe latter will administer the industry within their own districts,\nand, as long as they comply with those rules and provide their quota of\ncoal, will possess local autonomy and will follow the method of working\nthe pits which they think best suited to local conditions.\n\nThus interpreted, public ownership does not appear to confront the\nbrain worker with the danger of unintelligent interference with his\nspecial technique, of which he is, quite naturally, apprehensive.  It\noffers him, indeed, far larger opportunities of professional\ndevelopment than are open to all but a favored few to-day, when the\nconsiderations of productive efficiency, which it is his special\n_metier_ to promote, are liable to be overridden by short-sighted\nfinancial interests operating through the pressure of a Board of\nDirectors who desire to show an immediate profit to their shareholders,\nand who, to obtain it, will \"cream\" the pit, or work it in a way other\nthan considerations of technical efficiency would dictate.  And the\ninterest of the community in securing that the manager's professional\nskill is liberated for the service of the public, is as great as his\nown.  For the economic developments of the last thirty years have made\nthe managerial and technical _personnel_ of industry the repositories\nof public responsibilities of quite incalculable importance, which,\nwith the best will in the world, they can hardly at present discharge.\nThe most salient characteristic of modern industrial organization is\nthat production is carried on under the general direction of business\nmen, who do not themselves necessarily know anything of productive\nprocesses.  \"Business\" {171} and \"industry\" tend to an increasing\nextent to form two compartments, which, though united within the same\neconomic system, employ different types of _personnel_, evoke different\nqualities and recognize different standards of efficiency and\nworkmanship.  The technical and managerial staff of industry is, of\ncourse, as amenable as other men to economic incentives.  But their\nspecial work is production, not finance; and, provided they are not\nsmarting under a sense of economic injustice, they want, like most\nworkmen, to \"see the job done properly.\"  The business men who\nultimately control industry are concerned with the promotion and\ncapitalization of companies, with competitive selling and the\nadvertisement of wares, the control of markets, the securing of special\nadvantages, and the arrangement of pools, combines and monopolies.\nThey are preoccupied, in fact, with financial results, and are\ninterested in the actual making of goods only in so far as financial\nresults accrue from it.\n\n\nThe change in organization which has, to a considerable degree,\nspecialized the spheres of business and management is comparable in its\nimportance to that which separated business and labor a century and a\nhalf ago.  It is specially momentous for the consumer.  As long as the\nfunctions of manager, technician and capitalist were combined, as in\nthe classical era of the factory system, in the single person of \"the\nemployer,\" it was not unreasonable to assume that profits and\nproductive efficiency ran similarly together.  In such circumstances\nthe ingenuity with which economists proved {172} that, in obedience to\n\"the law of substitution,\" he would choose the most economical process,\nmachine, or type of organization, wore a certain plausibility.  True,\nthe employer might, even so, adulterate his goods or exploit the labor\nof a helpless class of workers.  But as long as the person directing\nindustry was himself primarily a manager, he could hardly have the\ntraining, ability or time, even if he had the inclination, to\nconcentrate special attention on financial gains unconnected with, or\nopposed to, progress in the arts of production, and there was some\njustification for the conventional picture which represented \"the\nmanufacturer\" as the guardian of the interests of the consumer.  With\nthe drawing apart of the financial and technical departments of\nindustry--with the separation of \"business\" from \"production\"--the link\nwhich bound profits to productive efficiency is tending to be snapped.\nThere are more ways than formerly of securing the former without\nachieving the latter; and when it is pleaded that the interests of the\ncaptain of industry stimulate the adoption of the most \"economical\"\nmethods and thus secure industrial progress, it is necessary to ask\n\"economical for whom\"?  Though the organization of industry which is\nmost efficient, in the sense of offering the consumer the best service\nat the lowest real cost, may be that which is most profitable to the\nfirm, it is also true that profits are constantly made in ways which\nhave nothing to do with efficient production, and which sometimes,\nindeed, impede it.\n\nThe manner in which \"business\" may find that the methods which pay\nitself best are those which a truly {173} scientific \"management\" would\ncondemn may be illustrated by three examples.  In the first place, the\nwhole mass of profits which are obtained by the adroit capitalization\nof a new business, or the reconstruction of one which already exists,\nhave hardly any connection with production at all.  When, for instance,\na Lancashire cotton mill capitalized at L100,000 is bought by a London\nsyndicate which re-floats it with a capital of L500,000--not at all an\nextravagant case--what exactly has happened?  In many cases the\nequipment of the mill for production remains, after the process, what\nit was before it.  It is, however, valued at a different figure,\nbecause it is anticipated that the product of the mill will sell at a\nprice which will pay a reasonable profit not only upon the lower, but\nupon the higher, capitalization.  If the apparent state of the market\nand prospects of the industry are such that the public can be induced\nto believe this, the promoters of the reconstruction find it worth\nwhile to recapitalize the mill on the new basis.  They make their\nprofit not as manufacturers, but as financiers.  They do not in any way\nadd to the productive efficiency of the firm, but they acquire shares\nwhich will entitle them to an increased return.  Normally, if the\nmarket is favorable, they part with the greater number of them as soon\nas they are acquired.  But, whether they do so or not, what has\noccurred is a process by which the business element in industry obtains\nthe right to a larger share of the product, without in any way\nincreasing the efficiency of the service which is offered to the\nconsumer.\n\nOther examples of the manner in which the control of {174} production\nby \"business\" cuts across the line of economic progress are the wastes\nof competitive industry and the profits of monopoly.  It is well known\nthat the price paid by the consumer includes marketing costs, which to\na varying, but to a large, extent are expenses not of supplying the\ngoods, but of supplying them under conditions involving the expenses of\nadvertisement and competitive distribution.  For the individual firm\nsuch expenses, which enable it to absorb part of a rival's trade, may\nbe an economy: to the consumer of milk or coal--to take two flagrant\ninstances--they are pure loss.  Nor, as is sometimes assumed, are such\nwastes confined to distribution.  Technical reasons are stated by\nrailway managers to make desirable a unification of railway\nadministration and by mining experts of mines.  But, up to the war,\nbusiness considerations maintained the expensive system under which\neach railway company was operated as a separate system, and still\nprevent collieries, even collieries in the same district, from being\nadministered as parts of a single organization.  Pits are drowned out\nby water, because companies cannot agree to apportion between them the\ncosts of a common drainage system; materials are bought, and products\nsold, separately, because collieries will not combine; small coal is\nleft in to the amount of millions of tons because the most economical\nand technically efficient working of the seams is not necessarily that\nwhich yields the largest profit to the business men who control\nproduction.  In this instance the wide differences in economic strength\nwhich exist between different mines discourage the unification which is\neconomically desirable; naturally the {175} directors of a company\nwhich owns \"a good thing\" do not desire to merge interests with a\ncompany working coal that is poor in quality or expensive to mine.\nWhen, as increasingly happens in other industries, competitive wastes,\nor some of them, are eliminated by combination, there is a genuine\nadvance in technical efficiency, which must be set to the credit of\nbusiness motives.  In that event, however, the divergence between\nbusiness interests and those of the consumers is merely pushed one\nstage further forward; it arises, of course, over the question of\nprices.  If any one is disposed to think that this picture of the\neconomic waste which accompanies the domination of production by\nbusiness interests is overdrawn, he may be invited to consider the\ncriticisms upon the system passed by the \"efficiency engineers,\" who\nare increasingly being called upon to advise as to industrial\norganization and equipment.  \"The higher officers of the corporation,\"\nwrites Mr. H. L. Gantt of a Public Utility Company established in\nAmerica during the war, \"have all without exception been men of the\n'business' type of mind, who have made their success through\nfinanciering, buying, selling, etc....  As a matter of fact it is well\nknown that our industrial system has not measured up as we had\nexpected....  _The reason for its falling short is undoubtedly that the\nmen directing it had been trained in a business system operated for\nprofits, and did not understand one operated solely for production_.\nThis is no criticism of the men as individuals; they simply did not\nknow the job, and, what is worse, they did not know that they did not\nknow it.\"\n\n{176}\n\nIn so far, then, as \"Business\" and \"Management\" are separated, the\nlatter being employed under the direction of the former, it cannot be\nassumed that the direction of industry is in the hands of persons whose\nprimary concern is productive efficiency.  That a considerable degree\nof efficiency will result incidentally from the pursuit of business\nprofits is not, of course, denied.  What seems to be true, however, is\nthat the main interest of those directing an industry which has reached\nthis stage of development is given to financial strategy and the\ncontrol of markets, because the gains which these activities offer are\nnormally so much larger than those accruing from the mere improvement\nof the processes of production.  It is evident, however, that it is\nprecisely that improvement which is the main interest of the consumer.\nHe may tolerate large profits as long as they are thought to be the\nsymbol of efficient production.  But what he is concerned with is the\nsupply of goods, not the value of shares, and when profits appear to be\nmade, not by efficient production, but by skilful financiering or\nshrewd commercial tactics, they no longer appear meritorious.  If, in\ndisgust at what he has learned to call \"profiteering,\" the consumer\nseeks an alternative to a system under which product is controlled by\n\"Business,\" he can hardly find it except by making an ally of the\nmanagerial and technical _personnel_ of industry.  They organize the\nservice which he requires; they are relatively little implicated,\neither by material interest or by psychological bias, in the financial\nmethods which he distrusts; they often find the control of their\nprofessions by business men who are {177} primarily financiers\nirritating in the obstruction which it offers to technical efficiency,\nas well as sharp and close-fisted in the treatment of salaries.  Both\non public and professional grounds they belong to a group which ought\nto take the initiative in promoting a partnership between the producers\nand the public.  They can offer the community the scientific knowledge\nand specialized ability which is the most important condition of\nprogress in the arts of production.  It can offer them a more secure\nand dignified status, larger opportunities for the exercise of their\nspecial talents, and the consciousness that they are giving the best of\ntheir work and their lives, not to enriching a handful of uninspiring,\nif innocuous, shareholders, but to the service of the great body of\ntheir fellow-countrymen.  If the last advantage be dismissed as a\nphrase--if medical officers of health, directors of education,\ndirectors of the co-operative wholesale be assumed to be quite\nuninfluenced by any consciousness of social service--the first two, at\nany rate, remain.  And they are considerable.\n\nIt is this gradual disengagement of managerial technique from financial\ninterests which would appear the probable line along which \"the\nemployer\" of the future will develop.  The substitution throughout\nindustry of fixed salaries for fluctuating profits would, in itself,\ndeprive his position of half the humiliating atmosphere of predatory\nenterprise which embarrasses to-day any man of honor who finds himself,\nwhen he has been paid for his services, in possession of a surplus for\nwhich there is no assignable reason.  Nor, once large incomes from\nprofits have been extinguished, need his salary be large, {178} as\nincomes are reckoned to-day.  It is said that among the barbarians,\nwhere wealth is still measured by cattle, great chiefs are described as\nhundred-cow men.  The manager of a great enterprise who is paid\n$400,000 a year, might similarly be described as a hundred-family man,\nsince he receives the income of a hundred families.  It is true that\nspecial talent is worth any price, and that a payment of $400,000 a\nyear to the head of a business with a turnover of millions is\neconomically a bagatelle.  But economic considerations are not the only\nconsiderations.  There is also \"the point of honor.\"  And the truth is\nthat these hundred-family salaries are ungentlemanly.\n\nWhen really important issues are at stake every one realizes that no\ndecent man can stand out for his price.  A general does not haggle with\nhis government for the precise pecuniary equivalent of his contribution\nto victory.  A sentry who gives the alarm to a sleeping battalion does\nnot spend next day collecting the capital value of the lives he has\nsaved; he is paid 1/- a day and is lucky if he gets it.  The commander\nof a ship does not cram himself and his belongings into the boats and\nleave the crew to scramble out of the wreck as best they can; by the\ntradition of the service he is the last man to leave.  There is no\nreason why the public should insult manufacturers and men of business\nby treating them as though they were more thick-skinned than generals\nand more extravagant than privates.  To say that they are worth a good\ndeal more than even the exorbitant salaries which a few of them get is\noften true.  But it is beside the point.  No one has any business to\n{179} expect to be paid \"what he is worth,\" for what he is worth is a\nmatter between his own soul and God.  What he has a right to demand,\nand what it concerns his fellow-men to see that he gets, is enough to\nenable him to perform his work.  When industry is organized on a basis\nof function, that, and no more than that, is what he will be paid.  To\ndo the managers of industry justice, this whining for more money is a\nvice to which they (as distinct from their shareholders) are not\nparticularly prone.  There is no reason why they should be.  If a man\nhas important work, and enough leisure and income to enable him to do\nit properly, he is in possession of as much happiness as is good for\nany of the children of Adam.\n\n\n\n[1] The Coal Mines Department supplied the following figures to the\nCoal Industry Commission (Vol. III, App. 66).  They relate to 57 per\ncent. of the collieries of the United Kingdom.\n\n  Salary, including bonus and                Number of Managers\n  value of house and coal                      1913     1919\n\n  L100 or less ...............................    4        2\n  L101 to L200 ...............................  134        3\n  L201 to L300 ...............................  280       29\n  L301 to L400 ...............................  161      251\n  L401 to L500 ...............................  321      213\n  L501 to L600 ...............................   57      146\n  L601 and over ..............................   50      152\n\n\n\n\n{180}\n\nXI\n\nPORRO UNUM NECESSARIUM\n\nSo the organization of society on the basis of function, instead of on\nthat of rights, implies three things.  It means, first, that\nproprietary rights shall be maintained when they are accompanied by the\nperformance of service and abolished when they are not.  It means,\nsecond, that the producers shall stand in a direct relation to the\ncommunity for whom production is carried on, so that their\nresponsibility to it may be obvious and unmistakable, not lost, as at\npresent, through their immediate subordination to shareholders whose\ninterest is not service but gain.  It means, in the third place, that\nthe obligation for the maintenance of the service shall rest upon the\nprofessional organization of those who perform it, and that, subject to\nthe supervision and criticism of the consumer, those organizations\nshall exercise so much voice in the government of industry as may be\nneeded to secure that the obligation is discharged.  It is obvious,\nindeed, that no change of system or machinery can avert those causes of\nsocial _malaise_ which consist in the egotism, greed, or\nquarrelsomeness of human nature.  What it can do is to create an\nenvironment in which those are not the qualities which are encouraged.\nIt cannot secure that men live up to their principles.  What it can do\nis to establish their social order upon principles to which, if they\nplease, they can {181} live up and not live down.  It cannot control\ntheir actions.  It can offer them an end on which to fix their minds.\nAnd, as their minds are, so, in the long run and with exceptions, their\npractical activity will be.\n\nThe first condition of the right organization of industry is, then, the\nintellectual conversion which, in their distrust of principles,\nEnglishmen are disposed to place last or to omit altogether.  It is\nthat emphasis should be transferred from the opportunities which it\noffers individuals to the social functions which it performs; that they\nshould be clear as to its end and should judge it by reference to that\nend, not by incidental consequences which are foreign to it, however\nbrilliant or alluring those consequences may be.  What gives its\nmeaning to any activity which is not purely automatic is its purpose.\nIt is because the purpose of industry, which is the conquest of nature\nfor the service of man, is neither adequately expressed in its\norganization nor present to the minds of those engaged in it, because\nit is not regarded as a function but as an opportunity for personal\ngain or advancement or display, that the economic life of modern\nsocieties is in a perpetual state of morbid irritation.  If the\nconditions which produce that unnatural tension are to be removed, it\ncan only be effected by the growth of a habit of mind which will\napproach questions of economic organization from the standpoint of the\npurpose which it exists to serve, and which will apply to it something\nof the spirit expressed by Bacon when he said that the work of man\nought to be carried on \"for the glory of God and the relief of men's\nestate.\"\n\n{182}\n\nViewed from that angle issues which are insoluble when treated on the\nbasis of rights may be found more susceptible of reasonable treatment.\nFor a purpose, is, in the first place a principle of limitation.  It\ndetermines the end for which, and therefore the limits within which, an\nactivity is to be carried on.  It divided what is worth doing from what\nis not, and settles the scale upon which what is worth doing ought to\nbe done.  It is in the second place, a principle of unity, because it\nsupplies a common end to which efforts can be directed, and submits\ninterests, which would otherwise conflict, to the judgment of an\nover-ruling object.  It is, in the third place, a principle of\napportionment or distribution.  It assigns to the different parties of\ngroups engaged in a common undertaking the place which they are to\noccupy in carrying it out.  Thus it establishes order, not upon chance\nor power, but upon a principle, and bases remuneration not upon what\nmen can with good fortune snatch for themselves nor upon what, if\nunlucky, they can be induced to accept, but upon what is appropriate to\ntheir function, no more and no less, so that those who perform no\nfunction receive no payment, and those who contribute to the common end\nreceive honourable payment for honourable service.\n\n  Frate, la nostra volonta quieta\n  Virtu di carita, che fa volerne\n  Sol quel ch'avemo, e d'altro non ci asseta.\n  Si disiassimo esse piu superne,\n  Foran discordi li nostri disiri\n  Dal voler di colui che qui ne cerne.\n     *     *     *     *     *\n\n{183}\n\n  Anzi e formale ad esto beato esse\n  Tenersi dentro alla divina vogli,\n  Per ch'una fansi nostre vogli e stesse.\n     *     *     *     *     *\n  Chiaro mi fu allor com' ogni dove\n  In Cielo e paradiso, e si la grazia\n  Del sommo ben d'un modo non vi piove.\n\nThe famous lines in which Piccarda explains to Dante the order of\nParadise are a description of a complex and multiform society which is\nunited by overmastering devotion to a common end.  By that end all\nstations are assigned and all activities are valued.  The parts derive\ntheir quality from their place in the system, and are so permeated by\nthe unity which they express that they themselves are glad to be\nforgotten, as the ribs of an arch carry the eye from the floor from\nwhich they spring to the vault in which they meet and interlace.\n\nSuch a combination of unity and diversity is possible only to a society\nwhich subordinates its activities to the principle of purpose.  For\nwhat that principle offers is not merely a standard for determining the\nrelations of different classes and groups of producers, but a scale of\nmoral values.  Above all, it assigns to economic activity itself its\nproper place as the servant, not the master, of society.  The burden of\nour civilization is not merely, as many suppose, that the product of\nindustry is ill-distributed, or its conduct tyrannical, or its\noperation interrupted by embittered disagreements.  It is that industry\nitself has come to hold a position of exclusive predominance among\nhuman interests, which no single interest, and least of all the\nprovision of the {184} material means of existence, is fit to occupy.\nLike a hypochondriac who is so absorbed in the processes of his own\ndigestion that he goes to his grave before he has begun to live,\nindustrialized communities neglect the very objects for which it is\nworth while to acquire riches in their feverish preoccupation with the\nmeans by which riches can be acquired.\n\nThat obsession by economic issues is as local and transitory as it is\nrepulsive and disturbing.  To future generations it will appear as\npitiable as the obsession of the seventeenth century by religious\nquarrels appears to-day; indeed, it is less rational, since the object\nwith which it is concerned is less important.  And it is a poison which\ninflames every wound and turns each trivial scratch into a malignant\nulcer.  Society will not solve the particular problems of industry\nwhich afflict it, until that poison is expelled, and it has learned to\nsee industry itself in the right perspective.  If it is to do that, it\nmust rearrange its scale of values.  It must regard economic interests\nas one element in life, not as the whole of life.  It must persuade its\nmembers to renounce the opportunity of gains which accrue without any\ncorresponding service, because the struggle for them keeps the whole\ncommunity in a fever.  It must so organize industry that the\ninstrumental character of economic activity is emphasized by its\nsubordination to the social purpose for which it is carried on.\n\n\n\n\n{185}\n\nINDEX\n\n\n  Abolition of private ownership, 147\n  Absenteeism, 152\n  Absolute rights, 50-51\n  Absolutism in industry, 144\n  Acquisitive societies, 29-32\n  Administration, 115-116\n  Allocation of power, 163-164\n  American Constitution, 18-19, 52\n  Annuities, 74\n  Arbitration, compulsory, 101\n\n  Bacon, quoted, 58, 181\n  Bentham, 16, 52, 55\n  Brain workers, position of the, 161-171\n  British Coal Industry, reorganization of, 166-171\n  Building Guilds, 103\n  Building Trade Report, 106-110\n  Bureaucracy, 116, 149\n\n  Capitalism, and production, 173-176; downward thrust of, 154;\n    in America, 101; losing control, 141-142, 148\n  Cecil, Lord Hugh, 23, 58\n  Cecil, Robert, 59\n  Cecil, William, 59\n  Church and State, 10-13\n  Coal Industry Commission, 71, 126, 137, 143; report of, 166-167\n  Coal Mines Committees, 152\n  Combinations, 125, 130\n  Committee on Trusts, 153\n  Competition, 27\n  Compulsory arbitration, 101\n  Confiscations, 103\n  Conservatism, the New, 28\n  Consumer, exploitation of the, 133-134\n  Co-operative Movement and cost of coal, 125\n\n  Dante, quoted, 182-183\n  Death Duties, 22\n  Democratic control, 116\n  Dickenson, Sir Arthur Lowes, 71\n  Directorate control, 129\n  Duckham, Sir Arthur, 119\n  Duke of Wellington, quoted, 123\n\n  Economic confusion, cause of, 131-132\n  Economic discontent, increase of, 5\n  Economic egotism, 27,\n  Economic expansion, 9\n  Efficiency, the condition of, 139-160; through _Esprit de Corps_, 149-150\n  Employer, waning power of the, 140\n  England, and natural right, 15-16; and France contrasted, 16-17;\n    Industrialism in, 44-47; Liberal Movement in, 18;\n    over-crowding of population in, 37; proprietary rights in,\n    64 _et seq._\n  English landlordism, 22-23\n  Englishmen, characteristics of, 1-3; vanity of, 129\n  English Revolution of 1688, 52\n  Esch-Cummins Act, 118\n  Expediency, rule of, 16\n\n  Feudalism, 18\n  Fixed salaries, 177-178\n  Forced labor, 102\n  France, social and industrial conditions in, 16-17;\n    Feudalism in, 18; Revolution in, 15, 65, 69\n  French Revolution, 15, 65, 69\n  Function, definition of, 8; as a basis for remuneration, 41-42;\n    as a basis of social reorganization, 180; Function and Freedom, 7\n  Functional Society, 29, 84-90\n  Functionless property-owners, 79, 86; abolishment of, 87-88;\n    an expensive luxury, 87\n\n  Gainford, Lord, quoted, 26, 111\n  Gantt, H. L., 175\n  Government control in war time, 25-26\n  Ground-rents, 89-90, 91\n\n  Hobson, Mr., 63\n  \"Hundred-Family Man,\" 178\n\n  Imperial Tobacco Company, 116\n  Incomes, 41\n  Income Tax, 22\n  Income without service, 68\n  Individualism, 48-49\n  Individual rights, 9\n  Individual rights _vs._ social functions, 27\n  Industrial problems, 7\n  Industrial reorganization, 151, 155\n  Industrial revolution, 9\n  Industrial societies, 9\n  Industrial warfare, cause of, and remedy for, 40-42\n  Industrialism, 18; a poison, 184; compared to Militarism, 44-46;\n    exaggerated estimate of its importance, 45-46; failure of present\n    system, 139-141; nemesis of, 33-51; spread of, 30; tendency of,\n    31-32\n  Industry, and a profession, 94, 97; as a profession, 91 _et seq._,\n    125-126; deficiencies of, 147; definition of, 6; how private\n    control of may be terminated, 103-104; and the advantages of such\n    a change, 106; Building Trades' Plan for, 108, 111; motives in,\n    155-159; nationalization of, 104, 114-118; present organization\n    of intolerable, 129; purpose of, 8, 46, 181; right organization\n    of, 6-7; the means not the end, 46-47\n  Inheritance taxes, 90\n  Insurance, 74\n\n  Joint control, 111-112\n  Joint-stock companies, 66\n  Joint-stock organizations, 97\n\n  Labor, absolute rights of, 28; and capital, 98-100, 108; compulsory,\n    100; control of breaking down, 139 _et seq._; degradation of, 35;\n    forced, 102\n  League of Nations, 101\n  Liberal Movement, 18\n  Locke, 14, 52, 55\n\n  Management divorced from ownership, 112-113\n  Mann, Sir John, 126\n  Militarism, 44-45\n  Mill, quoted, 89\n  Mine managers, position of, 162, 166-168\n  Mining royalties, 23-24, 88\n\n  Nationalism, 48-49\n  Nationalization, 114, 117; of the Coal Industry, 115, 165, 168-169\n  Natural right in France, 15; in England, 15-16; doctrine of, 21\n\n  Officials, position under the present economic system, 162\n  Old industrial order a failure, 139; its effect on the consumer, 144\n  Organization, for public service instead of private gains, 127\n  Over-centralization, 121\n  Ownership, a new system of, 112-114\n\n  Pensioners, 34\n  Poverty a symptom of social disorder, 5\n  Private enterprise and public ownership, 118-120\n  Private ownership, 120; abolition of, 147; of industrial capital,\n    105-106\n  Private rights and public welfare, 14-15\n  Privileges, 24\n  Producer, obligation of the, 127-128; responsibility of, 128\n  Production, increased, 5; large scale and small scale, 87;\n    misdirection of, 37-39; why not increased, 136\n  Productivity, 4, 46\n  Professional Spirit, the, 149-150\n  Profits, and production, 173-176; division of, 133\n  Proletariat, 19, 65\n  Property, absolute rights of, 52, 80; and creative work, 52 _et seq._;\n    classification of, 63, 64; complexity of, 75; functionless, 76-77, 81;\n    in land, 56-60; in rights and royalties, 62; minority ownership\n    of, 79; most ambiguous of categories, 53-54; passive ownership of,\n    62; private, 70-72; protection of, 78-70; rights, 50-51; security in,\n    72-73; socialist fallacy regarding, 86\n  Proudhon, 54\n  Publicity of costs and profits, 85, 123-124, 126, 132\n\n  Redmayne, Sir Richard, 149\n  Reformation the, 10-13; effect on society, 12-14\n  Reform Bill of 1832, 69\n  Religion, 10; changes in, 11-12\n  Report of the United States Industrial Commission, 1916, 128-129\n  Riches, meaning of, 98\n  Rights of Man, French Declaration of, the, 16, 52\n  Rights, and Functions, 8-19; doctrine of, 21 _et seq._, 43-44; without\n    functions, 61\n  Rights of the shareholder, 75\n  Royalties, 23-24, 62\n  Royalties, and property, 70; from coal mining properties, 88; a tax\n    upon the industry of others, 89\n\n  Sankey, Justice, 115, 117, 143, 165, 167, 168, 169\n  Security of income, 73-75\n  Service as a basis of remuneration, 25, 41-42, 85, 133\n  Shareholders, 91-92\n  Shells, cost of making, 124-125\n  Smith, Adam, 15, 52, 95\n  Social inequality, 36-37\n  Social reorganizations, schemes for, 5\n  Social war, 40\n  Socialism, 53\n  Society, duality of modern, 135\n  Society, functional organization of, 52\n  State management, 116, 117\n  Steel Corporation, 116\n  Supervision from within, 151\n  Syndicalism, 130\n\n  Taxation, 22\n  Trusts, Report on, 23\n\n  United States, transformation in, 65\n  Utilitarians, the English, 17\n  Utility, 16-17\n\n  \"Vicious Circle,\" the, 43, 123-138\n  Voltaire, quoted, 55\n\n  Wages and costs, 131\n  Wages and profits, 78\n  Wealth, acquisition of, 20 _et seq._; as foundation for public esteem,\n    35-36; distribution of on basis of function, 77; fallacy of increased,\n    42-45; how to increase output of, 147; inequality of, 37-38;\n    limitation of, 36-37; output of, 37-38; production and consumption\n    of--a contrast, 77-78; waste of, 37-39\n  Whitley Councils, 110\n  Women self-supporting, 74\n  Worker and Spender, 77-78\n  Workers, collective responsibility of, 154\n  Workers' control, 128\n  Workmen, as \"hands,\" 152; present independence of, 145-146;\n    responsibility of destroyed, 153-154; servants of shareholders,\n    136-137; treatment of, 152-153","title":"The Acquisitive Society","tradition":"philosophy-ethics","translated_text":null,"word_count":49921}