29. A DISAPPOINTING STIMULUS

who are the actual producers of wealth, should get but an insignificant part of its benefits, and why they, being the majority, should permit the continuance of an economic system which operates so inequitably. And the answer, which is taking ever more definite shape in their minds, and in which they are being diligently schooled by able and zealous teachers, is to the effect that there is no valid reason, ethical or otherwise, why an economic system which yields such manifestly unfair results, should be tolerated. Unless this unfairness be remedied, a revolution, peaceful or otherwise, is sure to bring the system eventually to an end.

This gross disproportion in the distribution of the products of human effort is not what one would have expected. The thought which would naturally stimulate all men to combine and put forth their best efforts for the increase of commodities would be that, after the wants of those most favourably located with reference to the sources of production were supplied, the surplus stream of products would automatically flow on to satisfy those less advantageously placed. This expectation might, for a time at least, keep the latter class diligently working at the increase of wealth in mass, particularly if that expectation were kept alive by artfully prepared "prosperity" reports, and by statistics showing great improvement in the condition of "the working man." But there must inevitably come a time when it will be impossible longer to disguise the fact that the great surplusage of wealth, which is the boast of the age, and which results from the labour of the working man, does not overflow the reservoirs of those who employ that labour. Those reservoirs are, in fact, capable of indefinite expansion; and, moreover, it invariably happens that, before they could by any possibility overflow, production receives one of those mysterious periodical checks which cause an enforced relaxation of effort on all hands.

FINANCIAL PANICS AND BUSINESS DEPRESSIONS

The phenomena of financial "panics" and industrial upheavals, followed by periods of "depression," are another striking characteristic of the existing economic order. Of the many groups of financiers and students of economics, the Socialists alone seem to have been able to furnish anything like a plausible explanation of these strange events. Whether or not the remedy proposed by Socialism would correct these evils, or whether, in correcting them, it would introduce others as bad or worse, is not our present concern. But it is very pertinent to notice the explanation which the Socialists advance to account for these industrial phenomena, because this explanation, which is being more and more widely accepted, argues the downfall of the present economic system.

A TWO-PART PARADOX

It has been observed that the strange phenomenon called "over-production," whereby the stores, markets, and warehouses become glutted with surplus products of labour for which there are no purchasers, invariably occurs at a time when there is a very large class of people who are actually suffering for the need of those very products, and that this needy class includes many of those whose labour has produced such surplus commodities. That suffering should be caused in consequence of the existence of a shortage of the things upon which life and comfort depend, would be intelligible. But how does it come about that destitution and need result from the existence in the community of too much of these needful things? By what strange contradiction of the logic of cause and effect does it come about that the existence of a superfluity of the products of labour has the effect of curtailing the power of the labourers to purchase those things which they have produced in superabundant quantity, and for the lack of which they are suffering? Apparently the producers of wealth are curtailed as to their purchasing power as a punishment for their productivity. Their punishment for having produced too much is that they get too little for their own needs. At least this is the idea that is being persistently impressed upon their minds.

That which is to be explained, then, is a paradox, composed of two elements—namely, first, that the wealth-producers periodically deprive themselves of the power to purchase the things needful for life or comfort; and second, that they do this by producing too great a quantity of those very things.

Now the Socialists say that the cause of this strange phenomenon is to be found in the existing economic system, which they call "Capitalism"; and that the evil complained of can be removed only by abolishing that system. It is not the fault, they say, of the capitalist, but of the system. They insist that the system is vicious, and that its operation is outrageously unjust to those whose labour produces the wealth for which all are striving. The vice of the system, they say, is that it is organized to produce commodities solely for the sake of the profits gained by the numerically small capitalist class; whereas it should be organized for the purpose of supplying human needs. Under the existing system, production ceases when the things produced can no longer be manufactured "at a profit"; whereas under the proposed Socialistic system (as yet untried), production would, in theory at least, continue so long as there remained any human wants unsatisfied. Under the present system the capitalist class controls all the machinery of production and distribution—mills, factories, power-plants, raw material, railroads, steamboats, etc., and the only incentive which the owners of these appliances have for operating them is to add to their own gains. When conditions

COLLECTIVE OWNERSHIP occur (as they are bound to do, so long as the existing system of "Capitalism" remains) wherein the appliances of production cannot be operated at a profit, then production is checked, trade sharply declines, factories are shut down, and on all sides the capitalists "economize" by discharging hands until "times get better" for them.

The Socialist therefore proposes to abolish capital and profits, and to establish a social order wherein wealth, produced by the joint efforts of all men, should be for the benefit of all. Unquestionably such a change, if it were possible to effect it, would be beneficial to the majority of men, and if desirable there is no reason whatever why, in a democratic society, the change should not be made, or at least be attempted. If the will of the majority be the supreme law, then the majority may rightfully abolish Capitalism and introduce Socialism whenever they will so to do.

But the explanation as thus far given is incomplete. It yet remains to be explained why "panics" and their accompanying miseries are necessary characteristics of the present economic system. To this question the Socialist has a ready answer, and one which, unless a better can be advanced, is bound to gain an acceptance sufficiently general to produce important social changes. His answer is substantially as follows:—

In the first place, the labourer receives in wages an amount of money on an average a little less than half (instead of the whole) of the actual value imparted by his labour to the material upon which he works. As this statement is deduced from United States census reports, it may be accepted as at least approximately accurate. The other fifty per cent. (plus) goes as "profits" to the capitalists. We may therefore regard the wealth produced in any given period of time as being divided about equally between the capitalists and the producers. These gains, thus equally divided, constitute the purchasing power of the two classes respectively. But the purchasing power of the capitalists is shared among a very few individuals, while that of the labourers must be divided among a great many, so that of the latter class each individual's share is relatively insignificant.

But another point has to be stated, and then the explanation is easily grasped. Under the present system of doing business the cost of selling an article is greater (sometimes much greater) than that of making it. This selling cost must, of course, be added to the retail price of the article; so that, when the individual labourer comes to use his gains for making purchases (the only thing they are really good for), he can get in return for them manufactured goods to the value of only half (or less than half) that of their retail purchase price.