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Economic Democracy

Chapter I

Marked resistance to change in sphere of economics - Business man and Social Reformer, contending ideas of progress- Secrets of the war revealed-What purposes govern humanity?-American Declaration of Independence-primary requisite for economic freedom defined - The necessary foundation of society.

THERE has been a very strong tendency, fortunately not now so strong as it was, to regard fidelity to one set of opinions as being something of which to be proud, and consistency in the superficial sense as a test of character.

The Scottish political constituent who always voted for a Liberal because he was too Conservative to change, has his counterpart in every sphere of human activity, and most particularly so in that of economics, where the tracing back to first principles of the dogmas used for everyday purposes requires, in addition to some little aptitude and research, a laborious effort of thought and logic very foreign to our normal methods.

It thus comes about that modification in the creed of the orthodox is both difficult and conducive to exasperation; since because the form is commonly mistaken for the substance it is not clearly seen why a statement which has embodied a sound principle, may in course of time become a dangerous hindrance to progress.

Of such a character are many of our habits of thought and speech today. Because from the commercial policy of the nineteenth century has quite clearly sprung great advance in the domain of science and the mastery of material nature, the commercialist, quite honestly in many cases, would have us turn the land into a counting house and drain the sea to make a factory. On the other hand the Social Reformer, obsessed as well he might be, with the poverty and degradation which shoulder the very doors of the rich, is apt to turn his eyes back to the days antecedent to the Industrial Revolution, note, or assume, that the conditions he deplores did not exist then, at any rate, in so desperate a degree; and condemn all business as abominable.

At various well-defined epochs in the history of civilisation there has occurred such a clash of apparently irreconcilable ideas as has at this time most definitely come upon us. Now, as then, from every quarter come the unmistakable signs of crumbling institutions and discredited formulae, while the widespread nature of the general unrest, together with the immense range of pretext, alleged for it, is a clear indication that a general rearrangement is imminent.

As a result of the conditions produced by the European War, the play of forces, usually only visible to expert observers, has become apparent to many who previously regarded none of these things. The very efforts made to conceal the existence of springs of action other than those publicly admitted, has riveted the attention of an awakened proletariat as no amount of positive propaganda would have done. A more or less conscious effort to refer the results of the working of the social and political system to the Bar of individual requirement has, on the whole, quite definitely resulted in a verdict for the prosecution; and there is little doubt that sentence will be pronounced and enforced.

Before proceeding to the consideration of the remedies proposed, it may be well to emphasise the more salient features of the indictment, and in doing this it is of the first consequence to make very sure of the code against which the alleged offences have been committed. And here we are driven right back to first principles - to an attempt to define the purposes, conscious or unconscious, which govern humanity in its ceaseless struggle with environment.

To cover the whole of the ground is, of course, impossible. The infinite combinations into which the drive of evolution can assemble the will, emotions and desires, are probably outside the scope of any form of words not too symbolical for everyday use.

But of the many attempts which have been made it is quite possible that the definition embodied in the majestic words of the American Declaration of Independence, 'the inalienable right of man to life, liberty and the pursuit of happiness' is still unexcelled, although the promise of its birth is yet far from complete justification; and if words mean anything at all, these words are an assertion of the supremacy of the individual considered collectively, over any external interest. Now, what does this mean? First of all, it does not mean anarchy, nor does it mean exactly what is commonly called individualism, which generally resolves itself into a claim to force the individuality of others to subordinate itself to the will-to-power of the self-styled individualist. And most emphatically it does not mean collectivism in any of the forms made familiar to us by the Fabians and others.

It is suggested that the primary requisite is to obtain in the readjustment of the economic and political structure such control of initiative that by its exercise every individual can avail himself of the benefits of science and mechanism; that by their aid he is placed in such a position of advantage, that in common with his fellows he can choose, with increasing freedom and complete independence, whether he will or will not assist in any project which may be placed before him.

The basis of independence of this character is most definitely economic; it is simply hypocrisy, conscious or unconscious, to discuss freedom of any description which does not secure to the individual, that in return for effort exercised as a right, not as a concession, an average economic equivalent of the effort made shall be forthcoming.

As we shall see, this means a great deal more than the right to work; it means the right to work for the right ends in the right way.

It seems clear that only by a recognition of this necessity can the foundations of society be so laid that no superstructure built upon them can fail, as the superstructure of capitalistic society is most unquestionably failing, because the pediments which should sustain it are honeycombed with decay.

Systems were made for men, and not men for systems, and the interest of man which is self-development, is above all systems, whether theological, political or economic.


Building up from the individual, not down from the State - Abuse of Darwinism - Rise of centralised control in Germany - Effects in Britain - Social Injustice, division servility - Centralisation necessary for specific technical ends, but totally unsuitable for proper government.

ACCEPTING this statement as a basis of constructive effort, it seems clear that all forms, whether of government, industry or society must exist contingently to the furtherance of the principles contained in it. If a State system can be shown to be inimical to them it must go; if social customs hamper their continuous expansion they must be modified, if unbridled industrialism checks their growth, then industrialism must be reined in. That is to say, we must build up from the individual, not down from the State.

It is necessary to be very clear in thus defining the scope of our inquiry since the exaltation of the State into an authority from which there is no appeal, the exploitation of a public opinion which at the present time is frequently manufactured for interested purposes, and other attempts to shift the centre of gravity of the main issues; these are all features of one of the policies which it is our purpose to analyse. If, therefore, any condition can be shown to be oppressive to the individual, no appeal to its desirability in the interests of external organisation can be considered in extenuation; and while co-operation is the note of the coming age, our premises require that it must be the cooperation of reasoned assent, not regimentation in the interests of any system, however superficially attractive.

There is no doubt whatever that a mangled and misapplied Darwinism has been one of the most potent factors in the social development of the past sixty years; from the date of the publication of The Origin of Species the theory of the 'survival of the fittest' has always been put forward as an omnibus answer to any individual hardship; and although such books as Mr. Benjamin Kidd's Science of Power have pretty well exposed the reasons why the individual, efficient in his own interest and consequently well-fitted to survive, may and will possess characteristics which completely unfit him for positions of power in the community, we may begin our inquiry by noticing that one of the most serious causes of the prevalent dissatisfaction and disquietude is the obvious survival, success and rise to positions of great power, of individuals to whom the term 'fittest' could only be applied in the very narrowest sense. And in admitting the justice of the criticism, it is not of course necessary to question the soundness of Darwin's theory. Such an admission is simply evidence that the particular environment in which the 'fittest' are admittedly surviving and succeeding is unsatisfactory; that in consequence those best fitted for it are not representative of the ideal existent in the mind of the critic, and that environment cannot be left to the unaided law of Darwinian evolution, in view of its effect on other than material issues.

To what extent the rapid development of systematic organisation is connected with the statement of the law of biological evolution would be an interesting speculation; but the second great factor in the changes which have been taking place during the final years of the epoch just closing is undoubtedly the marshalling of effort in conformity with well-defined principles, the enunciation of which has largely proceeded from Germany, although their source may very possibly be extra-national; and while these principles have been accepted and developed in varying degree by the governing classes of all countries, the dubious honour of applying them with rigid logic and a stern disregard of by-products, belongs without question, to the land of their birth. They may be summarised as a claim for the complete subjection of the individual to an objective which is externally imposed on him; which it is not necessary or even desirable that he should understand in full; and the forging of a social, industrial and political organization which will concentrate control of policy while making effective revolt completely impossible, and leaving its originators in possession of supreme power.

This demand to subordinate individuality to the need of some external organisation, the exaltation of the State into an authority from which there is no appeal (as if the State had a concrete existence apart from those who operate its functions) , the exploitation of public opinion manipulated by a Press owned and controlled from the apex of power, are all features of a centralising policy commended to the individual by a claim that the interest of the community is thereby advanced, and its results in Germany have been nothing less than appalling. The external characteristics of a nation with a population of 65 millions have been completely altered in two generations, so that from the home of idealism typified by Schiller, Goethe and Heine, it has become notorious for bestiality and in-humanity only offset by slavish discipline. Its statistics of child suicide during the years preceding the war exceeded by many hundreds per cent those of any other counts in the world, and were rising rapidly. Insanity and nervous breakdown were becoming by far the gravest problems of the German medical profession. Its commercial morality was devoid of all honour, and the external influence of Prussian ideals on the world has undoubtedly been to intensify the struggle for existence along lines which quite inevitably culminated in the greatest war of all history.

The comparative rapidity with which the processes matured was no doubt aided by an essential docility characteristic of the Teutonic race, and the attempt to embody these principles in Anglo-Saxon communities has not proceeded either so fast or so far; but every indication points to the imminence of a determined effort to transfer and adopt the policy of central, or, more correctly, pyramid, control from the nation it has ruined to others, so far more fortunate.*

* This was written in 1918 and subsequent events have served to underline it.

Thus far we have examined the psychological aspect of control exercised through power. Let us turn for a moment to its material side. Inequalities of circumstance confront us at every turn. The vicious circles of unemployment, degradation and unemployability, the disparity between the reward of the successful stock-jobber and the same man turned private soldier, enduring unbelievable discomfort for eighteen-pence per day, the gardener turned piece-worker, earning three times the pay of the skilled mechanic, are instances at random of the erratic working of the so-called law of supply and demand.

In the sphere of politics it is clear that all settled principle other than the consolidation of power, has been abandoned, and mere expediency has taken its place. The attitude of statesmen and officials to the people in whose interest they are supposed to hold office, is one of scarcely veiled antagonism, only tempered by the fear of unpleasant consequences.* In the State services, the easy supremacy of patronage over merit, and vested interest over either, has kindled widespread resentment, levelled not less at the inevitable result than at the personal injustice involved.

* The device of coalition governments has modified the fear of consequences, while the general attitude is openly admitted. Speaking at Birmingham on March 9th 1934, Mr. Nevllle Chamberlain remarked 'If five hundred people write to me and ask me to reduce or abolish a particular tax the only effect upon my mind is that of a mild irritant, although one letter, if it were well reasoned . . . might affect my judgement'.

In its relations with labour, the State is hardly more happy. In the interim report of the Commission on Industrial Unrest (1917), the following statement occurs:

'There is no doubt that one cause of labour unrest is that workmen have come to regard the promises and pledges of Parliament and Government Departments with suspicion and distrust.'

In industry itself, the perennial struggle between the forces of Capital and Labour, on questions of wages and hours of work, is daily becoming complicated by the introduction of fresh issues such as welfare, status and discipline, and it is universally recognised that the periodic strikes which convulse one trade after another, have common roots far deeper than the immediate matter of contention. In the very ranks of Trade Unionism, whose organisation has become centralised in opposition to concentrated capital, cleavage is evident in the acrimonious squabbles between the skilled and the unskilled, the rank and file and the Trade Union official.

Although the diversion of the forces of industry to munition work of, in the economic sense, an unproductive character has created an almost unlimited outlet for manufactures of nearly every kind, it is not forgotten that before the war the competition for markets was of the fiercest character and that the whole world was apparently overproducing; in spite of the patent contradiction covered by the existence of a large element of the population continually on the verge of starvation (Socialism and Syndicalism) , and a great majority whose only interest in great groups of the luxury trades was that of the wage-earner.

The ever-rising cost of living has brought home to large numbers of the salaried classes problems which had previously affected only the wage-earner. It is realised that 'labour-saving' machinery has only enabled the worker to do more work; and that the ever-increasing complexity of production, paralleled by the rising price of the necessaries of life,* is a sieve through which out and for ever out go all ideas, scruples and principles which would hamper the individual in the scramble for an increasingly precarious existence.

* Prices have since fallen but every effort of government is bent to restoring a period of rising prices, politely called 'reflation'.

We see, then, that there is cause for dissatisfaction with not only the material results of the economic and political systems, but that they result in an environment which is hostile to moral progress and intellectual expansion; and it will be noticed in this enumeration of social evils, which is only so wide as is necessary to suggest principles, that emphasis is laid on what may be called abstract defects and miscarriages of justice, as well as on the material misery and distress which accompany them. The reason for this is that the twin evil (common more or less to all existing organised Society) of servility is poverty, as has been clearly recognised by all shades of opinion amongst the exponents of Revolutionary Socialism. Poverty is in itself a transient phenomenon, but servility (not necessarily, of course, of manner) is a definite component of a system having centralised control of policy as its apex; and while the development of self-respect is universally recognised to be an antecedent condition to any real improvement in environment, it is not so generally understood that a world-wide system is thereby challenged. In referring the existent systems to the standard we have agreed to accept, however, it seems clear that the stimulation of independence of thought and action is a primary requirement, and to the extent to which these qualities are repressed, social and economic conditions stand condemned as undesirable.

Now it may be emphasised that a centralised or pyramid form of control may be, and is in certain conditions, the ideal organisation for the attainment of one specific and material end. The only effective force by which any objective can be attained is in the last analysis the human will, and if an organisation of this character can keep the will of all its component members focussed on the objective to be attained, the collective power available is clearly greater than can be provided by any other form of association. For this reason the advantage accruing from the use of it for the attainment of one concrete objective, such as, let us say, the coherent design of a National railway or electric supply system (just so long as these objects are protected from use as instruments of personal and economic power) is quite incontrovertible; but every particle of available evidence goes to show that it is totally unsuitable as a system of administration for the purposes of governing the conditions under which whole peoples live their lives; that it is in opposition to every real interest of the individual when so used, and for this reason it is vital to devise methods by which technical coordination can be combined with individual freedom.

To crystalline the matter into a paragraph; in respect of any undertaking, centralisation is the way to do it, but is neither the correct method of deciding what to do nor the question of who is to do it.