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Title: The Next Step: A Plan for Economic World Federation

Author: Scott Nearing

Release date: May 29, 2009 [eBook #28991]

Language: English

Credits: E-text prepared by Peter Vachuska, Graeme Mackreth, and the Project Gutenberg Online Distributed Proofreading Team

*** START OF THE PROJECT GUTENBERG EBOOK THE NEXT STEP: A PLAN FOR ECONOMIC WORLD FEDERATION ***

E-text prepared by Peter Vachuska, Graeme Mackreth,
and the Project Gutenberg Online Distributed Proofreading Team
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THE NEXT STEP

A Plan for Economic World Federation

By
SCOTT NEARING
Author of
"The American Empire"

Ridgewood, New Jersey
NELLIE SEEDS NEARING
1922

By the same author

Wages in the United States.

Financing the Wage Earner Family.

Reducing the Cost of Living.

Anthracite.

Poverty and Riches.

Social Adjustment.

Social Religion.

Women and Social Progress.
(Collaboration with Nellie Nearing)

The Super Race.

Elements of Economics.

The New Education.

Economics.

Community Civics.
(Collaboration with Jessie Field)

Solution of the Child Labor Problem.

Social Sanity.

The American Empire.

Copyright, 1922
All Rights Reserved
Printed in the United States of America

This book is dedicated to the task of emancipating the human race from economic servitude

"The community needs service first, regardless of who gets the profits, because its life depends on the service it gets."

"Organizing for Work."

H.L. Gantt.

"It is not common language, literature and tradition alone, nor yet clearly defined or strategic frontiers, that will in the future give stability to the boundary lines of Europe, but rather such distribution of its supplies of coal and iron as will prevent any of the great nations of Europe becoming strong enough to dominate or absorb all the others."

"The Economic Basis of an Enduring Peace."

C.W. MacFarlane.

"Men cannot exist in their present numbers on the earth without world co-operation."

"Our Social Heritage."

Graham Wallas.

"The real way, surely, in which to organize the interests of producers is by working out a delimitation of industry, and confiding the care of its problems to those most concerned with them. This is, in fact, a kind of federalism in which the powers represented are not areas but functions."
"Foundations of Sovereignty."

H.J. Laski.

SUMMARY OF THE ARGUMENT

Men progress in proportion as they are able to fit themselves for life, and to fit life to themselves. Both processes go on unceasingly.

Recent economic changes have brought the remotest parts of the world into close contact with "civilization" at the same time that they have increased the dependence of one part of the world upon another part. Oddly enough, this interdependence has been intensified under a system of society that deified competition. The conflicts, inevitably resulting from such a contradiction, have taken a terrible toll in life and well-being, and have left Europe in chaos.

The successful organization of the life of the world is impossible without the organization of its economic affairs. For the present plan of competition between groups, classes and nations there must be substituted a means of co-operative living. The organization of a producers society will provide that means. Local initiative must be preserved; self-government in economic affairs must be assured, and the economic activities of the world must be federated in such a way that all economic problems of world concern will be brought under some central authority which is representative of the various interests involved at the same time that it controls the disposition of economic life. A world parliament composed of representatives elected by the workers in the various producing groups would provide such a central authority, and would furnish the means of directing the economic experiments of the race.

Economic emancipation is the objective. The means for its attainment is a society organized in terms of producers groups, and living in accordance with the highest known standards of intelligent social direction.

TABLE OF CONTENTS

CHAPTER HEADINGS

1. A World Economic Program |  |
Chapter I. |  | The New Economic Life
Chapter II. |  | The Economic Muddle
2. World Economic Organization |  |
III. |  | Economic Foundations
IV. |  | Economic Self-Government
V. |  | A World Producers' Federation
VI. |  | World Administration
3. Economic Progress |  |
Chapter VII. |  | Trial and Error in Economic Organization
VIII. |  | Economic Liberation
|  | What to Read

SECTION HEADINGS

Chapter    I. The New Economic Life
1. The Historic Present.
2. Economic Needs.
3. Worldizing Economic Activity.
4. The Basis of a World Program.
5. The League of Nations Failure.
6. Axioms of Economic Reorganization.

Chapter  II. The Economic Muddle
1. Bankruptcy and Chaos.
2. Localized Problems.
3. World Problems.
4. Competition for Economic Advantage.
5. Distribution of the World's Wealth.
6. The Livelihood Struggle.
7. Guaranteeing Livelihood.
8. Distribution and the Social Revolution.
9. A New Order.
10. The Basis of World Reconstruction.

Chapter  III. Economic Foundations
1. The Social Structure.
2. Specialization, Association, Co-operation.
3. Three Lines of Economic Organization.
4. Economic Forms.
5. Limitations on Capitalism.
6. The Growth of Capitalism.
7. Effective Economic Units.
8. Classes of Economic Units.
9. The Ideal and the Real.

Chapter  IV. Economic Self-Government
1. Maximum Advantage.
2. The Essentials for Maximum Returns.
3. Centralized Authority.
4. An Ideal Economic Unit.
5. Rewarding Energy.
6. The Ownership of the Economic Machinery.
7. Economic Leadership.
8. The Selection of Leaders.
9. The Detail of Organization.
10. The Progress of Self-Government.

Chapter    V. A World Producers' Federation
1. World Outlook.
2. The Need of Organization.
3. Present-day Economic Authority.
4. Federation as a Way Out.
5. Building a Producers' Federation.
6. Four Groups of Federations.
7. The Form of Organization.
8. All Power to the Producers!

Chapter  VI. World Administration
1. The Basis for World Administration.
2. The Field of World Administration.
3. Five World Problems.
4. Work of the Administrative Boards.
5. The Resources and Raw Materials Board.
6. The Transport and Communication Board.
7. The Exchange, Credit and Investment Board.
8. The Budget Board.
9. The Adjudication of Disputes Board.
10. The Detail of World Administration.

Chapter  VII. Trial and Error In Economic Organization
1. Trying Things Out.
2. The Capitalist Experiment.
3. The Cost of Experience.
4. Education.
5. Pacing the Future.
6. Accumulating Social Knowledge.
7. Conscious Social Improvement.
8. The Barriers to Progress.
9. Next Steps.
10. The Success Qualities.

Chapter VIII. Economic Liberation
1. Why Organize?
2. Freedom from Primitive Struggle.
3. Freedom from Servility.
4. Wisdom in Consumption.
5. Leisure for Effective Expression.
6. Culture and Human Aspiration.

What to Read

THE NEXT STEP

I. THE NEW ECONOMIC LIFE

1. The Historic Present

The knell of a dying order is tolling. Its keynote is despair. Gaunt hunger pulls at the bell-rope, while dazed humanity listens, bewildered and afraid.

Uncertainty and a sense of futility have gripped the world. They are manifesting themselves in unrest, disillusionment, the abandonment of ideals, opportunism, and a tragic concentration on the life of the moment, which alone seems sure. The future promises so little that even the most hopeful pause on its threshold, hesitant, and scarce daring to penetrate its mystery.

The war showed the impotence of the present order to assure even a reasonable measure of human happiness and well-being. Of what profit the material benefits of a civilization that takes a toll of thirty-five millions of lives and that wrecks the economic machinery of a continent in four short years? Yet the failure of the revolutionary forces to avail themselves of the opportunity presented by the war proved the unreadiness of the masses to throw off the yoke of the old régime and to lay the foundations of a new order. The world rulers painted a picture of liberated humanity that led tens of millions to fight with the assurance that victory would make that hope a reality. The workers yearned for the social revolution and for the establishment of the co-operative commonwealth with its promise of equality and fraternity. But the events that staggered the world between 1914 and 1920 shattered both ideals.

Now that the terrible conflict has ceased, we pause and reflect. Millions are weary, millions are old, millions are broken, millions are disappointed, and the weary ones, the old ones, the broken ones and the disappointed ones have lost their vision and have abandoned their faith. Yet life sweeps on—its unity unimpaired, its continuity unbroken, its force unchecked, its vigor unabated. Multitudes have been born since the end of the Great War, and other multitudes, who were babes in arms when the Great War began, are growing into young manhood and womanhood. The war, with its hardships and its fearful losses, is history. The present, merging endlessly with the future, makes of each day a to-morrow in which hundreds of millions of those who now inhabit the earth will live.

How?

That is the question which the world to-day faces. The answer is in our hands.

2. Economic Needs

Humanity has always been face to face with the bread and butter problem because people must have food and clothing and a roof over their heads or pay the penalty in physical suffering. Under the present world order, for lack of these simple economic requirements, millions of poverty-stricken workers perish each year, of slow starvation and exposure in Paris, London, Chicago, Tokyo; of famine in China, Egypt and India.

Some issues present themselves for consideration only occasionally. The demand for economic necessaries each day recurs with tireless insistence in the life of every individual. Men have learned this fact through frightful experiences, and they look forward with hope or with dread to the comfort of plenty or to the disaster of want. So effectually have these forces entered into everyday life that they color all aspects of human existence, and people continually think and act in terms of economic hardship or of economic well-being. This simple fact of economic determinism—the influence of the livelihood struggle upon the conduct of individuals and of societies—plays a fateful part in shaping both biography and history.

The economic issues before primitive society were comparatively simple ones. The producer—the hunter, herder, farmer—snared his game and cooked it, tended his goats and lived on their milk and flesh, planted and reaped his crops, and used them to sustain life. Later, the baker, the saddler, the tailor and the carpenter spent their energies in producing the articles of their trade and in disposing of them. The herdsman could live on his hills, the farmer in his valleys and the artisans in their towns, content and at peace with the remainder of the world, neither knowing nor caring what was happening to their fellow dwellers on the planet. Confined within its narrow bounds, primitive thought was as local as primitive life.

But such isolation is no longer possible. The currents of economic life, like most other phases of human activity, have swept beyond the local forests, the grass lands, the tilled fields, the oven and the carpenter's bench, and gaining momentum in their ever-widening course, they have circled the world.

3. Worldizing Economic Activity

The past hundred years have witnessed a speedy worldizing of human affairs built upon a transformation in the ways of making a living. These changes have been effected by the industrial revolution, which, toward the end of the eighteenth century began to make itself felt in Great Britain. Its influence spread over Europe, America and Australia during the last three-quarters of the nineteenth century, but it did not reach Japan until 1860. Almost within the memory of the present generation, therefore, the scope of trade, manufacture and finance, the search for markets, the organization and unification of labor and of popular thinking about economic problems, have passed from a local into a world field.

The inventions and discoveries which were the immediate cause of the industrial revolution succeeded one another with a bewildering rapidity that is well illustrated in the case of communication. The steamboat, first made practicable in 1807, and the locomotive, invented about 1815, provided the means of rapid transportation of goods, people and messages. The power press (1814) and the manufacture of paper from wood-pulp (begun in 1854) made possible cheap and abundant reading matter. The telegraph, invented about 1837, laid the basis for instantaneous communication. The first trans-Atlantic cable (1858) annihilated the water barrier to thought. The telephone (1876) and the wireless (1896) brought the more remote parts of each country and of the world within easy reach of the centers of civilization, while the radio-phone (1921) enables millions to sit around a common table for thought, instruction or enjoyment. The camera (1802) supplemented by the moving picture process (1890) has enabled those who do not read to secure information that was formerly reserved for the learned and the cultured. Thus steam, electricity, and a number of other discoveries and inventions in the realm of natural science have brought the minds of the world in as close touch as were the inhabitants of a fifteenth century Italian city.

The effects of industrialism date only from history's yesterday, yet its results have already been momentous and far-reaching. This is particularly true of the close dependence of industries upon supplies of raw materials and fuels, of the volume and the variety of the goods produced and transported, of the speed with which communications are sent, of the widened opportunities for travel, and of the immense amount of information on the printed page and the film that goes, each day, from one part of the world to another.

Nature has not scattered coal, iron, copper and sugarland over the earth in the same lavish way that she has distributed air and sunshine. On the contrary, the important resources from which industry derives its raw materials and its fuels are found within very limited areas to which the remainder of the world must go for the commodities that supply its basic industries.

Within each country raw materials are produced at one point and shipped elsewhere. Ore, coal, grain and meat-animals make up the bulk of the freight tonnage in Europe, in America and in Australia. A similar economic relation exists between the various countries, some of which produce far more than their proportionate share of minerals and fuels. Thus, in 1913, the United States, with but 7 per cent of the world's population, produced 36 per cent and consumed 37 per cent of the world's iron ore supply. The figures for the other important nations were: ("World Atlas of Commercial Geology," Dept. of the Interior, Washington, 1921, p. 27)

Per Cent
Produced

Per Cent
Consumed

Germany

20

27

Britain

9

14

France

12

7

Russia

5

5

Belgium

0

4

Spain

6

1

Only in France and Spain did production exceed consumption. Four of the remaining countries used more iron ore than they produced, which meant that they were forced to depend upon some other country for their supply. Belgium, with her many industries, imported practically all of the iron ore that she used.

Coal furnishes an even more striking illustration of the economic dependence of one part of the world upon another. The production and consumption of coal, for 1913, in millions of tons, were as follows:

Tons
Produced

Tons
Consumed

United States

517

495

Britain

292

217

Germany

191

167

France

40

60

Italy

1

10

Austria-Hungary

17

30

The United States, Britain and Germany produced, in this one year, 121 millions of tons of coal that were either stored or exported. France, Italy and Austria, together with many of the smaller industrial countries of Europe were forced to depend upon their neighbors for coal. In the case of Italy, practically all of the coal used was imported.

Again, the United States and Spain are alone among the principal countries producing a surplus of copper. Out of a consumption (1913) of 127,000 tons, Britain imported 126,572; France imported 91,437 of the 91,486 tons consumed, and Germany, out of 259,300 tons consumed, imported 234,000 tons.

These figures of the production and consumption of iron, coal and copper tell the story of an economic interdependence that makes isolated industrial life virtually impossible. Manufacturing and transport depend for their maintenance upon minerals and fuels, and those countries that propose to manufacture and to transport must either produce minerals themselves or depend upon some other country that does produce them. In practice, a few countries are enabled to produce more of the minerals and fuels than they themselves use, and to sell the surplus to their needy neighbors.

With the spread of the industrial system, this dependence will increase rather than diminish because of the way in which the reserve supplies of minerals and fuels are distributed. The principal deposits of iron, coal, copper and petroleum are apparently in the Western Hemisphere, and particularly in North America. In so far as this is true, the remainder of the world will be compelled to look to the Americas for these basic commodities. Out of a total world product of iron ore (1913) of 177 millions of tons, the United States produced 63 millions (over a third) because that country is far better supplied with available iron ore deposits than is any other country. Since the war, France holds the second largest deposits, but the third largest are in Newfoundland, the fourth largest in Cuba, and the fifth largest in Brazil, whose "enormous deposits are almost untouched" ("Atlas," p. 26). As for coal, about three-fourths of the world's known reserves are in North America. The largest known reserves of copper are in North and South America—those of Canada and Mexico are comparatively important; those of Chili probably greater than any other country except the United States. Petroleum is also highly localized. Between 1857 and 1918 the world's production of petroleum was 1,005 millions of tons. Of this total, three-fifths came from the United States, while seventeen-twentieths came from the United States and Russia. Indeed, resources are limited and localized to such a point that the economic survival of many parts of the industrial world depends upon the continued importation of raw materials from other countries or from other continents.

This localization of resources has resulted in a corresponding localization of many of the basic industries. Germany thus became a manufacturing center and Argentina a producer of food. Necessarily these two countries exchange their products, the Germans eating Argentinian wheat reaped by German machinery. So complete has this specialization become, that industrial communities, and even industrial countries, like Britain and Germany, have ceased to produce sufficient food for their maintenance, and have relied, instead, on the American, African and Australian grain fields.[1]

In order to buy wheat, these countries must sell manufactured goods. In order to manufacture, they are compelled to import the raw materials and fuels—cotton, copper, rubber, petroleum, coal, iron. The countries with highly developed industries have therefore ceased to be self-sufficient. Their whole economic life has become a part and parcel of the life of the world.

This world interdependence is reflected in the growth of world commerce from a total value of 1,659 millions of dollars in 1820, 4,049 millions in 1850, and 20,105 millions in 1900, to 75,311 millions in 1919. Meanwhile, the nominal tonnage of steam and sailing vessels increased from 5.8 millions of tons in 1820 to 12.3 millions of tons in 1850, to 20.5 millions in 1900, and to 32.2 millions in 1919.

Resources are sought after, raw materials are transported and manufactured into usable products, manufactured products are exchanged for food and raw materials, and the cycle is thus completed. In its course, all of the principal countries and all of the continents are drawn upon for the means of maintaining economic life.

While the industrial revolution broke the spell of isolation that lay so heavily upon the remote parts of the world, the driving power of the economic forces that followed in its wake, has battered down the geographic barriers that separate men, almost to the vanishing point. Peoples work together, exchange the products of their labor, travel, accumulate and spread news, broadcast ideas and organize and co-ordinate business ventures and labor unions, without any great consideration for geography, and despite the political boundary lines that separate nations. A century of rapid economic development has brought the world into a physical unity the like of which it has never before experienced.

Through the ages, human brotherhood has been the theme of philosophers and poets. Recent economic changes have established a world fellowship, not, to be sure, of the kind about which utopists had dreamed, but one growing out of the exigencies of world interdependence.

Tens of millions are to-day co-operating in production and exchange, not because of any sweet reasonableness but because the pre-emptory demands of existence leave them no choice. Of necessity, therefore, since they are in constant touch with one another, they begin to learn one another's little ways; to inquire into the personalities of the "foreigners" that pass them on the street, work with them elbow to elbow in the shops, and eat with them at the same restaurant tables. This new brotherhood is an outgrowth of day-to-day relations in an industrial community.

Old time questions were of a kind that divided men. "Are you a Christian?" "Where were you born?" "Can you speak Spanish?" No matter how a man answered these questions he got himself into difficulty. If he was a Christian, he found two-thirds of the world confronting him with different religious beliefs. If he was born in France, he was compelled to assume all of the enmities, hatreds and antagonisms felt by Frenchmen for their rivals. If he spoke anything except Spanish, he was a "foreigner" in Spain. The old world was a separatist world, lined with walls, fences, boundary stakes and frontiers.

Modern questions bring men into touch with one another. "Can you repair a locomotive?" "Do you understand coal mining?" "Can you carry us safely to Japan?" "Will you take shoes in exchange for petroleum?" "Are you able to get along with people?" "Have you any surplus wheat?" "How do you suppose we can get rid of the boll-weevil?" "Let us show you a new style tractor." If a man can repair an engine, he is wanted in an engine shop. If he can dig coal, he is needed in a coal mine. If he has shoes to exchange for fuel, he finds a ready customer. If he can get along with an odd assortment of his fellows, he is in demand everywhere. The new world is a co-operative world in which people are working together, living together, thinking together; and a test of man's capacity to take part in its activities lies in his ability to be an effective, co-operating member of a world group.

[1] Before the war Great Britain imported about half of her food. By 1920 she was importing about three-quarters of it. On the basis of the 1919-1920 harvests, British wheat sufficed for less than a third of the British population. See "The Fruits of Victory," Norman Angell, Glasgow. Collins, 1921, p. 9.

4. The Basis of a World Program

With economic life established on a world scale, it is inevitable that the range of men's thoughts and the lines of their social groupings should assume the same general scope. The late war made it quite apparent that war means world war, and that a real peace is impossible unless it is a world peace. The post-war experience has shown with equal clearness, that prosperity means world prosperity, and that it is impossible to destroy the economic well-being of an integral part of the world without destroying the well-being of the whole world. These things were suspected before the war, when they formed the themes of moral dissertations and scholarly essays, of syndicalist pamphlets, socialist programs and revolutionary appeals. But it required the hard knocks of the past eight years to lift them so far out of the realm of theory into that of reality, that any thinking human being who faces the facts must admit their truth.[2]

The economics of the modern world make it inevitable that thinkers on public questions, particularly on economic questions, should frame their thoughts in world terms, and that the practical plans for the organization and direction of human affairs should be built around an idea which includes these three elements:

1. Any workable plan for the organization of the world must have an economic foundation.

2. Such a plan must include all of the economically essential portions of the world. It will be ineffective if it is confined to any one nation, to any one group of nations, or to any one continent.

3. Such a plan must rely, for its fulfillment, on world thinking and world organization.

These propositions do not imply that economic forces and world organization must become the centers of exclusive attention. There are potent forces, other than economic ones, and there are forms of local organization that must be developed or perpetuated as a matter of course. But for the moment the economic forces and the world phases of organization have assumed a position of primary importance.

[2] The Manchester Guardian Commercial, Supplement for April 20, 1922, page IV, carries an advertisement signed by Sir Charles W. Macara, Chairman and Managing Director of Henry Bannerman and Sons, Ltd., Chairman of the Manchester Cotton Employers Association, etc., which contains a very forceful presentation of this point. "It is impossible for any country to expect to win economic success at the expense or in total indifference to the success of others.... The good of one country is bound up with the good of another, and it is only by studying what will be mutually advantageous that we shall find the key to our good fortune.... The whole world is interdependent, and you cannot injure one member of the international body without injuring all the rest."

5. The League of Nations Failure

The principal scheme recently advanced as a means of co-ordinating the life of the world—the League of Nations Covenant—violates all three of these essential principles. In the first place, the League Covenant, with certain minor exceptions, is a political and not an economic document, devoting its attention to territorial integrity and the preservation of sovereignty, and passing over such economic problems as resource control, and the competition for raw materials, markets and investment opportunities as though they were non-existent. In the second place instead of concerning itself with all of the integral parts of the world, it treats nations other than the "big five" (Britain, France, Italy, Japan and the United States) as though they were of second or of third rate importance. China, India, Germany, Russia and Latin America, with considerably more than half of the world's population, and with at least half of the world's essential resources, were slighted or ignored. In the third place, the League Covenant is not based on world thinking. On the contrary, it was designed to set up one part of the world, the victorious Allies, against four other parts of the world: the enemy countries, Soviet Russia, the undeveloped (unexploited) countries, and the small and powerless countries. Political, sectional and provincial in its point of view, the League, as a means of world organization, was destined, from its inception, to pathetic failure. World economic life is an established fact of such moment that it must be reckoned with in any scheme for social rebuilding.

A capacity for organization and for conscious improvement distinguishes man from most of the animals. In the past, men have organized the army, the church, the city, the nation, the school. The events surrounding the industrial revolution have placed a new task on their shoulders—the task of organizing world economic life.

Without doubt this is the largest and the most intricate problem in organization that the human race has ever faced. On the other hand, the interdependence of economic life invites co-ordination, while the advances in organization methods, particularly among the masses of the people, render the transition from local to world organization quite logical and relatively easy—far easier, certainly, than the first hesitating steps that the race took in the direction of co-operative activities. Even though the task were far more difficult than it is, the race must perform it or pay an immense price in hardship, suffering and decimation.

The work is already begun. Private capitalists have built world systems of trade, transport and banking. Soviet Russia has made an heroic attempt to organize one portion of the earth's surface along economic lines. For the most part, however, the task of co-ordinating the world's economic life awaits the courage and the genius of a generation that shall add this triumph to the achievements of the race.

6. Axioms of Economic Reorganization

Certain well-defined and widely understood principles, that might almost be called axioms of social procedure, are to be reckoned with in any effort at world economic reorganization. For convenience of discussion, they may be summarized thus:

1. The wheels of industry must be kept turning smoothly, regularly and efficiently.

A country like Russia, consisting, for the most part of agricultural villages, can survive, even though machine industries practically cease to function, while such countries as Germany and Britain, built of Bremens, Hamburgs, Essens, Glasgows and Manchesters are dependent for their food supply as well as for their supply of raw materials upon the continued production and transport of commodities. The State of Rhode Island, with its 97.5 per cent of city and town dwellers, typifies this dependence. Given such concentrated populations engaged in specialized industries, and the cessation of production means speedy starvation for those that cannot migrate.

2. Provision must be made for improvements and betterments.

The increase of population and the normal advances in science and industry both demand a volume of product adequate to cover the necessary increases in equipment.

3. The people who do the work must dispose of the products they turn out.

They may consume them all, or they may reserve a portion of them for new roads, for additional rolling stock, for the advancement of art and learning. Whatever the character of the decision, the right and power to make it rests with those who produce the goods of which a disposition is being made.

4. Justice and fair dealing must be embodied in the scheme of production and distribution.

This does not mean absolute justice, but as much justice as the collective intelligence and will of the community are able to put into force. For the attainment of such a result, the forms of social life must be constantly altered to keep pace with economic change.

5. The foregoing principles must apply, not to one man, or class, or people, but to all men, all classes and all peoples.

Recent events have shown that an injury to one is an injury to all. Reasoning, foresight and experience will convince the people of the world that a benefit to one is a benefit to all. While men continue to live together, their livelihood problems must be thought about collectively, and the solutions that are determined upon must be applied to all, without discrimination.

How shall such results be obtained? By what means is it possible to lead men to a world vision? Who can persuade them to work toward the building of a sounder society than that with which the world is now laboring?

Of all the issues that confront the teachers of men, this is one of the most pressing and most insistent. Those who have taken upon themselves the task of seeking out and of expounding ideas have seldom faced a graver responsibility than that with which they are at the moment confronted. World facts demand world thoughts and world acts, before the human race can adopt saner, wiser and more enlightened economic policies. World thoughts and acts are impossible without world understanding. Therefore it is world understanding that is most imperatively needed in this critical hour.

The people of the world have many things in common—economic interests, science, art, ideas, ideals. Ranged against these common interests there are the traditions, prejudices, hatreds, national barriers, sectarian differences, language obstacles and racial conflicts that have proved so effective in keeping the peoples separated. The common interests are the vital means of social advancement, and it is upon them that the emphasis of constructive thinking must be laid in an effort to promote world understanding.

There is no need to apologize, then, for adding to groaning library shelves a book dealing with world economics, the purpose of which is to propose a plan that will pull together the scattered threads of world economic life. The time is so ripe for an examination of these problems that no man may consider himself informed who has not pondered them deeply, and no man may consider that he has done his duty as a member of this generation, who has not helped, at least in some degree, to unify the world's economic activities. Most particularly does this apply both to the statesmen and other public men who are striving to rejuvenate a dying order, and to the organizers and leaders of the new order that is even now pressing across the threshold of the western world.

II. THE ECONOMIC MUDDLE

1. Bankruptcy and Chaos

World economic affairs are in a muddle. Famine has gripped Central Europe since 1918; unemployment is rife in Japan, Argentina, Britain, and the United States; business depression is felt in all of the principal industrial countries; producer and consumer alike find the world's economic machinery sadly out of gear.

There have been innumerable predictions of "better times ahead," but among those who are closely connected with industry, there is serious concern over the future of the present economic system, while a formidable array of students and investigators agree with Bass and Moulton that: "It is not at all beyond the bounds of possibility that all of continental Europe might in the course of the next twenty-five years, or even sooner, go the way that Russia has already gone. It would not necessarily be through the instrumentality of Bolshevism; it might easily go in the Austrian way." ("America and the Balance Sheet of Europe." New York. Ronald Press. 1921. p. 138-9.)

The cause for such gloomy utterances may be found in those superficial indications of chaos such as the breakdown of exchange and of international trade; the severe business depression; the waste and inefficiency of industry; the prevalence of unrest and sabotage, and the preparations for future wars.

Traditionally, the old institutions still exist and are cherished by those who believe that they will be rehabilitated and re-established. But as the months succeed one another and lengthen into years, without any evidence that "things will right themselves as soon as the war is over," it becomes increasingly apparent, even to the conservative that the situation is far from what they had promised themselves it would be. Europe's day-to-day experience between 1919 and 1922 has convinced millions that some disaster impends. For the most part, however, they fail to realize that the "disaster" is already upon them.

The disorganization of the world's financial structure, following on the drains of the war and the debauches and exactions of the peace, has been the object of much comment, with the emphasis laid on the aspects rather than on the essential characteristics of the breakdown.

One of the basic assumptions of the present economic order is that promises to pay must be redeemed at par. Failing in this redemption, the promisor is declared bankrupt, and beyond the pale of reputable business society.

During the past eight years, most of the leading countries of Europe have become bankrupt. Before the World War, the sixteen principal belligerents had total debts of 28,660 millions of dollars, with a total note circulation of 5,000 millions, making a total of promises to pay amounting to something more than 33 billions of dollars. When the Treaty of Paris was signed, these sixteen countries reported debts of 171,633 millions of dollars and paper money issues of 77,954 millions, making a total of promises to pay about eight times the volume of 1913. Since the signing of the Treaty, most of the European countries, belligerents and neutrals alike, have continued to pile up obligations. According to the estimates of O.P. Austin, of the National City Bank of New York, world indebtedness was 43 billions of dollars in 1913, 205 billions in 1918 and 400 billions in 1921. ("Our Eleven Billions," R. Mountsier. Seltzer. 1922. p. 43.) A point has now been reached where the French, Russian, Italian, German, Austrian and Hungarian debts are equal to at least half of the total estimated national wealth. When it is remembered that most of this wealth is in private hands, and heavily encumbered with private mortgages; that the cities have issued enormous numbers of bonds against the same wealth, and that even though the wealth were in public hands it could not be liquidated for anything like its estimated value, it must be apparent that the capitalist world—particularly that part lying in Central Europe—has put itself into a position where its governments cannot meet their promises to pay.

Nor is this the worst. The war experience taught European government officials that it was possible to make money and pay debts with the aid of printing presses. The rapid increase in prices, and the unwillingness of the owning classes to pay for the war by means of a capital levy, placed the governments in a position where the ordinary expenses, plus the costs of the war, the interest on the war bonds, the costs of reparations and other extraordinary expenses amounted to far more than the total government revenue. As lately as 1920, all of the European belligerents, with the exception of Great Britain, all of the European neutrals, except Sweden, and all of the other principal countries of the world except Peru and the United States, reported expenditures in excess of receipts. The deficit for Austria amounted to 38 per cent of its expenditures. In other principal countries the ratio of deficit to expenditure was:

Belgium |  |  | 69 | per cent
France |  |  | 57 |   "    "
Germany |  |  | 46 | per cent
Italy |  |  | 21 | per cent
Japan |  |  | 17 | per cent

("Our Eleven Billions," p. 40-41).

These events led inevitably to a demoralization of the foreign exchange market, which reflects the measure of confidence felt by the business men of one community in the promises to pay made by the government of another community. The exchange values of the non-warring countries remained generally near to par during the entire war and post war period. Japanese exchange fluctuated very little; British pounds, which up to the time of the war were recognized the world over as the standard of value, fell to about three fifths of their par value as expressed in dollars; the French franc and the Italian lira fell to a quarter of their par values, while the Russian ruble, the German mark, the Austrian and the Polish crowns fell to less than one-tenth of one per cent of par. In addition to the serious depreciation of these various currencies, their values fluctuated from day to day and hour to hour, making business transactions difficult or impossible.

Coupled with the disorganization of exchange has been the economic depression which, beginning in March, 1920, spread like a tidal wave, bringing disaster and hardship to workers, farmers and business men. With abundant crops, with industries united into great combinations, with the banks more efficiently organized than ever before in modern times, there should have been no crisis according to the accepted economic philosophy, or, if there was a temporary set-back following the strain of the war, it should have been a regulated panic. But despite the predictions the depression came, and proved to be one of the most severe that the modern world has experienced. The thoughtful man noting these facts, and then learning that, beginning with the hard times of 1814, there have been seventeen of these breakdowns in the economic machinery of the United States, with corresponding derangements in France, Britain, Germany and the other industrial countries; and learning further that there is a tendency for such catastrophes to become more, rather than less severe, begins to wonder whether the difficulty is not very much more deep-seated than many public men would have him believe. Even the most stalwart supporters of the present order must agree that the system does not function smoothly. There are many bumps, jars and hitches, and considerable friction.

Another evidence of economic chaos is furnished by the extent of industrial waste. Studies in industrial efficiency have led recently to the publication of a number of reports, the most ambitious of which, "Waste in Industry," issued by the Committee on the Elimination of Waste in Industry of the Federated Engineering Societies of the United States, describes waste under four aspects:

1. Low production caused by faulty management of materials, plant, equipment and men.

2. Interrupted production, caused by idle men, idle materials, idle plant and idle equipment.

3. Restricted production, intentionally caused by owners, management or labor.

4. Lost production, caused by ill health, physical defects and industrial accidents. (Page 8.)

With these various kinds of waste in mind the committee made a survey of some of the leading industries in the United States, and drew up a table showing the percentage of waste found in each industry. The figures were as follows:

Men's Clothing Manufacturing | 63.78 | per cent
Building Industry | 53.00 |   "    "
Printing | 57.61 |   "    "
Boot and Shoe Manufacturing | 40.93 |   "    "
Metal Trades | 28.66 |   "    "
Textile Manufacturing | 49.20 |   "    "

The bulk of the responsibility for this waste is placed on "management,"—the lowest percentage (50 per cent) in Textile Manufacturing, and the highest (81 per cent) in the Metal Trades. The remainder of the responsibility is shared by labor, with a minimum of 9 per cent in the Metal Trades and a maximum of 28 per cent in Printing, and by miscellaneous causes, with a minimum of 9 per cent in Men's Clothing and Printing and a maximum of 40 per cent in Textile Manufacturing. (Page 9.)

There are a number of angles from which this result may be viewed. Waste may be looked upon merely as the index of industrial inefficiency due to the failure of the industrial mechanism to adjust itself to the demands made upon it. In that case the remedy for the waste is superior adjustment of the present system to itself. On the other hand, if the waste is the result of friction generated within the system, there must be some change in the system before it can be eliminated. The latter explanation seems to tally with the facts more thoroughly than does the former. Certainly, the unrest, bitterness and general sabotage which are encountered throughout the industrial order would point to the conclusion that the economic system is generating its own condition of chaos.

Sabotage, or "go slow," is becoming the dominant note of the entire economic system. "Get the most you can out and put the least possible in," is the theory upon which both workers and owners are operating. There has been much comment upon the tendency of the workers to use the go slow tactics. The real withholding of productive effort, however, takes place among the owners and managers of industry.

Industrial leaders are well versed in the law of monopoly profit: "Minimum product at maximum price." The railroad men have rephrased the law thus: "All that the traffic will bear." Industry has been organized and capitalized and is now owned by a group whose interests lie, not in the extent of production, but in the volume of profit. When profit is no longer forthcoming, the owners practice the conscious withholding of efficiency. In accordance with this general policy the control of industry is shifting from the hands of engineers into the hands of financial experts "who are unremittingly engaged in a routine of acquisition, in which they habitually reach their ends by a shrewd restriction of output; and yet they continue to be entrusted with the community industrial welfare, which calls for maximum production." ("The Engineers and the Price System," Thorstein Veblen. Huebsch. 1921. p. 40-41.) The recent cry of the American farmer: "Produce only what you need for your own keep," is a crude effort to imitate the successful tactics of the business world in limiting production to the volume that will yield the greatest possible profit to the owner.

War-menace constitutes another indication of the chaos existing in modern economic society. The purpose of economic activity is to produce wealth. The purpose of war is to destroy it. The two are therefore in direct antagonism; yet the greatest war machines are maintained by the greatest industrial nations. To reply that they have the big war machines because they can afford to pay for them, is no conclusive answer. The organizing of nations for war came into present-day society with the present industrial system. Industrial leaders have engaged in a great competitive struggle from which the final appeal was always the appeal to arms. Furthermore, one of the most profitable businesses has been that of making the munitions and supplies required for the prosecution of war. Nor is there wanting evidence that modern wars have been made for profits—that they have been "commercial wars," as President Wilson put it.

There is no longer any question but that the forces behind the world war were in the main economic. The war was fought by capitalist empires, for the furtherance of capitalist enterprises. The publication of the secret treaties entered into by the Allies in 1916 gives conclusive proof of the land grabbing character of the Allies' intentions. There can scarcely be any question of the existence of similar intentions on the side of the Central Empires. The forces that constituted the war menace in 1914 were the economic forces arising out of the competitive economic régime that dominated the European world at that time.

Since the ending of the war, these forces have been augmented rather than abated. To them there must be added the other element of danger that threatens to throw Europe again into turmoil. Soviet Russia is and for a time must remain a source of international bitterness among the great capitalist nations, while the struggle for the control of the Near East is fraught with consequences as momentous as was the pre-war German dream of a railroad from Berlin to Baghdad. Unrest in Egypt, India, Korea, and the other countries held in subjection by the power of the bayonet; the contest between Japan, Britain and the United States for the control of the Pacific and the exploitation of China; the unrest and revolution that are stirring in China; the keen intensity of the struggle for foreign markets and for such strategic resources as the supply of petroleum, are all suggestive of a situation resembling an open gasoline can surrounded by lighted matches. And to add the last, and the most realistic touch to the picture, there are a million more men under arms in Europe than there were in 1913, while the military and naval authorities in all of the leading countries are busy planning how and where the next war is to be fought. (See "The Next War," Will Erwin. Dutton, 1921; "The Coming War with America," John MacLean. British Socialist Party, 1920; "War in the Future," F. von Bernbardi. Berlin, 1920; "The Inevitable War between Japan and America," F. Wencker. Stuttgart, 1921; "Coal, Iron and War," E.C. Eckel. New York, Holt, 1920, etc.) Before the grass was green over the graves where lies the flower of Europe's manhood, leaders of the present order were busy with the blueprints of another carnage.

The facts speak for themselves. The existence of such chaos is a matter of every day comment and experience. Though its nature and its causes are little understood, there is no issue of more immediate concern to the western world than the intelligent solution of the vexing questions arising out of the production and distribution of wealth.

Until the Russian Revolution of 1917, the entire western world was so organized that one group or class owned the land, the machines and the productive devices with which other groups or classes worked in order to live. The establishment of this "capitalist" system between 1750 when it had its start in England, and 1860, when it secured a foothold in Japan, has raised certain questions of economic procedure which lie at the background of the economic problems which men are seeking to understand and to solve.

There is no necessity for an elaborate discussion of these problems, since they are at the moment quite generally under the dissecting knife of social students, reformers and revolutionaries. They may be divided into two main groups:—those which are localized in character and those which are world-wide in character. Perhaps the latter group might be called "worldized."

2. Localized Problems

There are a number of outstanding economic problems that affect locally, each community that has adopted the capitalist system. Among the most important of them are:

1. The relations between the job owner and the job taker.

These relations involve the question as to whether job control shall be vested in those who hold the property or in those who do the work. The issue is an old one, intensified to-day by the absentee ownership which stocks and bonds make possible, and aggravated by the presence of vast industrial establishments in which there are employed thousands of workers without the possibility of any direct contact between job owners and job takers.

2. The distribution of wealth and income.

Another old issue has returned to plague a society that makes it possible for some to enjoy "progress" while others must suffer from "poverty." Labor saving machinery has increased the quantity of the industrial product, but as yet there has been no general effort to see that the advantages of this wealth production go to those who are in need of food, clothing and shelter. Indeed, under the present order, millions of those who work are called upon to accept a standard of living which represents less than physical health and social decency, while those who own the land and the machinery with which the wealth is produced are able to exact a rent or unearned income that keeps them permanently on easy street. This embittering contrast between the house of have and the house of want is leading to-day, as it has in any historical society, to division and conflict, for, as Madison wisely observed in the Federalist, "The most common and durable source of factions has been the various and unequal distribution of property."

3. The interrelation of industries.

So long as there was a direct connection between a worker and the product which he turned out, economic life was simple. When, however, the coal dug in eastern Pennsylvania was used to heat houses in Minneapolis, while wheat grown in Dakota was milled in Duluth, made into crackers in Boston and sold all over New England, there arose the problem of the relation between mining, wheat raising, transport, manufacturing, and merchandising. Thus far the banker has acted as the go-between in holding this machinery together, but he labors under two important disqualifications: first, he does not represent anyone except himself and his fellow owners and is therefore not socially responsible for what he does; in the second place, like every other business man, he is out to make a profit rather than to render the community a service. Hence the structure of industrial society rests in chaotic dependence upon the ambitions and foibles of self-selected financiers.

4. Attempts at government control of industry.

The irritated people, incensed by repeated acts of economic tyranny, have turned to the political state, which has been thought of as the guardian of popular rights in a democracy, and through regulatory legislation the appointment of commissions, and even through state competition they have sought to bring obstreperous business interests under the wing of state control. These efforts have generally failed: the business interests, through their control of the economic surplus, have dominated the commissions and have used the machinery of the political state as the instrument for further exploiting ventures; the police, the courts, the executive power, the military—all have been employed by the owners and exploiters against the workers. The issue between the empires of industry and the political state still remains one of the most vexing in the field of public life.

These problems of job control, of wealth and income distribution, of industrial inter-relations and of the relation between the state and industry are pressing for solution in every important centre of modern economic life. Each constitutes a disturbing element and contributes its mite to the aggregate of social instability and unrest that are racking the economic world.

3. World Problems

Aside from these problems, localized in character, though world-wide in their distribution, there are a number of other problems of a world character which also are factors in the disorganization of economic life. One of these world problems is the competitive struggle between economic groups for trade, markets, resources and investment opportunities; another is, the excessive concentration of the world's wealth in a few centres.

4. Competition for Economic Advantage

The issue of non-redeemable promises to pay has crippled the world's credit machinery. The competition for economic advantage has played havoc with the world's social stability.

Theoretically the coffee grower of Brazil and the agricultural machine manufacturer of Illinois produce and exchange those things that they can turn out most advantageously. Practically the resources of the world are monopolized by powerful financial interests each striving to destroy its rivals, each seeking its own enrichment, and each busy reinvesting the surplus wealth which piles up as the result of exploitation at home and abroad.

Competition for economic advantage has followed the line of greatest profit. The present age inherited from the medieval economic world certain time-honored trade rivalries such as those which had existed between Rome, Carthage and Corinth in classic times, or between Holland, France and England in more modern days. These trade rivalries concern themselves with:

1. The transport of goods and people.

2. The financing of such transactions through bills of exchange, and the like.

3. The insuring of trading ventures.

The people which succeeded in obtaining the carrying trade quite generally secured the banking and insurance business, both of which until recent years, have been principally concerned with trading.

The trade of the middle ages was small in volume, and was carried on, for the most part, in valuable commodities, since the cost of transporting bulky, cheap articles was generally prohibitive. With the emergence of modern industry, and its production of large amounts of surplus commodities, important industrial groups like Britain and Germany which depended for their prosperity on their ability to find foreign markets for their surplus commodities, have been driven to a fierce struggle for these markets.

Latterly the effort to dispose of surplus has taken a new form—the investment of capital in foreign enterprises. Instead of trying to sell an electrical plant to the city of Buenos Aires, a German business adventurer (enterpriser) secures a contract to build the plant, buys the equipment from the German General Electric Company, takes the bonds of the City of Buenos Aires in payment for the plant, and finances the transaction by selling the bonds to a German banking syndicate. Through this process, the German (or Belgian, or British) business world invests its funds in "undeveloped" countries.

At the outbreak of the World War, foreign investment had become a science, with the British leading all of the investing nations. C.K. Hobson, in his book, "The Export of Capital," and in a later article in the "Annals of the American Academy" for November, 1916, throws some important side-lights on British foreign investments. He notes that for some years preceding the war, Britain had never invested less than 500 millions of dollars per year in foreign countries and that just before the outbreak of the war, the annual export of capital had reached a total of a billion dollars per year. In 1913 the British foreign investments were approximately 20 billions of dollars, distributed geographically in a most significant fashion. The largest investment (3,750 millions of dollars) was in the United States; then came Canada with 2,500 millions; following were India, 1,800 millions, South Africa, the same amount, Australia, 1,500 millions, and Argentina a like sum. The British investments in Belgium, France, Germany and Austria were negligible. Thus it was in the new and undeveloped countries, not in the old and developed ones that Britain sought her investment opportunities. In their efforts to play at this great game of imperialism, and to win their share of profitable business, Germany, France, Japan, Belgium and the United States were dogging the British heels.

Each of the important producing countries must provide itself with the essential raw materials—coal, iron, copper, cotton, rubber, wheat, etc., upon which the continuance of its industrial life depends. Consequently each of these countries busies itself to secure the control of the largest possible reserves of the raw materials most needed by its own industries.

The case of petroleum is peculiarly instructive. When it became apparent, in the early years of the present century that oil burning ships, motor vehicles and air craft were bound to play a determining part in the economic life of the immediate future, various interests such as the Shell Transport, Royal Dutch and the Standard Oil, with the open or tacit backing of their respective state departments, entered on a campaign to secure the world's supply of petroleum. In Mexico, Central America, the Near East, Russia and the United States this struggle has been waged, and it still continues to be one of the most active contests for economic power that has been fought in recent times.

Petroleum-hunger is only one of the many economic factors that drive modern nations. The efforts to control the coal and iron of Alsace and Lorraine, the Saar and the Ruhr undoubtedly played a leading rôle in making the War of 1914 and the Peace of 1919. The partition of Upper Silesia was based on the same contest for iron and coal. Wherever the coal veins or iron deposits are, there, likewise, are gathered together the representatives of industrial enterprise, which depends for its life upon iron and coal.

As the resources of the earth become better known, and their extent more definitely established, there is every reason to believe that, with the continuance of the present economic system, the necessity for exploiting them will become greater, and the attempts to dominate them will become more aggressive.

Whether the object of the contest be trade, markets, investment opportunities or resources, the result is the same—rivalry, antagonism, bitterness, hatred, conflict. Probably it is fair to say that these economic rivalries constitute the largest single force now operating to keep people apart and to continue the economic desolation and chaos under which the world is suffering.

5. Distribution of the World's Wealth

There is another problem of world scope—the concentration of wealth in a very few countries. At the present moment the wealth of the world is distributed roughly as follows:

Great Britain | 120 | billions of dollars
France | 100 |   "        "        "
United States | 330 |   "        "        "
| —— |
Total | 550 |   "        "        "
Germany | 20 | billions of dollars
Russia | 40 |   "        "        "
Italy | 25 |   "        "        "
Japan | 40 |   "        "        "
Belgium | 15 |   "        "        "
Argentina | 25 |   "        "        "
Canada | 25 |   "        "        "
| —— |
Total | 190 |   "        "        "

Probably all of the other nations combined could not show a wealth total of more than 100 billions. Great Britain, France and the United States have just about 12 per cent of the population of the world, yet they probably hold somewhere in the neighborhood of two-thirds of the world's wealth. The United States alone, at the moment, has nearly half of the world's gold supply and more than a third of the world's wealth. Of course these wealth estimates are not to be accepted in detail, particularly in view of the wide fluctuations in the exchange rate. They serve, however, to give an idea of the relative wealth positions of the leading countries.

The present economic position of the United States in particular, is a perilous one. The estimated wealth of the United States is greater than that of the four richest nations of the world combined. Within a decade, the country has become the world's chief money lender, the world's principal mortgage holder, the world's richest treasure house. The results are inevitable. The United States will be an object of envy, jealousy, suspicion, cajolery and hatred in the eyes of those peoples who concern themselves with the present system of competition for economic supremacy. She holds the wealth and power that they desire and they cannot rest content until they secure it.

Past periods of civilization have witnessed the concentration of wealth and power in some great city, like Carthage, or in some isolated region, like Italy. All around were the "barbarians"—those who had less of the good things of life than were at the disposal of the citizens of the metropolis. Where two of these centres existed at the same time, they warred for supremacy until one or both were destroyed.

Before the war the centre of the world's economic power was Great Britain. To-day the economic centre has shifted to the United States, while Britain is still the world's greatest political power. The struggle between these two empires for the political suzerainty of the planet must continue until one is victorious, or until both have been reduced to impotence.

6. The Livelihood Struggle

Behind these struggles between various political and economic groups, there is a broader reality in the shape of a billion and three quarters of people, inhabiting the surface of the earth,—people of various races, religions, nationalities, who, with all of their differences, have this in common: that they are seeking life, striving to improve the opportunities for its enjoyment, yearning for its enrichment, and, despite the innumerable disappointments which they have suffered in the past, willing to pay handsomely, in vast and patient effort for each tiny gain that they secure.

One of the chief concerns of these human multitudes is the struggle for livelihood—for the means of continuing physical existence and of gaining the surplus and leisure out of which grow the higher life satisfactions.

All men have certain simple economic needs—for food and shelter. Denied these, they perish. Given them, they are able to devote their remaining energies to one of the many lines of activity that men have developed.

What are these other wants of men, aside from the primitive needs for food and shelter? Most prominent is the desire for human companionship, friendship, love. Again, mankind has accumulated a vast store of knowledge, of philosophy, of imagery, of artistic expression. Love, truth and beauty sound an appeal that finds some answering echo in each life. The leisure and the culture of the world, in the immediate past, have been the heritage of a favored few: to-day they are the objectives of the many. Heretofore it has been the belief of the aristocrats that the best of life was none too good for them. To-day that idea has spread among the people. Dimly, inarticulately, they feel that the world's advantages are for them and for their children.

Before the cultural advantages of life may be enjoyed by the many, wealth must be produced in sufficient quantities to provide food and shelter. This provision of the economic necessaries is not a far goal. Livelihood, when secured, does not make of man either a saint or an artist, but it is a necessary step in the pursuit of either goodness or beauty. The body must be fed before it will function, just as the engine must be fed with fuel before it will run. The provision of a supply of economic essentials is not the ultimate object of life, but until some such provision is made, life in its fullest terms is impossible.

7. Guaranteeing Livelihood

The millions who inhabit the earth have a direct and immediate interest in organizing economic life in such a way that the supply of economic goods is made regular and certain. This is the premise on which all constructive thinking about economics is necessarily founded.

How is this hope to be realized? What means are at hand to insure the ultimate success of these efforts to guarantee livelihood?

Nature has provided an ample supply of the resources out of which the economic necessaries may be produced. These resources fall mainly into three general classes:

1. Climate, including those conditions of light, air, rainfall and temperature that make possible the maintenance of life in its many forms.

2. Fertility, including those qualities of the earth that are useful to man in the pursuit of his economic activities.

3. Power, including those forces of nature which man may harness and compel to do his bidding.

Climate, fertility and power are variously distributed over the earth. The heat near the equator and the cold of the arctic regions make any highly organized forms of economic life difficult. Consequently it is in the temperate zones that industrial civilizations have developed. The deposits of minerals and fuels are quite uneven. Take iron as an example. The available deposits of iron ore are concentrated mainly in Brazil, Cuba, the Appalachians and the Great Lake Basin, so that the Americas and particularly North America have far more than a proportionate share of the iron ore supply. Copper, coal and petroleum are distributed with even greater irregularity. Equally uneven is soil fertility. Beside a garden spot, like the Mississippi Valley, lies a great Colorado-Utah desert. Nature has provided those requisites upon which man must depend for his economic life. They are scattered it is true, and with the present political barriers holding peoples apart, many of them are politically unavailable but, economically, they are an open door to the future.

Men have met with considerable success in availing themselves of nature's bounty, and of converting it into useful and pleasing forms. All of the tools, weapons, textiles, metals, wheels, machines, have been the result of human effort and ingenuity, spread over long periods of time, and gradually accumulated and concentrated. At last a day seems to have dawned when machinery, applied to nature's bounty, could produce the wealth necessary to support the world's existing population on a minimum standard of living. Certainly the energy and wealth which went into the five war years would have fed and clothed the people for that period.

8. Distribution and the Social Revolution

Men have succeeded in kindling fires, making wheels, separating the metal from the ore, harnessing electrical power and communicating their thoughts to one another and to their descendants, but they have not made themselves masters of those forces which work through fire and wheels. Men have met the immediate economic problem by devising methods for producing food, clothes and roof-trees, but they have been overwhelmed by the social implications of these productive forces. Before the problem of sharing the proceeds of their labor, they have stopped, and the whole economic progress of the race now stands like an engine stalled, awaiting some solution of the problems of distribution.

Through the ages various methods of making a living were inaugurated successively. Medieval Europe had worked out a combination of herding, agriculture, craft industry and trade that made a stable life for an agricultural village a practical possibility.

This period of economic stability—this golden age—was followed by a series of events that threw the fat into the fire. First in England, and then in all of the important countries of Europe, the industrial revolution turned the simple grazing, farming, craft-industry life of the village topsy-turvy, by providing a new method of converting nature's bounty into goods and services calculated to meet the increasing needs and wants of mankind. So far-reaching was the change that it has compelled a reorganization of virtually all phases of social life, but for the present purpose, it has been felt chiefly in four fields: manufacturing, commerce, wealth-surplus and population.

The efficiency of the new manufacturing processes has provided a large surplus of goods that must be taken somewhere, exchanged for food and raw materials, which must, in turn, be brought to the producers of manufactured goods. In the course of these transactions, a generous share of the values produced goes, in the form of profit, to the owners of the industry, another considerable portion goes into reinvestment, thus swelling the volume of productive capital.

The increased wealth, the larger capital and the greater amount of surplus all make possible the maintenance of a larger population. Thus it has come about during the past century, that the production of goods, the transport of goods, and the population, have all been increasing at a rate unheard of during the previous thousand years.

The suddenness of these economic changes has swept the world away from its accustomed moorings, out upon an uncharted sea. Only yesterday the race was struggling to make a meagre living: to-day the centres of industry are glutted with bulging warehouses and equipped with idle machinery that will produce unheard of quantities of shoes and blankets and talking machine records, if the owners will but give the word to the workers who are eager to perform those services that yield them a living. Only yesterday the world was maintained by local production: to-day it depends upon transport and exchange. All of these changes in the accustomed ways and acts of men have been brought about in the course of an economic revolution.

The tidal wave of the industrial revolution has not stopped with the economic world. No phase of life has been exempt from the power of its magic. The school, the church, the family, the home, the state, have all felt its transforming might. The aggregate of these changes is the profound social revolution that has been for some time, and that is at present tearing the fabric of the old society to tatters, while beneath its surface-chaos is forming the nucleus of a new social order.

9. A New Order

The results of profound changes such as those that are now occurring, must be chaos except in so far as the ingenuity and organizing capacity of man re-establishes order. The people in the world are in very much the position of a valley population suffering from a disastrous flood. Their houses and fruit-trees—the product of generations of labor—have been swept away. The valley is filled with debris. As the water recedes, the wreckage must first be picked up, then the whole population must fall to with a will and rebuild the community—put up houses, re-plant trees, re-make gardens, repair roads.

The social revolution has not swept everything away, but it has modified the form of social institutions, and some of them, such as the old time farm home, the individual workshop and the agricultural village have been obliterated in many localities. How shall the new society be rebuilt? Only as the old was built—by the expenditure of human effort and under the guidance of the best wisdom that the community can muster.

There are a number of points of view from which the present-day economic chaos may be regarded. The humanitarian feels pity for the suffering and hardship imposed upon multitudes of the world's population. The conservative laments the alterations which are being made in the established order. The liberal regrets that the changes are occurring so rapidly that construction cannot keep pace with destruction. The radical sees, in these fundamental changes, the dawn of his millennium. The scientist and the engineer upon whose shoulders will rest the burden of rebuilding the new society, tighten their belts and turn to the mightiest task that men have ever faced.

The economic muddle in which the world now finds itself is one of many transition periods in the history of civilization,—a phase of the great revolution. Like any period of chaos, it is the seed-ground of the new order—the demolition which precedes construction.

Some day men may be wise enough and sufficiently well organized and equipped to demolish and construct at the same time. As yet no such stage has been reached. During the intervals of chaos which separate two periods of forward movement (the dark ages of the world, as they are sometimes called) the masses agonize and suffer, groping blindly and crying out for guidance. Such is the period in which the world now finds itself.

Out of this chaos, men must bring order; and to do this they must discover the foundations upon which the new order can be successfully built. This is the work of the engineers, the constructors of the new society.[3]

10. The Basis of World Reconstruction

Asiatics, Europeans, Africans, Americans, Australians—all people who follow the movement of events realize that the crisis confronting the capitalist world is a serious one. Informed men like J.M. Keynes and Frank Vanderlip believe that the situation is perilous. While many persons see that something is wrong, and while some see what is wrong, there is a great diversity of opinion as to the remedies that should be adopted. What most of the writers fail to see, or at least to realize, is that economic organization is the basis—the only possible basis—for the reconstruction of the world.

The time has passed when political readjustments will meet the world situation. The events accompanying the industrial revolution have hammered the world into a closely knit economic whole, and until this fact is understood, and made the basis of world thought and world building, there can be no permanent solution of the world's problems.

The present chaos in world relations cannot be met and settled by war, legislation, diplomacy or any similar means. All of the steps in these fields imply some adjustment of political relationships, and it is the economic institutions rather than the political institutions of the world that are in need of constructive effort.

If a town is suffering from a break in the water-main, there are two things that may be done! The old pipe may be patched or a new pipe may be put in its place. It is sometimes possible for the engineers to patch the old main temporarily, while they are getting in a new one. The same situation confronts the people of the world. Their economic life is disorganized and chaotic. Shall it be reorganized along old lines, slightly modified in the light of experience, or shall it be built on fundamentally different lines?

[3] "Engineering is the science of controlling the forces and of utilizing the materials of nature for the benefit of man, and the art of organizing and directing human activities in connection therewith." (Resolution of the Engineering and Allied Technical Societies in creating the Federated American Engineering Societies. "Waste in Industry" 1921, p. IV).

III. ECONOMIC FOUNDATIONS

1. The Social Structure

When a town or a city decides to repair a water system or to replace an old system by a new one, the plans are made and the work is carried on in accordance with the soundest principles known to the engineering profession. There are communities which neglect their water systems, and which suffer accordingly. But for the most part, the water supply is looked upon as so vital a factor in the common life that no pains are spared to have it reflect the last word in sanitation and efficiency.

The same reasoning must apply to the economic machinery upon which a community depends for the supply of its necessaries and comforts. Economic life touches every home. No human being who eats food, wears clothes, lives in a house, rides on street cars or reads papers and books can escape its all pervasive influence. Therefore when changes are made in an established system of economic life, or when a new economic system is substituted for an old one, it behooves the people concerned to see that the work of reorganization is done in accordance with the soundest known principles of social science.

The principles of social science, like the principles of engineering, are matters of profound concern to those who are compelled to depend for health and livelihood on the outcome of a social experiment. The social scientist studies society as the natural scientist studies nature, by examining the social forms, the social forces, the ways of handling or of administering these forces, and the means of making social improvements. The social scientist, like the scientist working in any other field, is concerned with making those additions to knowledge which will prove of the greatest ultimate advantage to the human race.

The principles of social activity are not yet so well known as those of astronomy, physics, mechanics or biology, but they operate none the less surely. Until these principles are understood, and until men plan their activities in relation to them, there will be no possibility of a rationally organized and wisely managed society. The physicist who planned a pump on the supposition that water is always liquid in form would get no farther than the social scientist who advocated social changes on the theory that the only motive that animated mankind was the economic one.

Mankind is not wholly ignorant of the principles underlying social structure and social activities. Philosophers and statesmen worked over them in the ancient world. Within the past two centuries a flood of books and pamphlets has appeared dealing with social organization. To be sure, most of these publications have been of a political nature, but the effort was made none the less to understand society and its workings. The investigations, analyses, comparisons and conclusions are formulating themselves gradually into certain well-defined social laws, which men recognize as essential factors in social thinking.

Some of the more important among these social laws or principles which have been determined by the painful processes of trial and error are those relating to the manner in which the structure of society is built up. Society is not a collection of people, in the sense that a basket of eggs is a collection of eggs. Quite the contrary, society is a structure formed through the association of individuals and of groups having some common interests and some co-operative functions or activities. A family, for example, consists of a number of persons, usually connected by blood ties, living together in a common dwelling. A chamber of commerce consists of individuals, firms and corporations, doing business in one locality, and all concerned with the maintenance of certain property rights. The British Miners Federation is composed of local and of district organizations, which are built up around collieries, towns, and coal deposits. The local union is composed of individual mine workers. The district organization is composed of a number of locals in the same field. The federation is composed of these lesser organizations. No matter which one of the many forms of human association is examined, the same thing will be found true. Each social group is composed either of individuals or of lesser social groups which have certain common interests and certain co-operative activities, and which band themselves together in response to their interests and in pursuance of these activities. It is this organic structure of society to which Hobson applies the phrase "the federal units which society presents." ("Work and Wealth." J.A. Hobson. Macmillan. 1914. p. vi.)

Among primitive peoples who have simple forms of social organization, each individual is connected with some association like the clan or tribe which is state, church and family, all in one. The stories of the Jewish patriarchs are good illustrations of this stage in social evolution. In advanced and complex societies, however, each individual belongs to a number of groups—to a town, a factory, a school, a home, a political party, a fraternal order, a church. In complex societies these groups are united to form the whole social structure. The individual belongs to society, therefore, because he belongs to one or more of the groups composing society, and his membership in society is dependent upon his membership in a social group.

Without making too much of the comparison between a living organism, like the human body, and a society, the similarities between the two are striking. The human body consists of various systems, such as the circulatory system, the nervous system, the digestive system. Each of these systems is composed of many parts, having separate functions to perform. The circulatory system, for example, consists of the heart, veins, arteries, capillaries, the blood, etc. These various parts of each system are in their turn made up of different kinds of tissue. The heart is a complicated organ consisting of muscle tissue, nerve fibers, blood vessels, etc. Muscles, nerves and blood vessels are in their turn composed of living cells, each of which contains the mechanism of a life cycle. Among the unit cells, the various tissues, organs and systems of the body, there is a working harmony. The whole complex machine functions in unison. If one of the organs fails to do its work,—if the heart fails to pump blood or if the lungs fail to inhale oxygen,—the whole body ceases to function or "dies."

Throughout the series, from the single cell to the entire organism, the human body is built up compositely. This method of composite structure holds equally true in the composition of modern society.

A modern society or community consists of various systems, such as the educational system, the economic system, the political system. Each of these systems is, in its turn, composed of institutions. Thus, for example, the educational system consists of the common schools, the high schools, the normal and professional schools and universities, the special schools, and so on. Each city school system is a going concern with its pupils, teachers, officials, school buildings, textbooks, courses of study. Each school building, each class room, each group of pupils, is a social unit, composed either of individuals or of groups. Like the single cell of the human body, the individual pupil is a living organism, and it is out of a multitude of such organisms variously grouped that school systems are built.

The social machinery, like the machinery of the body, must work smoothly, otherwise misery will be the inevitable result. If the educational or the economic life of a community breaks down, the whole community suffers, as does the body through the failure of an important organ. If the stoppage is significant enough, as for example, a stoppage of the economic machinery like that experienced by central Europe since 1919, the social organism "dies,"—that is, it is resolved into its constituent elements, some of which may disappear.

Those who object to the comparison between society and a living organism like the body, find more satisfaction in likening the social machine to an automobile, with its self-starter, its ignition system, its lighting system, its steering gear, its driving mechanism. Each of the systems is in turn composed of parts. Each part is made of wood, iron, copper, rubber, and these materials are, in turn, composed of molecules and atoms in certain combination. The automobile is not self-acting, like the body or like society, but the failure of one of its essential parts like the ignition system, means the failure of the whole machine.

Society, like the human being, or like the engine, is a highly complex mechanism, and like them it cannot function successfully unless its various parts function in harmony. The major problem before a society is therefore the working out of a system of inter-relations between its parts, that will make harmonious functioning possible and easy. Just as the mechanical engineer who builds the automobile puts into it the results of his wisdom in an effort to make it effective, so the social engineer devotes himself to the problem of making society function in the way that will yield the largest results to the individuals composing it.

2. Specialization, Association, Co-operation

Every social group except the horde, which is an aggregation of unspecialized and non-co-operating individuals, is constructed on the principle of:

1. Specialization

2. Association

3. Co-operation

The social group—the family, the school, the factory—takes upon itself the performance of a particular social function—it specializes itself. Each group associates itself with other groups—families with families, schools with schools, factories with mines and stores. Finally, these associated groups work together or co-operate, exchanging the products which their specializations have created, and uniting their efforts in the furtherance of their common interests. These developments take time, and some communities are more highly specialized than others, but all societies which enter intimately into the life of the modern world are thus constituted.

The more advanced the society, the more numerous and the more complex are the relations between its component parts. The agricultural inhabitants of the Ganges Delta have evolved a far more complex society than that of the aborigines of Australia, but the civilization at the mouth of the Ganges is simplicity itself compared with that of Britain, Belgium or Japan. In the Ganges Delta each family group has a homestead. Outside of the homestead, the community life is almost wholly unspecialized. Even where the homesteads are clustered together there are no stores, no recreation centres, and few churches or schools except in the larger towns or in the market towns, of which there are a very few, since only about one per cent of the people live in towns or cities. Practically the entire population is occupied with the work of the homestead, and the work of each homestead is very like the work of every other homestead. ("The Economic Life of a Bengal District." J.C. Jack. Oxford. Clarendon Press. 1916. pp. 1 to 40.)

How different is the French, German or Italian village, with its various crafts, trades, professions, industries, recreation centres, schools, churches and the like. Every such European community of three or four thousand persons is in itself a complex society, while the industrial city of fifty thousand people is a hive of related social activity.

The more highly specialized the group, the more complex, intricate and precise are its workings.

This principle of social federation through specialization, association and co-operation is nowhere better illustrated than in the case of the present economic system. In each centre of population, in each town or city, in each state, in each nation, in the world at large,—the economic system is divided into various elemental economic groups or units, falling under six main headings:

1. The extractive units, which are concerned with the taking of wealth from nature's storehouse—the farm, the mine, the lumber camp.

2. The fabricating units, which are busy changing the products of farm, mine and lumber-camp into semi-finished or finished forms—the mill, the smelter, the factory.

3. The transportation units, which carry goods or people or messages from place to place—railroads, ships, trucks, telephones.

4. The merchandising units, which assemble the goods turned out by the fabricators and distribute them to the users, wholesalers, jobbers, retailers.

5. Personal service units, which render a service to the consumer in some direct, personal way—housekeepers, educators, entertainers, health experts.

6. The financial units, which are concerned with the handling of money and of credit (the counters of the economic system) banks, loan associations, credit houses.

These are some of the main divisions of the economic system as it exists at the present time. Each division is a great net-work of economic inter-relations, specialized and subdivided into individual plants, factories, departments and the like. Take, as an example, one group, the manufacturing industries of the United States. When the Census of 1914 was compiled, the manufacturing industries were classed in fourteen groups,—food and food products, textiles, iron and steel and their products, lumber and its remanufactures, etc. There were 496,234 wage-earners working in 59,317 food and food products establishments, 1,498,644 wage-earners in 22,995 textile establishments, 1,061,058 individuals working in 17,719 iron and steel establishments, and so forth. Each of the fourteen subdivisions of the manufacturing industries of the United States employ hundreds of thousands of men and women who are at work in tens of thousands of establishments in thousands of cities and town. The same kind of specialization is to be found throughout the various modern industries, and in the different industrial countries.

Each one of the larger establishments—each factory or plant—is in turn composed of departments, divisions, shops and the like.

Whether the individual establishment or the individual department be regarded as the unit of economic activity, the outstanding feature of the manufacturing industry is the immense number of units that must be in working order and co-operating harmoniously with the others before the whole can function smoothly. And this is but one of the general divisions of industry. At the time of the Census of 1920 there were in the United States alone, 6,447,998 farms; in 1914 there were 275,791 manufacturing establishments; in 1910 there were 1,127,926 retail dealers and 50,123 wholesale dealers. Literally, there are millions of productive economic units in this one country which are specialized, which are associated in their activities and which must be put on a co-operative basis if effective results are to be obtained from them.

3. Three Lines of Economic Organization

So much, then, for the interdependence of the various economic groups under the present forms of society. This interdependence runs throughout the capitalist system. Farms depend on railroads, railroads on mines, mines on factories, factories on farms, and so on.

This extreme specialization of the economic system is the product of the past two hundred years, the outcome primarily of the industrial revolution. The experience of society with these specialized economic forms does not, therefore, extend over more than five or six generations. This experience is sufficient, however, to indicate, that there are three general lines along which economic organization may develop:

1. Economic "states rights" or individualism—the theory upon which the present day industry as well as the modern state was founded. Under this theory each economic group must be free to go its way, cutting a path for itself through the ranks of its competitors, and making its triumphant advance over their prostrate remains.

2. Economic bureaucracy, involving the concentration of economic authority in the hands of a centralized group which, knowing little or nothing about the requirements of particular localities, is nevertheless in a position to legislate for them and to enforce its mandates.

3. Economic federation or federalism, with local groups enjoying local autonomy in all local matters, and only so much centralized control as is necessary for the unified direction of the entire enterprise.

American industry has had considerable experience with the two first forms of organization. Until the period of the Civil War, competition was the generally accepted rule in all phases of economic life. With the formation of the Standard Oil Company in 1870, a new principle was demonstrated, and the idea of centralization was embodied in a form that served as the model for the American trust movement. By the time of the late nineties, this principle of centralization had been carried so far that a reaction set in, and when the United States Steel Corporation was organized in 1901 local autonomy was recognized as one of the essential principles around which its structure was built.

Experience points to the system of local autonomy in local matters and to the central control of general matters as the most workable in a complex society.

In the first instance, under such a system, each local unit is responsible for its own activities and for its own discipline. It is obvious that no matter how efficient the bureaucracy, it would hardly be possible for a centralized authority to control, from one point, the six millions of farms and the quarter million industrial establishments of the United States. It is only where the handling of local matters rests with those immediately concerned that the highest degree of local pride, initiative and energy can be generated and maintained.

Such a system leaves the central authority free from detail so that it may devote all of its energies to decisions on matters of general policy, and to such procedure as affects the welfare of the whole rather than of any particular part. Economic society, to be organized successfully, must be built of units that will prove self-acting and self-directing in all matters of purely local concern. At the same time, a scheme of economic life must be devised that will make it easy and natural for these economic units to function co-operatively in all matters connected with the well-being of the whole industry or of the whole economic society.

4. Economic Forms

Much has been done to organize the economic life of the planet, particularly during the past two centuries. Prior to the industrial revolution the economic life of the masses of the people, with the exception of a little trading and shipping, was localized and individualized in the village, the commune, the homestead and the home. The industrial revolution, with its dependence upon mechanical power, served to concentrate economic life in larger units—the factory, the plant, the industrial city. As a matter of necessity, organization followed in the wake of this concentration. The owners of industry organized on the one side: the workers organized on the other. Besides these two major forms of organization within the field of industry, there was the organization of the state, which has played a leading rôle in the life of present-day society.

The organization of the owners, which is far more complex and more highly developed than that of the workers, has followed four general lines:

1. The organization of one line of industry. Woolen mills in Massachusetts and in New York unite to form the American Woolen Company: sugar refineries are consolidated into the American Sugar Refining Company.

2. The organization of those industries which are concerned with the turning out of one product—industrial integration. The iron ore beds of Michigan, the coal and coke industries of Pennsylvania, lime-stone quarries, smelters, converters, rolling-mills, railroad connections and selling organizations all unite into the Cambria Steel Company or the Carnegie Steel Company. Timber tracts, ore properties, mills, mines and selling agencies join to form the International Harvester Company.

3. The organization of unlike and unrelated industries—manufacturing industries, public utilities, insurance companies, railroads, trust companies and banks brought under the financial control of Morgan and Company or of some other banking syndicate.

4. The banding together of these various groups in mutual welfare associations such as chambers of commerce, boards of trade, manufacturers' associations and so on.

None of these organizations has any primary interest in geographic areas or in national boundaries. Half of the business of the Standard Oil Company of New Jersey is carried on outside of the United States; the International Harvester Company puts up plants in Canada and in Russia; United States Steel buys properties in Mexico; The National City Bank opens agencies in Cuba and in Argentina. The great modern business units deal, not with political boundaries, but with economic areas. They seek out, as the field for their operations, abundant resources, cheap labor, attractive markets.

The present economic system has made great strides toward the world organization of economic life in a comparatively short time. Australia, Canada and the United States furnish excellent illustrations of the way in which continents have been surveyed, spanned with steel, populated and exploited in three or four generations. So completely has the economic system been altered that the seventeenth century world would not recognize its infant great-grandson of the twentieth century.

5. Limitations on Capitalism

Important changes have been made in the structure of society since the inauguration of the present economic system, but these changes have not been radical enough to keep pace with the still more radical changes that have occurred in the mechanism of economic production and exchange. The chief failure of the present order is its failure to readjust social machinery in conformity with the economic changes that have occurred in society, and this failure is due, in large measure, to the limitations contained within the capitalist system.

Like all social systems which attain to positions of consequence, the capitalist system has played an important rôle in the development of society, and like all such systems, it has had its day. The needs of the community have advanced to a point at which they cannot be met under capitalism, whose chief failure to function more effectively in the present crisis may be traced to:

1. Excessive centralization of the determining control of industry in the hands of financial manipulators, who do not even enjoy the advantage of owning the industries which they dominate.

Through shrewd financial dealing they have maneuvered themselves into positions of importance, which they hold because of their ability to manipulate, a political rather than an industrial virtue. The necessary result of this concentration of authority is a denial of local self-determination and a corresponding loss of local initiative. The less local initiative there is, the more centralization is required to keep the machinery running, until a point is reached where all power and authority are exercised from the centre, and the local group is as devoid of spontaneity as it is of authority. At somewhere about this point, the friction involved in administration becomes so great that the whole of the social energy is consumed in the routine of keeping the social machinery running, and there is no surplus, either for leisure or improvement. This was the outcome of a similar centralization of authority under Feudalism, and it shows itself in any organization that permits itself to drift into the danger-zone of bureaucracy.

2. A second obstacle to the further development of the present economic system is nationalism.

The political state has become an adjunct to the capitalist economic system. It relies for one of its sources of driving power upon a concept of nationalism which places the political boundary lines that happen to surround a people first among the public limitations on conduct. "My country, right or wrong," becomes a catch phrase on the lips of school children. Whatever transpires inside these political boundary lines is sanctified by its association with the fatherland, while events having their origin outside of the country must be correspondingly discounted.

Since the middle of the nineteenth century the business men of every great industrial nation have been compelled to go abroad for raw materials, for markets and for investment opportunities. In order to obtain these economic advantages, the citizens of the civilized nations have not hesitated to plunder the natives, and if they resisted, to murder them—as Britain has done in India, as Belgium has done in the Congo, as Japan has done in Korea, as the United States has done in the Philippines and Hayti. This robbing and murdering is sanctified by the fact that "our interests were in danger" or that "our flag was fired upon" or that "our citizens have lost lives and property." But during the past few decades the exploiting nations have found more than natives to deal with. In almost every instance there have been at least two claimants for each choice economic morsel, and a conflict has frequently resulted, like that between Russia and Japan for the control of Eastern Asia or between Germany and France for the control of the iron and coal deposits of Western Europe. In such cases the wars are justified to the home populations as necessary defensive measures.

The justification may or may not be complete, but the bills must be paid, and they have proved to be inordinately high. The cost of killing African natives or unarmed Haytians is comparatively low, but the cost of killing Frenchmen and Germans is enormous. If, as some experts have estimated, the direct cost of the Great War was 250 billions of dollars, and if only 10 millions were killed, it cost something like $25,000 to kill each of the ten millions. It is at this point that nationalism breaks down because of the sheer inability of the peoples to foot the bills that have been contracted in destroying their "enemies"—namely, the citizens of other nations.

When this point is reached—when the costs of expansion beyond boundary lines of a nation are so great that the people who do the country's work cannot or will not meet them, the end of the system that depends upon expansion is already in sight. That point has been reached and passed in capitalist society.

While the costs of expansion were merely the cost of subduing naked savages, the business was a remunerative one; but when, to these ordinary costs must be added the stupendous price of capturing trenches protected by barbed wire entanglements, of bombing whole countrysides, of desolating states and wiping out industries, not to mention the cost of building forty million dollar ships that can be sunk in six or seven minutes with one well aimed torpedo, the limit has been reached, and bankruptcy sooner or later ensues. Capitalism is now paying that price throughout most of Europe.

3. A third obstacle to the continuance of the capitalist system lies in the fact that it has fallen into the hands of profiteers (bankers and absentee owners) whose chief purposes are to control economic machinery for the money there is in it, and to guarantee their clients (investors) an opportunity to live without working on the labor of others.

By the very nature of their connections the managers of industry are denied the right to think in economic terms. Their function is to "make money" by exploiting nature and men. They are therefore profiteers rather than producers, and no economic system can hope to survive unless it is based on production rather than profiteering.

4. The present economic system is in the hands of those who are responsible to wealth (stockholders) and not to the masses of the people.

A small fraction of the people in a modern industrial community—one in 30 or 40 or 50—holds the controlling vote in the strategic industrial enterprises, and says the final word on all questions of industrial policy. Their interest is a property interest. Automatically they are precluded and prevented from thinking or acting in the interest of the general welfare, since their clientèle, which is seeking to live on the labor of the masses of their fellow citizens, is only a minute part of the general public.

5. There is another limitation arising out of the third and fourth, just enumerated—the limitation imposed upon the whole of society by the incessant struggle between the owners of industry and the workers in industry.

While the owning class continues, without labor, to derive an income from the labor of the workers, the former will grip their privileges, while the latter will oppose, obstruct, attack and ultimately deny the rights of the owners.

These five limitations: centralization, nationalism, profiteering, the handling of economic affairs in the name of property rather than in that of human welfare, and the class struggle—make it difficult or impossible for the directors of the present economic system to extend it in response to the pressing demand for expansion. Like other social systems that have prevailed in historic times, the capitalist system of economic control has its limitations, and like many another system, it seems to have reached them.

6. The Growth of Capitalism

The existing economic order has grown to its present proportions competitively and nationalistically, without any centralized supervisory control (without any board of strategy) just as one of the Canadian cities out upon the plains has grown, or rather sprawled over the prairie—each man building how and when and where he liked, each industry choosing its own location, stores, schools, churches, theatres, squatting at those points that seemed to be the centres of the crowd life. Mines have been opened, factories established, railroads built, electric plants constructed, by some individual or corporation interested in making a profit on the investment, and with little or no relation to the well-being of the community. There has been no recognized intelligent guidance behind the development of the industrial system.

In so far as the present economic life was planned, it was planned locally, by the directors of one industry, by the chamber of commerce of some city, by a far-sighted banker or financier who insisted upon thinking in terms of the coming business generation. For the most part the system grew, however, like stalks of corn in a field, each stalk drawing its own nourishment from the soil and making what progress it could along its own path toward the zenith.

Another serious drawback in the growth of the present economic system is that much of it was developed as an underground organization. Even had they decided to do so, individual business men have not been free to plan ahead and work out a business policy in the light of day. On the one side were the jealous competitors, watching every move and eager to profit by any bit of information that they could secure with regard to the plans of their rivals. On the other side was the government, with its conspiracy laws and its anti-trust laws, ready to swoop down on the business director who planned too broadly or thought too far into the future. Then, too, there was an ever-growing force in a public opinion that was suspicious of profiteers, no matter what their professions. With competitors on the watch here, and government officials yonder, there was nothing for it but to work in secret, to shadow the new policies in mystery and to get as far as possible without being found out.

Far-reaching changes have taken place, of late, in the type of men who have held the reins of control over industry. During its early years the economic machinery was constructed by men who had worked at their trades; men who had begun at the bottom and climbed into a place of authority; men who had a first-hand knowledge of the processes underlying their industries. Latterly, however, with bankers and other professional manipulators in control of economic life, the engineers, with their intimate knowledge of forces and processes have been pushed into the background, and the actual work of direction has been shifted from producers to money makers.

Again, the present economic system, built for the profit of the builder rather than for the welfare of the community, represents, not the science of organization for production and use, but the science of organization for exploitation and profiteering.

These are some of the reasons why the economic life of the modern world has grown at haphazard. Each industrial director put his own ideas into his business, and as it grew in response to them, the various businesses differed as much in shape, size and character as did the early factory buildings.

The time seems to have arrived when a new working plan of economic life may be adopted. The faults and failures of the old are glaring and the clamor for the new is reasonable and insistent.

The construction of factory buildings has been evolved into a science. Why cannot the same thing be done with the whole scheme of economic organization? Men no longer erect factory buildings according to personal whim or to the chance ideas of some budding architect. Instead they consult scientists in factory construction who have devoted years to the study and to the practical supervision of the detail of factory building. Can less be demanded of the community which hopes to build its economic life soundly and solidly?

A modern steel plant, like that at Gary, Indiana, is carefully planned before a sod is turned. The organization of the works is thought out, sketched, drawn in detail, blue-printed, so that each group of workers that participates in the construction is given a blue print that specifies what is to be done, and where and how. When all of the tasks are completed a steel plant has been called into being. But suppose that each of the eighty gangs of workers, busy on the plant, had followed the lines of its fancy or of its own special interest! The result would resemble the helter-skelter of modern economic society.

7. Effective Economic Units

Economic life has been haphazard in the past. In the future it will be one of the most scientifically built of all human institutions. It is so vital a part of the social life, and it yields itself so readily to structural co-ordination that the best structural minds will turn to it perforce, as the logical field for their activities.

The economic structure of the future, to be sound, must be built of effective working units. It is as impossible to build a live social system with dead component elements as it is to build a live body with dead cells.

At least for the time being, an intricate and complicated structure is needed to handle the problem of livelihood. As time goes on, the nature of the economic system may be greatly modified, and its structure simplified correspondingly. While the complicated economic structure remains, however, the problem will be one of co-relating the activities of vast numbers of economic units, and of prevailing on them to function with less friction and greater harmony.

Like every social structure, the economic system will be built up of lesser social groups, beginning with the simplest local body of farmers, miners or mill workers, and continuing on, by successive stages of organization to the largest and most highly complex groups in the community.

The nature of each of the units that enters into the economic structure must vary with the locality, with the industry, and so on, hence it will prove to be impossible to lay down any arbitrary rules concerning their organization. It is possible, however, to suggest certain characteristics that must be present in effective working units:

1. The economic unit, which is to be built into the new society as stones are built into a wall, must bear a very close relation to the present working forms of economic life.

Ultimately, the economic units of which society is composed will differ completely from those now existing. It is quite out of the question, however, to build a new economic structure and new economic units at the same time. Habit and convention are too strong. Innovation is too terrifying and too problematical. The life of local economic units will be carried on to-morrow very much as it is carried on to-day by the masses of the people. The most workable economic superstructure, for a new society, will be built upon an answer to the question: "How is work done now?" This method of approach takes the basic economic activities of the masses of the people for granted and seeks to build them into a sounder type of super-organization than that now existing.

2. The economic unit, whatever its size and function, must be sufficiently homogeneous and coherent so that it will retain its unity even in the face of severe stresses and strains. That is, it must be in a state of relatively stable equilibrium.

3. The economic unit must be autonomous—self-governing, self-motivating, and in a sense, self-sufficing.

4. The organization and management of the unit must make possible an efficiency in production that will supply human needs and furnish the means of providing some comforts for the population.

5. Units must be so organized that they will work effectively with other units in the same industry and in related industries.

Whether plans are being made for the rebuilding of existing economic institutions or for the establishment of new ones, these general rules hold good. They have as their objective, a workable social system that will turn the wealth of nature's storehouse into usable forms, and that will procure the distribution of the good things of life, in an equitable manner, among the groups that have assisted in their production.

8. Classes of Economic Units

Those who are concerned with the establishment of a working basis for economic society must bear constantly in mind the purpose of economic organization—to provide livelihood on the most effective possible terms. The economic system is not called on to perform any other function.

Economic function would seem to be most effectively aided by some organization of the economic units that would provide a structurally sound skeleton for the whole economic mechanism. The needs of particular localities, the requirements of larger groups within one industry, the economic relations of continental areas, and finally the world organization of industries must be provided for. In order to meet this situation, it would seem desirable to think in terms of several different grades or classes of economic units. As a working basis, four are suggested:

1. The local unit, which would be some particular phase of the economic process that normally functions as a whole.

This unit is now a working part of the present economic order, and whether it is a colliery in Wales, a division of the P.L.M. Railroad in France, a mill in Bombay, or a farming community in Saskatchewan, it would continue the process of turning out goods and services under the new economic régime as it does under the present one.

2. District units composed of a number of neighboring local units in the same industry or in closely related and co-operative industries.

The district is an aggregation of conveniently situated local units, and is organized as a ready means of increasing the efficiency of the groups concerned. It might cover the tobacco factories of Havana, the coal mining industry of the Pennsylvania anthracite fields or the dock working activities of Belfast.

3. The divisional units which would be designed to cover a convenient geographic area, and to include all of the economic activities in a particular major industry within that area.

The boundaries of the districts would vary from one industry to another. The boundaries of the divisions would be uniform for all industries. The whole world would therefore be partitioned into a number of divisions, such, for example, as: North America, South America, South Africa, the Mediterranean Basin, Northern Europe, Northern Asia, Eastern Asia, Southern Asia and Australia. In setting the boundary lines of these divisions, economic homogeneity, geographic unity, the distribution of the world population and the character of existing civilization would all be called into question. Under such a grouping would fall the agricultural workers of Southern Asia, the transport workers of North Europe, the manufacturing workers of North America.

4. World industrial units, so designed as to include within their scope all of the producers of the world classified in accordance with their occupations.

To-day, the outstanding method of classifying the people of the world is to take them in relation to their political affiliations. The new grouping would arrange all of the peoples in accordance with their economic activities. A simple form of classification would include: agriculture, the extractive industries, manufacturing, transport, trade, housekeeping, and general (miscellaneous) trades. The classification might be made far more elaborate, but for clarity of discussion a simple classification is of great assistance. Every person in the world who performed a useful service would belong to one of these great industrial or occupational groups, and the aggregate of the membership of the groups would equal the aggregate of all the producers of the world.

Under this plan, therefore, each individual would have a series of economic affiliations. He might, for example, be a docker on the French Line at Le Havre (local affiliation); a dock worker in the Le Havre district (district affiliation); a transport worker of North Europe (divisional affiliation); a worker in the transport industries of the world (industrial affiliation).

Since each of the producers in the world would have this series of relations, all of the producers would be grouped together in local, in district, in divisional and in world industrial groups, so that the economic life of the world would present the picture of a completed economic structure very similar to the political structure that has been evolving for many centuries, and which has reached its highest forms of development in such new countries as Australia and the United States, where each person is a citizen in a borough, city or town, in a county, in a state and in the whole nation or federation of states.

While political life has been thus organized about the administration of certain public affairs, economic life has remained disorganized, or has been organized largely with an eye to owners' profits. The producers society will be organized in economic terms very much as the present society is organized in political terms. Each producer will be a participant in the life of economic units, graduated from the local economic unit to the world industry.

9. The Ideal and the Real

This is, of course, an idealized picture, subject to an infinitude of modifications, just as an architect's plan for "a bungalow in the woods" or a city planner's scheme for a model town is idealized and subject to modifications. It is not a working drawing, but a general design which is intended to place the whole subject of economic reorganization on a plane where it can be discussed as a matter of practical social science.

The plan presented here is simplified as far as possible in order that attention may be concentrated on the essential issues that the world faces. Too much time and energy have already gone into contentions over details, when there was no general plan in view. Let no man deceive himself with the delusion that the solution of the world's economic problem is a simple matter, but at the same time, each one who is striving toward a better world may rest with the assurance that there are certain simple and fundamental principles that underlie world economic organization.

Society is structural, and as a structure it must function; the economic world is built up of working units that are compelled, by the nature of modern industry to work co-operatively, but the very nature of the political structure of modern society hampers this co-operative work in many essential directions; federation seems to be the logical answer to the enigma of effective social organization, and it only remains to organize a workable series of economic units and to build them into a world structure—a world structure in terms of production rather than of politics.

The world is sadly muddled. Millions pay for this muddling with their lives; tens of millions pay with bitter suffering. The owners have had their day. The opportunity for the producers has well-nigh come.

The men and women who are responsible for the work that is involved in the economic reorganization of the world must see the whole plan as well as the multiplicity of detail, and must work with the whole plan vividly before their eyes if they are not to be blinded and led astray by the multitude of will-o'-the-wisps that flit across the path.

IV. ECONOMIC SELF-GOVERNMENT

1. Maximum Advantage

Economic society consists of unit groups or organs which are established for the performance of certain functions. Mines and other extractive units take nature's stores from their age-old resting place and prepare them for the railroad, the factory or the home; the transport units convey goods and people; the merchandising units bring together many varieties of goods, and act as a distributing agency for those who will consume the products of mine and factory. The existence of a unit of economic organization is therefore a proof of the presence of some economic function. The whole structure of economic society has developed in response to the economic needs and in accordance with the economic activities of the community in which it exists.

When a part of the economic structure is built, it is expected to function. Mines, when opened, must produce coal; railroads, when completed, must provide transportation. Side by side with the problems involved in the kind of groupings that make up economic society, there is the question of the handling and direction of these groups. No economic institution is of value unless it will perform some useful service by turning out an economic good or by affording a benefit that corresponds to some human need.

Each rational person, and every self-directing social group seeks to get the largest possible return in the form of satisfaction for the time and the energy invested in any given enterprise. This law of maximum advantage—which applies with double force to social enterprises, underlies all intelligently directed effort.

Unintelligent effort concerns itself with the principle of minimum outlay—seeking to ascertain the least possible expenditure of energy that will yield a subsistence. This is one of the essential distinctions between the present day society and most of those that have proceeded it. Likewise it is the difference between the more and the less highly civilized portions of the earth at the present time. The individual or the group—operating on a very narrow margin, or on a deficit that involves constant misery and that may at any time spell disaster, tends to slip by with the least possible misery or suffering, or, to put it more technically, tends to expend the least possible amount of energy that is required for survival. The moment the tables are turned, and the individual or the group operates on a surplus which permits the enjoyment of more than the bare necessaries, the law of minimum outlay is supplanted by the law of maximum returns.

The truth of this principle is strikingly illustrated in Canada, Australia, Argentina, and other relatively new societies where resources are abundant and surplus is large. The same men and women who, under European conditions of narrow marginal living, were satisfied to survive with the least possible expenditure of effort, are transformed into creatures operating on another economic plane. In these new and fertile countries, where the individual, and indeed, the entire group is able to live above the line of bare subsistence, and where surplus is so easily accumulated, the individual devotes himself untiringly to the economic struggle. It is not because they are poor, but because they have a chance to get rich that these people are willing to expend unusual effort.

Just as the individual, working on a basis of economic surplus, directs his energies to the task of insuring and of increasing the surplus, so the group, which has a similar economic advantage, devotes itself to the task of building up a surplus as soon as it realizes the possibility of increasing its returns through an increase in the energy and intelligence devoted to group purposes.

The personal comfort and the industrial prosperity of temperate zone civilizations depend, at the present moment, in great measure upon the supply of coal which is available. Certain parts of the earth, such as Wales, the Saar Basin and Newfoundland contain coal deposits upon which the entire industrial society is dependent for its survival. It is, then, a matter of the gravest importance to secure a maximum coal output, at least to the point of satisfying the minimum demands of the community. Whatever men and machinery are required to produce the ration of coal upon which industrial efficiency depends must be directed toward that goal. At the same time, waste, inefficiency and dis-employment, whether of men or of machines must be reduced to a minimum.

What volume of production constitutes a maximum of return under a given set of circumstances, experiment alone will decide, but the individual and the social effort to secure this return must be unremitting.

Such maximum returns will be obtained by society when each productive unit is operating at maximum efficiency. The efficiency of the human body depends upon the efficient operation of the digestive system, the respiratory system, the circulatory system, and so on. The stomach, the lungs, the heart must all function smoothly to maintain bodily health. The body cannot function as a body. It functions through the aggregate activities of its various organs. The same thing is true of a society. It is impossible for the economic system to secure its maximum returns as a system. It will work only through the co-operative functioning of its various constituent elements. If the efficiency (health) of the economic system is to be preserved, it will be accomplished through the effective working of the mines and other extractive units; the mills, and the other fabricating units; the railroads and other transport units. Each one of these constituent elements of the whole economic society must be self-efficient, in order that there may be a high standard of efficiency in the entire economic system.

The units of which the economic system is composed must therefore be self-motivating and self-acting. They must be "alive." If one part of the economic body is dead, the whole will eventually disintegrate and decay.

2. The Essentials for Maximum Returns

The efficiency of the economic unit—the mine, the factory, the railroad division—depends upon the attitude of the individual human beings of which the unit is composed. Just as the entire economic system is made up of an aggregate of functioning units, so each unit is made up of functioning individuals. What would a coal mine be without its pick miners, road men, drivers, door-men, dumpers? The efficiency of the economic unit cannot be maintained unless the individuals who compose it are self-acting, intelligent beings, who know what they want and why they want it; who know the ends they desire to attain and how to reach them. Without this beginning there can be no lasting efficiency in a society that is dependent for its success upon the self-generated activity of autonomous groups.

In order that society may enjoy a maximum of return for its outlay of labor and machinery, therefore:

1. The human values present in each economic unit must be maintained at a high level through an appeal to the finest qualities of the individual human being.

That appeal must be strong enough and constant enough, when coupled with the economic appeal, to provide a reason or incentive for continued activity.

2. The integrity and permanence of the unit must be preserved.

The economic unit is one of the tools with which society does its work, and is the means relied upon for the production of livelihood. Like the axe of the woodsman or the lathe of the mechanic, the social tools and machinery must be kept in effective working order if society is to receive a return for its outlay of labor and materials. Three items enter into the maintenance of this efficiency: (a) current repairs, (b) periodic rebuilding, and (c) ultimate replacement. This is as true of any part of the social structure as it is of mechanical devices. The more complicated the structure the more necessary are rebuilding and replacement.

3. The productivity of the unit must be kept up to a high level of efficiency.

This is the purpose for which the unit exists. Efficiency is the product of the individual activity of the group members, and of the working effectiveness of the mechanism with which they accomplish their tasks. Thus both are essential to efficiency in production.

4. Self-motivation and co-operation are the two fundamentally important requirements in the working of all economic units.

The former is the best guarantee of the continuous functioning of the unit. The latter links together the different units, making them working parts of the whole economic system.

Here are four indispensable requirements—the maintenance of human values, the preservation of group integrity and permanence, productive efficiency and self-generated activity—for the building and successful continuance of economically sound unit groups. If society is to secure maximum returns, if the economic mechanism is to yield its largest quota of goods and services to mankind, the units out of which society is built must meet these requirements which constitute four of the essential pre-requisites to the success of any economic experiment.

3. Centralized Authority

Granted the desirability of efficiency in economic organization, the question at once arises as to how this efficiency is to be guaranteed. Up to this point the means adopted to secure such an end have consisted in concentrating economic authority in the hands of a small owning and managing class, and in leaving with the members of this class the determination of policy and of methods of procedure.

The concentration of administrative authority at one point has proved impracticable, first because of the great amount of red tape involved in the handling of the endless detail, and second because of the resulting destruction of initiative and enterprise. Such a centralization of social function would be just as cumbersome as a like centralization of all bodily functions in the higher brain centres. If men were compelled to reason about and to direct each step, each movement of eyes or hands, each breath, each heart-beat, the attention would never pass beyond the boundaries of such pressing and never-ending routine. Many bodily organs, like the stomach, function involuntarily. Walking becomes habitual. It is only when the stomach and the legs fail to work properly that they become the objects of attention. The same thing should be true of a well-directed economic system. Each local unit should function locally and autonomously, and the problems of local function should never come to the attention of a more central authority until there is some failure to work on the part of the local unit.

Those who despair of the future of society, and who feel that effective co-operation between social groups is impossible, should remember that the organs of the human body have been gaming experience in co-operative and harmonious function for hundreds of thousands or for millions of years, while the organization of society is an art that is still in its extreme infancy. The astonishing thing about the various social groups is not that they work so badly together, but that they work so well.

As the centralization of authority increases, the amount of red-tape piles up until more social energy is consumed in overcoming social inertia and the friction that is the result of social function, than is produced by the function in question. When this point is reached, the social machinery operates at a constant loss, and it is only a question of time when it will cease to operate altogether, and the social machinery will begin to disintegrate into its constituent elements. The greater the degree, therefore, of localization, provided the mechanism can be held together and kept in working order, the less the loss in social energy.

4. An Ideal Economic Unit

The social group thus faces two problems: One is the development of sufficient energy to keep the social machinery going. This problem is tied up with the stimulation of human wants, as it is only from the aroused energies of men and women that the social energy is derived. The other is the reduction of social friction and other forms of social waste to a minimum, in order that the largest possible amount of social energy may be devoted to the work of driving society.

The present social order relies, in part, for its driving power on man's desire for personal economic advantage. Where the rewards have been considerable, large amounts of energy and ingenuity have been developed as the result of this stimulus. The worker, the manager, the whole producing unit strove to excel, both because failure carried with it the penalty of destruction (bankruptcy or unemployment) and because success carried with it the probability of large economic rewards (profits). The result was an outpouring of social energy in the various independent local groups.

The real difficulty inherent in the earlier stages of the present order was not its failure to secure abundant human exertion, but its failure to provide any means of co-operation between individuals and between groups. The same set of social principles which decreed local rewards and local punishments for initiative and enterprise, or for the lack of them, was built upon the theory that "competition is the life of trade." Thus, while the present economic system, in its earlier stages tended to stimulate initiative, its form made co-operation difficult or impossible.

The ideal economic unit would be one capable of generating its own driving power, and given a legitimate exchange of commodities and services with other units, one that could maintain its own energy and efficiency. A society composed of such units would have great vitality because its energy would be generated in a large number of more or less independent localities. A study of the agricultural village of Central Europe or of the Mexican Indians shows how workable and how stable such a form of society really is.

The only practicable method of maintaining efficiency and of reducing the friction incident to social function is to erect a form of local self-government that will make possible both the stimulation of initiative and effective co-operation between groups.

5. Rewarding Energy

The issue of economic self-government resolves itself into two questions, which the average human being will sooner or later ask:

1. What do I get out of it?

2. Who is to be the boss?

The intelligent man or woman cannot be expected to exert himself freely for the building of a palace at Versailles, on whose grounds he can never set foot, or for the maintenance of a Palm Beach that he sees only on the screen. The economic necessities are too immediate and the economic urge is too strong.

Before the individual will expend his maximum energy upon the economic process, he must see tangible results such as bread, shoes, schools, and holidays. One of the strongest arguments that the present economic system advances in favor of its continuance is the showing of large tangible returns in the form of economic goods. To be sure these results have not been secured by everyone, but there is neighbor Pitt who started as a stable boy, and who now owns the largest garage in the city; there is neighbor Wallace who began life as a grocery clerk and to-day is master of many acres of coal and timber. Besides, yonder store is filled with the good things of life, ready for anyone who has the money to buy them. Many persons, under the present system, make enough to buy all of them and others beside. So the argument runs, and those who advance it can give a wealth of instances to prove the point.

The huge rewards of the present system even though they have gone to the very few, have been turned over to those who could survive in the struggle. Everyone knows that the winners in a lottery are few and the losers many, yet each buys a ticket because he hopes and expects to be one of the winners.

Society, as reconstructed, must be less of a gambling venture and more of an established certainty, with the material rewards going to those who are responsible for producing them. And each person who thus shares in the economic rewards of society must see the connection between the energy expended and the share received. Only while such a connection apparently exists will economic effort be expended by the normal individual.

6. The Ownership of the Economic Machinery

The individual cannot be expected to exert himself where there is no apparent connection between the effort expended and the return for his effort. Neither can he be expected to exert himself in the interest of economic machinery that belongs to someone else. His interest can be maintained only by the hope of a return for the effort that he expends, and by a sense of control over the job on which he works. Among the various experiments that society has tried, in an effort to attain these ends, none has been more successful than self-government.

The application of the principle of self-government to the economic world involves the control of economic machinery and economic policy in each unit by those who compose the unit. The members of each economic group must be supreme in their own field, except in so far as their decisions affect the welfare of other units. In such cases the decision must rest with that larger economic group to which the involved economic units belong. Thus the aim of economic self-government is to keep the responsibility centered upon those who would normally be the most concerned in getting results.

All matters of policy will therefore be decided by those individuals or groups that are directly involved. Where possible such decisions should be reached in open meetings corresponding to the tribal council or the town meeting. Such meetings may always be held in local economic units, such as collieries, departments of factories and the like. Where it proves impossible to get the members of an economic group all into one meeting place, their affairs must necessarily be transacted by representatives, chosen as directly as possible.

7. Economic Leadership

The decisions having been made with regard to matters of policy, the next and equally important question arises: "Who shall be entrusted with the duty of seeing that policies once decided upon are carried out? Who shall be entrusted with leadership in economic affairs?"

Those who are entrusted with the carrying out of economic policy in a producers' society may be divided, roughly, into two classes: the executive and the expert. The executive is the director of general policy. The expert is the specialist, selected to do a particular piece of work. For example, the representatives of District 2, United Mine Workers of America decide that, as a matter of general policy, they will advocate the nationalization of the coal mines, and they instruct their president and their executive board accordingly. The executives of District 2 are therefore charged with the duty of organizing a propaganda, which, to be effective, must consist of a well-ordered summary of facts about the coal mining industry, put in a form that can be easily understood by the average man, and distributed in such a manner that it will reach the people responsible for coal mine nationalization. Here, then, are three distinct tasks: (1) an investigation of the facts; (2) a plan for nationalization; and (3) an advertising campaign. The first two of these tasks, to be well done, must be placed in the hands of engineers, statisticians and mine experts. The third will fall to the lot of an advertising or publicity man. The president of District 2 is an executive, charged with the duty of seeing that a program of mine nationalization is carried forward. The engineers, statisticians and advertising men that he secures to do the work in their respective fields are experts. These distinctions have been well established in the world of government and of business, and they are rapidly finding their way into the world of labor.

There can be no great difference of opinion about the expert. He is a technically trained man, and as a chemist, an electrician, or as an auditor of accounts he has a special field in which he is supposed to be a master craftsman. The selection of such an expert, therefore, is a question of finding men with the knowledge and experience necessary for the doing of a certain piece of work.

8. The Selection of Leaders

The situation is far more complicated when it comes to the selection, of the executive. He is the keystone of the social arch—the binding force that holds the various parts of the group apart and together. Upon his decisions may depend the success or the failure of an entire enterprise, because, tie him with red tape as you will, he still has a margin of free choice in which he registers his success or failure as an executive.

The executive is put in office to do the will of a constituency and to carry out a certain policy. But what is the will of the constituency, and which one of a half dozen lines of action will most completely and effectively carry out the policy in question? The executive must find an answer to those questions, and he must find it hour after hour and day after day.

Society has striven for ages to devise a successful method of picking executives, and of keeping a watchful eye on them after they assume the reins of government. There are three general ways in which the selection may be made:

1. Through heredity—the leadership descending from one generation to the next in the line of blood relationship.

This is the method practiced in all countries that have kings, aristocrats, plutocrats or others who automatically inherit power from their ancestors.

2. Through self-selection—the leadership being assumed by those who are the quickest to seize it.

Primitive, disorganized or unorganized societies or associations pick their leaders in this way. The strongest, the most courageous, the most cunning, press to the front in an emergency, and their leadership is accepted as a matter of course by those who are less strong or courageous or cunning. The leaders of a miscellaneous mob are apt to be thus self-selected. The leaders of new activities, like the organized business of the United States and Canada, have been, for the most part, self-selected. Seeing opportunities for economic advantage, they have grasped them before their fellows realized what was happening. The great accumulations of economic power that were made in this way during the past generation are now being passed from father to son, and the leadership in American economic life is therefore tending to fall into an hereditary caste or class. There is still, however, a considerable margin of self-selection of American economic leadership.

3. Through social selection—the right and duty of leadership being assigned by the group, after some form of deliberation to a designated individual.

This is the method common to all highly organized and self-conscious societies that are not dominated by a system of hereditary caste rule. Public officials in most of the countries of the world, officials of trade unions and other voluntary associations are usually selected in this manner.

The selection of executive leadership in any organized society must be through heredity or through group choice. Self-selection is necessarily confined to new or temporary or loosely organized groups.

9. The Details of Organization

These general principles of economic self-government may be applied to local, district, divisional and to world economic groupings. To be sure the application, in each instance, will be varied in accordance with the peculiar needs in question, but a general scheme of procedure may be suggested somewhat as follows:

1. Suggestions for the organization of a local economic unit in a given industry—a mine, factory, store—

a. The entire working force would meet at regular intervals, in a shop meeting, or colliery meeting, or store meeting, to transact general business.

b. At such a meeting a shop committee selected by those present, would be charged with the responsibility of directing affairs in the shop that had selected it. The shop committee would consist of a small group, varying in size with the size of shop, under the chairmanship of a person selected by the workers at the same time they elected the committee.

c. This chairman of the shop committee would be called the shop chairman. His duties would correspond roughly with those of the present-day foreman, or with those of the shop-steward or shop chairman in some of the more advanced of the British industries. In reality this shop chairman would be the shop executive, holding office while he could retain the good will of his shop-mates, and while he could give a satisfactory account of his shop in the way of production and discipline.

d. Where there were a number of departments in a large factory, store or other establishment, there would be a plant committee made up of the chairmen of all shop committees in the plant.

e. Where plant committees were organized, it would be their duty to designate one of their members as chairman. This plant committee chairman would therefore be what, under present conditions, is the general manager of the plant, with his fellow committeemen as his executive committee or board of managers.

f. Each economic unit, whether shop or plant, would have its engineers or experts, picked, like other workers, by the shop committee or the plant committee, and responsible to that committee for the particular tasks assigned to them.

All participation in the activities of this basic economic unit—hiring and firing as it is called—would be determined by the shop committees and by the plant committee, each with final local jurisdiction, subject, of course, to a referendum of the workers in the department or the plant concerned. By this means, the members of each basic economic group would be made the sole judges as to those with whom they should work. Each group would therefore have an opportunity to set its own group standards and to build up its own group spirit.

The individual worker, in order to secure a job, or work place, must therefore subject himself to the scrutiny of his prospective shop-mates, perhaps even to work for a time on probation, and this to prove his fitness to join the group and thus to participate in its activities.

Such a plan would provide a self-governing and self-directing economic unit, capable of adaptation to the various phases of economic life, and at the same time capable of generating its own social steam, and thus driving itself forward on the path of its own activities.

Farming, hand-craft industries, and other occupations in which the worker owns his own tools, and is worker, manager and business-man combined, would be forced to organize a local unit more nearly approximating the medieval guild or some of the modern organizations for producers' co-operation. The general principles of organization would be the same in the one case as in the other, power and control being held locally by self-directing, autonomous groups.

This plan for the organization of a local self-governing economic unit represents an attempt to apply the best principles of economic and political science to the working out of an intelligently directed society.

2. Suggestions for the organization of an economic district in a given industry.

a. The district would consist of a number of economic units in the same or in an immediately related field of industry. For example, it might be formed of steel mills alone, or of machine shops and steel mills, or of machine shops, steel mills, and foundries. The decision on the matter of membership in the district would rest, first with the local economic units that united to form the district, and second, with the industries immediately concerned. The purpose of the organization would be to link together those economic units that were most dependent upon one another, and that therefore had the most interests in common.

b. When formed, the organization would apply for recognition to the divisional organization of its particular industry. If the district comprised manufacturing industries, it would apply to the divisional organization of the manufacturing industries; if the district comprised coal mines, it would apply to the divisional organization of the extractive industries. It would be to the interest of the divisional organization to recognize only such district organizations as did not involve the divisional organization in jurisdictional disputes.

c. After securing recognition from the divisional organization, the district organization would be the judge of its own membership, and would be in a position to add such local economic units as were to its advantage in pursuit of its general policy.

d. The control over the affairs of the district would be in the hands of a district committee, elected directly by the workers of the district, each group of workers voting by ballot in its own shop.

A. When the elections for membership of the district committee were held, the members of the plant committees, or of the shop committees where there were no plant committees, would be the candidates. By this means, only those of recognized standing in a local group could become candidates for the higher offices. At the same time, the local group, when it elected to local office would be nominating for higher office.

B. When a plant committeeman was elected to the district committee, his position in the plant committee would be filled by special election.

e. The district committee would be a large body, consisting of at least one representative from each of the plants or shops in the district.

f. The routine work of the district committee would be handled by the district executive committee, picked by the district committee from its own membership, and responsible to it as a board of managers.

g. Each district would have its staff of engineers, experts or inspectors, whose duty it would be to check up on the technical side of the activities in the district, very much as a county agricultural agent or a district sales manager checks up on the work of those who come within his jurisdiction. These experts would be selected by the district executive committee, subject to the approval of the district committee.

h. Where possible, important issues confronting the district would be brought to the attention of the workers in the district through one or a series of mass meetings. Where this proved to be impossible, newspapers, leaflets, and other forms of printed information must suffice.

i. The district would therefore be a self-governing group of economic units, engaged in activities that fell within one of the main divisions of industry. It would be the judge of its own economic affairs and would be autonomous in all matters affecting only the district.

3. Suggestions for the organization of a geographic division within a given industrial or occupational group.

a. The division would consist of a convenient geographic area, in so far as possible contiguous and closely bound together by transport facilities, related economic interests, etc. North America, South America, South Africa, and Mediterranean Basin, Northern Europe, Northern Asia, Eastern Asia, Southern Asia, and Australia might be agreed upon as such divisions.

b. The organization of the division is, in the main, a replica of the organization of the district, with two exceptions:

A. The scope of the organization is limited geographically to the division in question, and covers all of this division, whereas the district organization includes a group of local economic units, which are not necessarily contiguous, and are in no particular geographic relation to one another. While the district organization is strictly industrial, the divisional organization is industrial and geographic.

B. The organization is definitely limited to the major occupational groups, each of the groups covering the whole of the division. Hence there would be, in each division, a division organization of transport workers, a division organization of agricultural workers, a division organization of those engaged in manufacturing and so on, making a divisional organization for each of the major industrial groups. A district might comprise only one branch of an industry such as textile manufacturing or electric transport. All of these districts would be included, however, in the particular divisional organization with which they would logically affiliate. Thus there might be a district organization for the textile workers of Lyons and vicinity, and another district organization for the metal workers of St. Etienne and vicinity. Both districts would be included in the divisional organization of the manufacturing industries of the Mediterranean Basin.

c. The control of each industry within a division would be vested in a divisional congress, elected directly by all of the workers in the division who were engaged in that industry.

A. The members of this congress would be elected by districts, with a minimum of at least one member from each district, and an additional member from each district for each additional quota of workers over a specified minimum. The details would necessarily vary with the division, but if there were 100 districts in a division, with a million workers in all of the districts, each district might be allowed a minimum of two members in the divisional congress, with one additional member for each 5,000 workers in excess of 10,000. Under such an arrangement, a district with 25,000 workers would have five representatives in the congress, and so on.

B. The members of the district committees are the candidates for election to the divisional congresses.

d. The divisional congress meets at least once in each year, and within thirty days of its election.

e. The divisional congress picks from its own membership a divisional executive committee, which meets at intervals through the year, and is responsible for the affairs of the division when the divisional congress is not in session.

f. The divisional congress selects from its membership a divisional executive board which sits constantly. Its members are members of the division executive committee, and it is responsible to the division executive committee when the division congress is not in session.

g. Each divisional executive board picks a staff of experts or engineers, who are approved by the divisional executive committee, and who constitute the technical general staff of the division.

4. Suggestions for the organization of a general industrial group on a world basis.

a. The general industrial group, or general occupational group, would be a major subdivision of the world's industrial life. All of those producers who were engaged in like activities would be classed together, and the number of these world industrial groups would be determined as a matter of administrative convenience. The producers of the world might, for example, be divided into the following major industrial groups: agriculture, the extractive industries, manufacturing, transport, trade, housekeeping, and general (miscellaneous) workers. Some such economic grouping of producers would include all who are employed in producing goods and services and would provide the basis for an alignment of the world's population in terms of what the producers did rather than in terms of where they lived.

b. Thus far, in the detailed statement of local, district and divisional organization, only the barest outline has been given, first because it was the intention to discuss the world economic problem rather than the local problem, and second because the internal structure of each industry would be determined largely by that industry, and would, of necessity, vary considerably with the varying industrial conditions. The organized world industries, however, are the economic framework of the producers' society, and their organization becomes a matter of the most supreme concern to producers everywhere.

c. The control of affairs in each of the major industrial groups would be vested in a congress of from 500 to 1000 members, meeting at least as often as once in each January.

A. The members of the divisional congresses, within these same industrial groups, are the candidates for election to the world congress. They are voted for directly by the workers in each division, and if they are elected to the industrial congress, the places thus made vacant in the divisional congress are filled by special election.

B. Each division would send a minimum of twenty members to the industrial congress, and an additional member for each specified quota of workers.

d. The industrial congress would pick an executive committee from its own membership. This committee would meet at regular intervals, and would be responsible for the conduct of the industry when the industrial congress was not in session.

e. The congress would pick a number of additional committees to deal with the various problems arising within each industry. These committees might be called policy committees. In practice, and for the sake of greater effectiveness, it might be desirable for the industrial congress to select a chairman, permit him to pick his committee from the membership of the congress, and then endorse the whole committee, very much as a minister in a responsible government picks his cabinet. Since these committees would be concerned with problems of policy on one side and with problems of administration on the other, such a method would develop a far more harmonious working group.

f. The chairmen of these various policy committees together with the chairman of the executive committee would constitute the board of managers of the industry, which would be the responsible directing authority for the world industrial group.

g. Connected with each of these committees, and selected by them, there would be a board of engineers and experts, responsible for the technical side of the industry.

A diagram may help to visualize the relations existing between the various parts of the world organization. (p. 98.)

10. The Progress of Self-government

This outline of the organization of one of the major world economic units is tentative and suggestive rather than arbitrary or final. The details of the plan would necessarily vary from one industry to another and from one district and one division to another. All such matters of detail would be subject to the decisions made by the district committees, by the divisional congresses and by the world congress of each industrial group.

The aim of the plan is to build up an economic structure that will be efficient and at the same time sufficiently elastic to meet the changing needs of the times. Production is always necessary, but the methods vary from one age to another. The changes which occur in the economic activities of a population must find their counterpart in the changing economic structure of that community, otherwise disorganization and chaos will inevitably result.

The means best calculated to preserve the efficiency and to guarantee the mobility of the economic life of the world is self-government. No other known means of directing and controlling social affairs will secure permanent results, either of efficiency or of mobility.

PLAN FOR THE WORLD ORGANIZATION OF ONE INDUSTRIAL OR OCCUPATIONAL GROUP

Self-government is present to some degree in every form of society of which there is a record. Under some circumstances it is confined to one caste or class. Again it is the right of the whole society. In one place it is confined to political affairs alone. In others it is present in all public activities. Everywhere, however, there is self-government of some kind.

Recent generations have devoted their attention to the fostering of political self-government, and to the organization of a multitude of voluntary associations based on the self-governing principle. Generation by generation the peoples have been prepared to assume an ever-increasing authority over the complicated mechanism of public affairs. Self-government in the clan or in the agricultural village was a simple matter compared with the management of public affairs in a modern economic society. It is this task, however, that confronts the present generation. The principle of self-direction, extended into the complex field of economic relationships, must be relied upon to pull together the scattering threads of economic activities. That this task involves an immense amount of propaganda and educational activity, goes without saying. That it is the only sound basis for social procedure seems to be the conclusion inevitably arising out of a careful examination of the premises.

The organization of sound economic groups is a problem in the field of social engineering. The preparation of the industrial populations for economic self-government is a problem in the field of education. Both of these problems lie at the root of any effective reorganization of the world's economic affairs.

V. A WORLD PRODUCERS' FEDERATION

1. World Outlook

An organization of producers into groups corresponding with their occupations lays the basis for world thinking and world federation. Each active member of society would then be directly associated with a group that was world wide in its scope, so that transport workers, miners, farmers and other producers would be in constant touch with similarly occupied men and women on every continent.

One of the principal disadvantages of the present organization of society is the sectionalism arising out of the political divisions established by national boundary lines. In a world where all of the producers were organized along lines corresponding with their occupations, sectionalism would have much less chance to play a rôle in the lives of the people. To be sure issues would arise between the various economic groups, but each individual would be affiliated with a world organization, and the scope of his interests and of his thinking would therefore be much broader than it is under the present system of political divisions. World thoughts and world views on a hitherto unknown scale would be the logical outcome of world economic affiliations in producer groups.

The organization of society along the lines of production will therefore necessarily broaden the outlook of those whose visions are now limited by the confines of a political state, and the present ties of loyalty which bind the individual within a geographic area would then attach him to a world organization and would compel him to think in world terms. That there are limitations imposed by the affiliation of the individual with an economic group cannot be denied, but such limitations are far less drastic than those prescribed by restricted geographic areas.

2. The Need of Organization

The organization of society in terms of economic activity, building up through intimate local units, through district and divisional units to world organization within the major industrial groups does not provide any basis for effective co-operation between the individual groups. The metal workers of the world might produce machinery and the farmers wheat, but by what means are they to exchange their product and regulate their output in a way to secure the maximum of advantage on both sides?

There are two outstanding characteristics of present-day economic life. One is its world scope. The other is the intimate and constant inter-working of the various parts of the economic machine so well described by J.A. Hobson in his book on "The Industrial System." Agriculture, mining, transportation, manufacturing and so on are all linked into one functioning mechanism. To be sure there are times when the machine does not work very well—as after a great economic depression, but the purpose is there, the intermittent working harmony of the mechanism is unquestioned, the experience in world economic activity is a permanent part of the heritage of the race, and there remains only the task of making world economic relations more effective and more permanent than they have been in the past. The ice has been broken in the sea of world economic life and the human race has already taken many a plunge in its waters.

Under any form of society that can be foreseen in the immediate future, the need of close co-operation between the various parts of the world economic mechanism will tend to increase rather than to diminish, and it is therefore of great importance to have at hand a means of maintaining and facilitating the contacts between the different economic groups.

The present system has given economic life an exceptional opportunity to grow within the boundaries of single nations, and to co-operate within those areas that are not sacred to competition. Meanwhile the need for world co-operative organization has grown steadily with the evolution of economic life on a world plane, fostered by some of the clearest visioned among the men who are responsible for the direction of the economic world.

3. Present-day Economic Authority

Under the present system of society the linking together of the various parts of the economic world is a private matter. Mines, factories and mills use the railroads as a means of transporting their products. The intermediary in this as in other transactions between the various branches of the economic world is the bank. Thus the banker, who provides the credit, and through whose private institution financial transactions take place, becomes the arbiter of economic destiny, rendering decisions upon which the well-being of the masses or producers depends, yet wholly irresponsible for the results that follow on these decisions. Using the people's money, possessed of vast authority over the jobs and the property of the producers, the banker is answerable only to other financiers who have a similar power and who enjoy a similar freedom from social restraint. Within the scope of the law prohibiting fraud and theft, and subject to the limitations of conscience the bankers and their confreres follow the dictates of their own inclinations. Quite naturally, under the circumstances, they have grown rich, and powerful far beyond the extent of their riches, since their control of the credit—upon which the whole business community depends—and their easy access to other people's money in the form of insurance premiums and savings bank deposits, place them in a strategic position which permits them to dominate and to dictate outside the boundaries of their ownership.

The power now exercised by the bankers will, in a producers' society, be under the control of public servants whose business it will be to link up the various lines of activity within the economic machine.

At one stage in the development of the world's economic life it was necessary to take out of the hands of private individuals the right to issue money, and to make of money issue a public function. To-day no one questions the desirability of having money issued by public authority, and the right to issue money is recognized as one of the important attributes of sovereignty.

Meanwhile there has been a change in the character of the medium of exchange. Credit and not money is employed to adjust most of the relations between economic groups. In 1920, for example, the total amount of money in circulation in the United States, including gold, silver, and all forms of paper money was only 6,088 millions of dollars, while the bank-clearings—that is, the exchange of checks between banks—totaled 462,920 millions of dollars. If to these figures are added the volume of checks drawn and accepted on the same bank, the amount of commercial paper discounted, etc., some idea may be obtained of the importance of credit transactions as compared with the use of cash under the present system. Nevertheless, while the right to issue money has become a public function, the right to issue credit remains in the hands of private bankers.

Under a producers' society, the relation between the various groups of producers will be maintained through a system of book-keeping that will charge against each economic group what it uses in the form of raw materials, machinery and the like, and will credit each group with the value of its product. Such a system is in vogue in any large industrial plant, where each department keeps its own accounts, charges the other departments with what they get from it and credits them with what they receive. The whole is handled through a central book-keeping system. The principle of social book-keeping is not new, therefore, but is an essential link in any large and complex economic organization. It merely remains to apply the principle to producers' groups instead of to the affairs of a private banker or to the book-keeping system of some great industrial trust.

How shall a joint control be exercised by all of the producers' groups over those economic activities, such as the handling of credit, or social book-keeping, that affect more than one of them? The obvious answer is that they can be transacted through some organization in which all of the groups participate on a footing of economic equality.

Common, interests will sooner or later compel common action, or action through a joint board. The point has been reached in the economic history of the world where some such common action of the producing groups is vitally essential to their continued well-being. The logic of economic development is compelling men to turn from the owners' society of the present day to a producers' society, organized by the producing groups and functioning in those cases where the single group of producers finds effective function impossible.

4. Federation as a Way Out

Experience has shown that the best way to secure co-operation among a number of groups having more or less divergent interests is through a federated or federal system of organization, under which each of the constituent groups retains control over those matters which relate exclusively to the affairs of that group, while all matters affecting the well-being of two or more groups are handled through the central organization or federation.

The United States of America is an association of sovereign states, each of which retains the right to decide those matters which are of importance to that state alone, while all questions of interstate concern are automatically referred to the Federal Government. At the same time, matters of common concern to all of the states such as the coinage of money, relations with foreign governments, the regulation of commerce with other nations and between the states, and the like, are also under exclusively federal jurisdiction. By this means, those questions which are of local moment may be settled within the state in which they arise, while all questions affecting the interests of more than one state, and those having to do with the common interests of all the states, fall within the jurisdiction of the Federal Government.

The organization of business has followed similar lines of federation. During the early years of capitalism there was a strong tendency to concentrate all of the power of a given business at one point, and in the hands of one man. With the growth of large enterprises, however, such centralization became unworkable. Instead of a single generalissimo, business organized the general staff. The corporation with its board of directors (executive committee) helped to make the transition, and when the United States Steel Corporation was formed, at the peak of the period of American trust organization, its constituent companies were given large scope for individual initiative and activity. The tendency toward departmental autonomy in large businesses is also very marked. Bitter experience with "one man" concerns and top-heavy organizations convinced business men that the road to success lay along the path of federated autonomous units rather than of highly centralized bureaucracies.

The labor movement has had the same experience in many of the more advanced countries of the world. There has been almost a century of local, independent groups, each one acting on its own initiative. The failure of such a divide-and-perish course was predicted from the beginning. Then there have been highly centralized organizations of considerable extent and power, like the American Knights of Labor, which flourished for a time and then dried up and blew away. But out of the hundred years experience, the labor movement, as at present organized in Germany, Britain, Belgium, the United States, etc., is an exponent of the social principle that local autonomy must be preserved in all local matters, while questions of general concern must be referred to some general body which represents the general interest.

One of the most insuperable difficulties before the world at the present time is the lack of any central authority to which may be referred those matters of general and vital concern that affect the peoples of more than one nation. The peoples feel this lack. They are aware of the fact that industry, science, commerce, art, literature have all leaped the national boundary fence. This is particularly true of Western Europe, whose economic life is closely interwoven, and dependent on certain centers of coal and iron production, and whose political boundaries were determined before the present economic system was dreamed of. The importing of food and of raw materials, the development of markets and of investment opportunities, the organization of means for the transport and the exchange of commodities are matters of common concern to all of the important countries of Western Europe. Before the outbreak of the world war, Europe was an economic net-work of transport, finance and trade, and as a matter of course, communication and travel were common between all of the industrial countries. But while there were so many matters of common concern to Britain, France, Germany, Russia, Austria, Belgium, there was no central authority to which these questions could be referred for decision when the threads of mutual interest became tangled. Instead, secret and competitive statecraft made the tangle worse. The mass of conflicting jurisdictions and of petty jealousies that have grown up among the two score of independent and sovereign states of Europe made a conflict almost inevitable.

Under a federated system of the European states, civil war would be possible, but the chances of a conflict would be greatly lessened by the presence of a central authority before whom questions of divergent interests could be publicly threshed out. For when issues arise between organizations of equal and parallel jurisdiction, a conflict can frequently be avoided if there is some commonly recognized and superior authority before whom the points in dispute may be laid, and whose decision will prove binding on both parties.

What is so obviously true of Europe is also true of the remainder of the Western world, though to a lesser degree. The economic, social and cultural life of civilization has passed beyond national boundaries. Until this fact is recognized, and until some organization is created with a jurisdiction as wide as the problems at issue, misunderstanding, conflict and catastrophe will continue to occur.

5. Building a Producers' Federation

The first step in economic reorganization is the recognition or establishment of local district, divisional and world groups of producers affiliated along the lines of their economic activities. This is a simple acceptance, in social terms, of the economic forms that have been evolving since the industrial revolution.

The second step in economic reorganization is the recognition or establishment of local, district, divisional and world federations of the local, district, divisional and world industrial groups. This second step must be taken in order that there may be some authority competent to deal with those problems which are common to two or more of the groups in question.

There are two general types of problems that the federations of industrial groups will be called upon to handle:

1. Those problems involving inter-relations between the various producing groups, such as the factory workers, transport workers, agricultural workers and the like, that must exchange their products and receive from one another the materials upon which existence depends.

2. Those problems which are common to all producing groups simply because they are common to men and women who are trying to live and to function together. The water-supply, roads, education, are questions of this type.

Problems of the second sort, and the issues raised by them, cannot be entered upon at this point. The same federal authority that is charged with the control over inter-industrial problems will likewise charge itself, in each instance, with these common questions not immediately related to industry.

This is not an attempt to under-estimate the importance of non-industrial problems, but to confine attention, for the moment, to matters directly related to production, with the conviction that when a mechanism is developed capable of handling the industrial problems there will be less difficulty in taking care of those not so closely related to industry.

6. Four Groups of Federations

The issues arising between industrial groups, and those problems common to all groups, will best be handled by federations having a jurisdictional scope parallel to that of the separate groups of which the federations are composed. If these component groups are local economic units, the federation will be local in character. If they are district economic units, the federation will have a district as its sphere, and so on. By this means, there will be created a series of federations or joint organizations, beginning with the federation of local economic units, and ending with a federation of world industries. Throughout this enlarging series of federations the principle of local autonomy will be maintained in all of its rigor, and no matter will be referred to a federation that can be handled by a local group. At the same time, the principle of federal authority will be asserted, and those matters that concern the welfare of more than one group of parallel jurisdiction, will be referred automatically to the federal authority under whose control the group in question falls.

The most elemental of the federations would be the local producers' federation, which would correspond, quite accurately, to the town or the city of the present day, save that its size and character would of necessity be much better regulated than the character and size of the present-day town or city. The modern city has been built as a profiteer's paradise. From the construction of houses to the erection of office buildings, the one foremost question: "What per cent will it yield?" has been the guiding principle behind city construction. The local industrial federation will have, as its chief task, the provision of a living and working place for people, hence the character of the industrial community will be determined with a view to the well-being of the inhabitants rather than to the profit of landlords.

The local federation would be under the control of a local council, the members of which would be elected by the producing units or groups composing the local federation, very much as the modern city is managed by a council elected by wards or aldermanic districts. Except for the choice of representatives on the council by occupational groups, rather than by geographic divisions, the local federation would closely resemble the municipal government of the present day. In addition to its present functions, however, it would assume the task of dealing with issues arising between two or more of the local producing groups. That is, it would have economic as well as political functions, although it would not necessarily carry on any more productive enterprises (gas, water, house-construction, abbatoirs) than do municipalities at the present time.

The local producers' federation would be responsible for two chief lines of activity. On the one hand, it would seek to maintain working relations between the various local economic groups by adjudicating those local questions that affected two or more of the groups. On the other hand, it would take charge of, and administer, those matters of common concern, such as the water supply, the local educational institutions, and so on. This second group of functions would be similar to those now performed by the city council, the board of health, the board of education.

There would be a local producers' federation wherever a number of local industrial units agreed to function together. Counties, cities, boroughs, and school districts are, at the present time, organized very much in that way.

The local producers' federation would therefore differ little from the existing local groups, such as towns and cities, save that its constituent elements would be occupational groups rather than geographic divisions, and that it would be functioning in the economic as well as in the political field.

The second series of federations might be called the producers' district federations. They would include all district industrial groups within a given economic field. Such a district federation would correspond, roughly, to the present state as it exists in Mexico or Australia, or to the provinces in Canada.

The district federation would function in three ways. First, there would be the issues arising between the industrial organizations that composed the district federation; second, there would be the issues arising between local federations within the district, and third, there would be those common matters, like health, education, highways and so on.

The third series of federations would be the divisional producers federations, which would correspond, roughly, to such aggregations of states as the Commonwealth of Australia or the United States of America. The boundaries of such a federation would follow the boundaries of the principal land areas and the chief population centers. North America, South America, South Africa, the Mediterranean Basin, Northern Europe, Northern Asia, Eastern Asia, Southern Asia and Australia would furnish a working basis for separating the world into such geographical divisions. Each of these divisional federations would function along the same general lines as the local and district groups.

The fourth, in the series of federations, would be the world producers' federation, which would be an organization composed of all of the major industrial groups. These groups, each of which would be organized on a world-wide basis, would unite in the world producers' federation in order to further those interests that were of consequence to two or more of them, as well as those common interests that were of concern to all alike. The world producers' federation would be built on the same principle as the local producers' federation, but unlike this latter federation, the world federation has no prototype existing at the present time.

The world producers' federation would be a world authority, linking up those interests of world consequence that are now waving about like cobwebs in the wind.

Throughout its entire course this outline has been designed in such a way as to separate sharply the producing units and the administrative groups (federations). The local, district, divisional and world industrial units are the back-bone of the public machinery in a producers' society. For the purposes of facilitating the work of administration, these producers' groups are brought together, at various points, in local, district, divisional and in a world producers' federation, all of which federations derive their power directly from the industrial producers' groups. The world producers' federation therefore has no direct relations with the local producers' federation, any more than the government of a county, in a modern state, has with the central federal authority. The authority of the world producers' federation, like that of the local, district and divisional producers' federations, is derived from its constituent industrial member groups, and is confined to the questions that are of immediate concern to a number of them, or that are the common concern of all.

This arrangement will make difficult the production of a state of present type which has drifted far away from some of the most pressing necessities of the common life, and into the hands of politicians,—a situation that permits tyranny on the one hand, and that makes any adequate check on the activities of these political rings difficult or impossible. This danger would be considerably reduced by delegating administrative power to the federations, holding each within its prescribed range, and keeping the real power in the hands of the local, district, divisional and world industrial groups.

The decision of the world producers' federation would therefore be binding on the industrial groups, and not upon the local, district and divisional producers' federations, except in so far as the industrial groups compelled these federations to follow the policy of the world producers' federation.

It is probable that an exception would have to be made in the case of issues arising between two divisional producers' federations. The burden of settling such an issue should rest, however, on the industrial groups rather than on the world producers' federation.

This withholding of authority from the federations in general, and from the world producers' federation in particular may be open to criticism, but it has several strong points in its favor. Through its control of resources, transport and the like, the world producers' federation will wield an immense power. Its constituent members, having aided in its decisions of policy, may follow a similar course of action in the divisional and the district producers' federations. Again, the alternative to the organization of a series of disconnected federations is a centralized bureaucracy of such magnitude, and holding such vast power, that it would be both unwieldy and dangerous, beside violating that very essential rule of local authority in local affairs.

The separation of the federations would compel each of them to specialize on particular problems of administrative routine. Questions that were to be carried to wider authorities would be carried by and through the various constituent industrial groups.

The structural organization of the world producers' federation would be similar to that of the United States of America or that of the Russian Federated Soviet Republic. The constituent groups would be economic and occupational rather than political or geographic, but the principle of federated autonomous groups would be the same. Each of the major industrial groups that belonged to the world producers' federation would have sovereign power over those matters which affected that group alone. The federation, on the other hand, would have jurisdiction over matters affecting two or more of the world industrial groups, as well as over those matters which were of common concern to all of the member groups.

7. The Form of Organization

The general lines of organization for the world producers' federation would be somewhat as follows:

1. The workers in each of the major industrial groups would vote in June of each year for the members of a world parliament which would be the central authority in the world producers' federation.

2. The world parliament would consist of from 800 to 1000 delegates, elected in each of the major industrial groups by the producers in that group.

a. Each industrial group would be entitled to at least 50 members in the world parliament, and to one additional member for each 50,000 workers over two and one half millions. But no group would be entitled to more than 150 members in the world parliament.

b. The members of the world parliament would be elected by popular vote in each of the major industrial groups, the franchise being extended to all producers, including those who had been producers and were rendered incapable of activity through age or infirmity.

c. Each industrial division would be entitled to at least five members of the parliamentary delegation from that particular industrial group, but the details of representation from each of the major industrial groups would be left in the hands of the group.

3. The world parliament would be elected in June and would meet in July of each year. Since the world congresses of each of the major industrial groups would meet in the preceding January, they would have six months to thresh out their individual problems, before they were called upon to consider the general problems confronting all of the groups.

4. The world parliament would select, from its own membership, an executive committee equal in size to ten per cent of the total membership of the parliament.

a. On this executive committee each of the world industrial groups would be entitled to at least five members.

b. The executive committee would be the steering committee of the world parliament, and when the world parliament was not in session, the executive committee would be the responsible body.

c. The executive committee would meet once in four months, or oftener at its discretion.

5. The executive committee would select, from its membership, a number of administrative boards, at the same time naming the chairman of each board. Each of these administrative boards would be charged with the responsibility of handling a unit problem, such as the control of resources, the control of transport, and the like.

6. The chairmen of the various administrative boards would constitute the executive heads of the world producers' federation. They might be called the world producers' federation board of managers. This board of managers would be responsible to the world parliament executive committee.

a. If, at any time, the board of managers failed to secure a vote of confidence from the world parliament executive committee, on any matter involving a question of general policy, the board of managers would be automatically dissolved, and the executive committee would proceed at once to select a new board that would replace the old one.

b. If the executive committee failed to select a board of managers that could secure a vote of confidence, the world parliament would be automatically summoned to meet one month from the day on which this failure to elect occurred.

c. As soon as it convened, the world parliament would proceed, as a first order of business, to the election of an executive committee which would function.

d. If the parliament failed to elect an executive committee capable of functioning, the parliament would be automatically dissolved, a special election would be held within ten days, a new parliament would be selected, and would assemble thirty days from the date of this special election.

e. By these means, the whole machinery of the world producers' federation would be rendered immediately responsive at all times to the sentiment of its constituency, and the board of managers would be compelled to function in line with the policy of the executive committee and of the world parliament, or turn the work over to another group.

PLAN FOR WORLD ECONOMIC ORGANIZATION

7. The world parliament would exercise, directly, or by delegated authority, all legislative, executive and judicial functions that pertained to its activities. It would therefore create the departments or subdivisions necessary to the carrying out of these various functions. The members of the world parliament would be elected for one year, subject to recall at any time by the constituency that elected them. The parliament would decide on the qualifications of its own members.

This proposed plan for the organization of a world producers' federation will be made clearer by a diagram. (p. 116.)

8. All Power to the Producers!

The plan for a world producers' federation is designed with the object of placing all power in the hands of the producers. The society of the present day vests power—particularly economic power—in the hands of the owners of economic resources and machinery. Their public institution is the capitalist state, and their rule is perpetuated by the manipulation of its machinery.

Under this order of society, the chief emphasis is placed on owning rather than on working. The largest material rewards and the greatest amount of social prestige go to the owners. The present society sanctifies ownership, and raises the owner to a position of moral superiority.

The same system which dignifies ownership can scarcely recognize work as of supreme social consequence. The worker is therefore placed in a position inferior to that of the owner. His economic rewards are less, his place on the social ladder is lower, and his children are taught in the schools the necessity of getting out of his class into the society of those who are able to live without working.

It is hardly necessary to remark that in a community dependent for its existence upon labor, the teaching of such a philosophy points the way to class conflict and ultimately to social disintegration. If the community is dependent upon production for its existence, there must be sufficient incentive to continue production, otherwise the community dies.

The disastrous consequences that must of necessity follow on the economic order as it is constituted at the present time are already in evidence,—strikingly so in the case of the European breakdown. The owning class society is coming to an end—falling of its own weight. The time has come when the producers must take the control of the world into their own hands or suffer disaster.

Man's sense of justice tells him that the product should belong to him who is responsible for creating it, and his experience teaches him that human beings take a greater interest in that which is theirs than they take in the property of another. The results of production should go to the producers; the machinery of production and the materials entering into production should belong to those responsible for the carrying on of the productive process. How shall these things be? Only when the producers themselves decide to make them come true.

All power to the producers!

This sentence carries with it the key to the society of the future.

VI. WORLD ADMINISTRATION

1. The Basis for World Administration

When the producers of the world are organized along the lines of their economic activities, and are federated in local, district and divisional federations, and in a world producers' federation, the structural side of the producers society will be complete. Such a structure is built for use, not for appearance, and its effectiveness depends upon the way in which it works. The handling or administration of the producers society is therefore the determining factor in its success. A world producers' society may fail as miserably as any other form of social organization unless it is deliberately utilized to attain the ends for which it was created.

The establishment of a world parliament consisting of representatives from the major industrial groups would create an authority more powerful than that of any existing state because, in the first place, it would be more extensive than any existing state. But even supposing that one of the great nations—Britain or the United States—was to conquer the world and attempt to administer it, the world producers' federation would be far more effective than such a victor, because its rule would be founded on the will and on the consent of the governed and not on the imperial foundation of organized might. The world producers' federation could therefore look for a support from its constituency that no empire could hope to demand from its conquered subjects.

The centralization involved in maintaining the authority of an imperial ruling class in a large and complex state is so great that it invariably results in friction and disaffection. The self-governing state, less efficiently co-ordinated and centralized, still has a far better chance for survival. Its energy-generating centres are so much more numerous and more localized than those of the class governed empire that they necessarily reach a larger share of the population. The roots of the self-governing social group may go no deeper than the roots of the group under a bureaucratic government, but there are more of them, and they go to more places. The foundations are sounder because they are broader.

In addition to these functional advantages of self-government, it possesses an immense asset in the sense of proprietorship that leads the citizens of a self-governing community to stand by the community organization because they feel that they have built it and that it is their own. A self-governing community therefore carries within itself the means of its own perpetuation in the enthusiasm and devotion of its population to an institution in which they feel a sense of workmanship and of the pride of possession.

A world parliament, organized on the basis of self-governing industrial groups, would be unique in two respects. First, in that it was of world extent, and second in that it was built upon the industrial affiliations of its citizenship. If such an organization were handled in a way to hold the allegiance of its constituent members, its decisions on matters of world importance would carry an immense authority.

2. The Field of World Administration

There, in fact, would be the test of world government efficacy—in its ability to leave the handling of local problems to local groups, and to concentrate its energies on the administration of those problems which have assumed a distinctively world scope. Such capacity to understand the difference between the business of local groups and the business of the world organization would be the touchstone of world statesmanship, the criterion by which the master political minds of the age could be tested. The short-sighted, narrow-visioned leader of world affairs would seek to gain and to hold power for himself and for his immediate local interests. The presence of many such men in positions of power would soon split the world government into a series of factions, each one seeking to destroy the others and to take away their authority. Such a competitive stage would represent little advance over the present nationalism.

A world government has no virtue in itself, and may as easily degenerate into a scramble for office as may any other phase of group relationship. Its success would only be possible where its power was strictly limited to the control of those matters that had reached a plane of world importance. Even then success would be impossible unless those responsible for making essential decisions saw the world problems as wholes rather than as localized and separable problems.

Grave issues hang on the method in which the world problems are approached and handled. Success is not assured by any means. Still, the dangers and disadvantages of a plan do not condemn it unless they outweigh the apparent advantages.

The people of the western world face a number of serious problems that cannot be solved by the existing nations. Some step must be taken to cope with the new situation that has followed on the heels of the industrial revolution, and in so far as the actual practices of life have evolved to a world plane, and in so far as they concern the workers in more than one industry, it must be apparent that nothing less than some world authority will suffice to cope with the issues that they present.

A number of economic questions, such as the control of resources and of transport, have already passed beyond the boundary of the individual nation, and have reached a stage of world importance where they can be handled only on a world basis. In the normal course of social evolution, other questions will, in like manner, emerge into a place of world consequence. As rapidly as such developments occur, the administration of the world issues must be delegated to the world parliament and to its appointees and subordinate bodies.

3. Five World Problems

There are a number of problems that have passed beyond the control of any single nation, and that should therefore be made the subject of world administration. Among them are: (1) the control of resources and raw materials, (2) transport (3) exchange, credit and investment, (4) the world economic budget, and (5) adjudication of world disputes. Under a world producers' federation, the administration of these five problems would be in the hands of five administrative boards selected by the executive committee of the world parliament.

Each administrative board would select and organize a staff of experts and specialists in its own field, and would present the outline of its proposed activities to the world parliament very much as the department of a modern government presents its budget to the parliament of its state. This presentation would take place through the executive committee of the world parliament, and it would be necessary to secure the endorsement of that committee before the plan could go before the parliament.

When the plan was approved, the administrative board would begin to function as a part of the machinery of the world producers' federation. Thereafter it would serve as a part of the world administrative mechanism, the working organization of which would remain intact, even should there be a change of policy, in exactly the same way that the department of state or of agriculture, in any modern government, remains intact through the various changes of party in power.

The specialists and experts who made up the staffs of the administrative boards would secure their appointments as the result of civil service examinations, and would continue in their positions until some question arose as to their efficiency. Each administrative board would be organized into a series of departments corresponding with the unit problems coming before the boards, with one specialist or department head charged with the direction of each of these departments. In the raw materials and resources board, for example, there might be one department for each of the more important resources such as coal, iron, copper, cotton, wool, timber, and the like. In the same way, the work of the transport board might be divided into departments covering shipping on the high seas, inland water transport between divisions, inter-divisional land transport, aerial navigation not wholly within one division, and so forth. In each instance, the task of providing an adequate supply of the commodity or an efficient service, would fall to the department or departments involved, while the administrative board itself would sit as a court of last resort, and as a board of strategy for the field in which it was functioning.

The administrative board would thus be a group primarily of experts, charged with the specific task of handling some problem of world moment, and responsible to the board of managers of the world producers' federation for the success of its activities.

4. Work of the Administrative Boards

A separate administrative board would be established to handle each of the important administrative problems confronting the world producers' federation. At the outset there would be such problems as resources, transport, credit and exchange, budget, and the adjudication of disputes affecting more than one division or more than one of the major industrial groups.

It is neither possible nor desirable to draw up a working program for any one of these boards. Such details must be met and solved when the task of administrative work begins. At this point it is only necessary to suggest some of the more important fields in which the boards would operate, and to bring forward typical instances of their functioning.

5. The Resources and Raw Materials Board

The survival of a modern industrial centre like the Manchester District of England or the Lille-Roubaix district of France depends upon the supplies of raw material which it is able to secure from and through other industrial groups. These supplies are in turn dependent upon the available deposits of raw materials, the power, and the fertility of the soil. Raw materials and resources are thus the foundation upon which all productive enterprise is based, and it would be one of the first duties of a producers' society to handle this issue successfully.

Some idea of the extent to which a modern industrial community is dependent for its survival upon imported raw materials may be gained from an examination of the trade figures for Great Britain. In 1920 the total value of British imports was 1,936 millions of pounds sterling. Of this amount, 767 millions (more than a third) were for food, drink and tobacco, while another third (711 millions) were for raw materials. Under these two general headings were included such items as grain and flour 232 millions, meat 142 millions, cotton and cotton waste 257 millions and wool and wool rags 94 millions of pounds sterling. The two main items of food and raw materials, covered more than three quarters of all British imports. (Statesman's Year Book.)

But Britain is a relatively small and very much isolated community, lacking some of the essential resources. It is therefore quite natural that her trade figures should show such a result. The same thing is of course true of Japan, Germany, Holland, Belgium, Italy, France, and in fact most of the important industrial countries. This is taken as a matter of course. Oddly enough, however, it is likewise true of the United States, which is as near to industrial self-sufficiency as any of the leading industrial nations.

Among the 5,278 millions of dollars worth of commodities imported by the United States in 1920, there were 40 million pounds of aluminum, 143 million pounds of rice, 345 million pounds of cocoa and cacao, 1,297 million pounds of coffee, 510 million pounds of hides, 152 million pounds of fresh meat, 603 million pounds of India rubber, 260 million pounds of wool, 510 million pounds of paper stock, 1,460 million pounds of paper, 8,074 million pounds of sugar, 4,459 million gallons of crude oil, 130 million skins, and so on. Here are extensive imports of hides, oil, paper, sugar, coffee, wool and rubber—seven of the most important items of modern commerce. Well supplied as it is with varieties of climate and resources, the United States is nevertheless compelled to import large amounts of some of the most essential raw materials. Like the nations of Europe, it is forced to depend, for these and other industrial essentials, upon portions of the economic world that lie outside the national boundaries.

An examination of these and similar figures tells the story of the industrial future—a story of limited, localized resources upon which the expanding industries will be compelled to make ever increasing demands. Since all of these demands cannot be met there must ensue a ferocious struggle among the nations to secure and hold the resource key to economic advantage. The beginnings of that struggle have already been witnessed in the contest between France and Germany for the coal and iron deposits of Western Europe. Its next stage will include a struggle between Great Britain and the United States for the possession of the world's reserves of oil. Such a struggle, with its appalling toll of suffering and chaos can be obviated in only one way, by an apportionment, among the users, of the chief raw materials, through an agency in whose direction all of those concerned have a share. This result could be accomplished by the resources and raw materials board of the world producers' federation.

The activities of the resources and raw materials board will include:

1. A survey of all available resources and raw materials.

2. A survey of the present consumption of these raw materials.

3. A survey of the present production and of the possible production of these materials.

4. A production budget, assigning to each of the producing areas the amounts of materials that they are responsible for producing.

5. A consumption budget, assigning to the various using areas their quotas of the materials produced.

6. Provision for the increase in production necessary to meet the demands of the consumers of raw materials.

7. Final decisions as to which resources should be used, and for what purposes.

This board would have under its immediate control the destiny of the whole producing world. It would not own the resources any more than the postal department of a government owns the post offices and the mail trucks, but in one case, as in the other, the power to decide on the service to be rendered would rest with the administrative officers.

The need for some central control over the world's resources, and of some clearing house for raw materials seems quite obvious. The world producers' federation faces no more important or pressing issue. In this field alone, through its elimination of sources of conflict and its regularizing of raw material supplies, the world producers' federation could undoubtedly justify its existence.

6. The Transport and Communication Board

The transport and communication board would have jurisdiction over all of those activities involving the transfer of goods, of people and of messages, not wholly within one division. Such a plan has been worked out in part in the United States of America, where commerce between the states (interstate commerce) is under the control of the Federal Government, while commerce wholly within one state is under the control of that state. The same principle, applied to a producers' society, would leave local transport in local hands, while all matters concerning world transport would be under the control of the world producers' federation.

The present economic system depends on the shipment of goods from one point to another. Raw materials are sent from the place of their origin to the fabricating establishment that consumes them. In some cases, these distances are small, but when Cuba sends iron ore to the United States, or when Brazil ships coffee to Europe, or when England sends coal to Italy, the distances are considerable and the means of efficient transport are correspondingly important. The same thing holds true of the marketing of finished products. Many of the goods turned out by the present-day industry—particularly machinery—are very bulky and heavy. Each of the manufacturing nations sells its goods, not only within its own borders, but at the ends of the earth. The transport of goods thus becomes supremely important.

The transport of goods and of people is only one aspect of the work coming under the direction of the transport and communication board. In addition, there would be:

1. The postal system, which is already on a world basis.

2. The express system, which is really only a branch of the postal system, and which is also on a world basis at the present time.

3. Telephone, telegraph and wireless machinery, which are in their very nature wider than the boundaries of one nation, and which are to-day among the chief means of holding the people of the world close together.

The mechanism of transport constitutes a vast net-work of inter-relations that have been carried farther toward a world basis than any other phase of the world's economic life. The nature of ocean transport, of the postal service, of the express service and of the telephone and telegraph made this inevitable. The inventions and discoveries of the past century have worldized transport without the necessity of any intervention from a producer's society.

While the work of the transport and communication board would be of vital consequence, it would be relatively simple, in that it would involve little innovation, but rather the unification and co-ordination of existing agencies.

7. The Exchange, Credit and Investment Board

Many economic writers have characterized the processes of exchange as "non-productive" activities, nevertheless, under the present economic order they lie closer to the seat of power than any other single group of activities. The rise of the banker to his present commanding position is due, primarily, to his control over money, and to his power to issue or to withhold credit. A producers' society may lay far less emphasis on money and its derivatives than does the present system, yet the money function will remain and the money forces will doubtless play some part for a very long period in the new economic order.

Money will owe its position of importance, under a producers' society, to the need for a medium of exchange, and until men discover a means more effective than money for the facilitating of exchange, money will continue to play an economic rôle.

The inhabitant of a modern industrial community buys many things each day. For the newspaper he spends a penny or two; for the street-car ride, five or ten cents; for fruit, groceries, and other food products, a number of small sums. These transactions, in a country of fifty millions of people, aggregate tens of millions for each day.

There are three possible ways in which such transactions may be carried on: (1) each party may give the other some commodity or service—a bunch of carrots for a street-car ride, a sack of flour for a hat, (2) Money may be employed. (3) A system of book-keeping may be devised, and each purchaser may use a credit card, or some similar device. Barter is impossible. Money is the usual means of facilitating exchange. Bookkeeping, on a scale requisite for all petty transactions would be an immensely intricate mechanism.

The chances are that at the outset, a producers' society will be compelled to follow the practices of present-day economic life, and to distinguish between the two chief uses of money: money as a means of making change and money as a basis for credit.

This distinction has been pretty well established in all parts of the world. The business man buys his morning paper and his lunch with the change that he carries in his pocket. He buys his automobile or his factory building with a check (credit). Money as a means of making change will continue under a producers' society until some more satisfactory means of handling minor transactions is discovered. Money as a basis for credit will be superseded by a system of social book-keeping.

The money used at the present time is based on an amount of some commodity, such as gold. A producers' society will undoubtedly substitute for this commodity base some unit of productive effort—an hour's labor or a day's labor in a given industry. Such an idealized labor production period could be used as a basis for all value computations.

There are a number of requirements for such a value measure:—(1) It must be reasonably stable; (2) it must be generally recognized and accepted; (3) it must be the medium in which all values in all parts of the economic world are calculated.

With a standardized labor unit of value once determined, there would be several methods of procedure. One would be to issue a certificate for each unit of labor performed. The pay-check would then serve as money. Another method would be for the world parliament to issue metal and paper money, using the labor unit instead of gold as the basis of value. In the former case, there would be a labor check, or piece of money in the community for each unit of labor performed. In the latter case, only so much money would be issued as was required for the ordinary purposes of making change. The latter method is the one now in use. The former would represent a distinct step in advance, in that there would be a certificate of purchasing power in the community for each unit of goods and services that was produced. There would be still a third method of handling the problem, by having the world producers' federation issue paper currency stamped with the statement "this is a mark" or "this is a franc," and making it receivable for all legal and public obligations. If the amount of this "fiat" money were carefully regulated, it would probably serve all of the purposes for which money is needed. Whatever its character, it is essential that all money and credit should be publicly issued and under public control.

The first problem confronting the exchange and credit board would be to establish some such generally acceptable standard of value. The chaos now existing in exchange rates is but a foretaste of the difficulties that confront a world which is attempting to carry on economic transactions with scores of different moneys and of differing financial systems.

The exchange and credit board would have three other important fields of activity:

1. The computation of the values produced by the various industrial groups.

This result would be accomplished by establishing a clearing house for reports on production in all industries and in all parts of the world.

2. The financing or exchange of materials between the various producing groups.

This activity is now carried on by the commercial banker, who handles trade acceptances, bills of exchange, and the like. It need be no more than a system of book-keeping, with the balances entered as loans from the industries that produce a surplus to those that are using more than they produce. Such a situation would of necessity be temporary, since the aim of the central authority would be to balance values in such a way that there would be an equilibrium all around, with no surpluses and no deficits. Such an ideal condition would never be reached, but it could be approximated.

3. Transfers of capital, or loans negotiated between various industrial groups, and covering more than one division.

These loans would take the form of adverse balances in the general clearing between producing groups, and would cover the advances for improvements and betterments, that one producing group would make to another, or that the world producers' federation would make to one of the producing groups.

The exchange and credit board would, in reality, be the book-keeping department for the world producers' federation, whose exchange transactions would be planned and handled through this department.

8. The Budget Board

Two principal functions would be performed by the budget board. On the one hand it would be charged with budgeting or planning the transactions involved in the world organization of economic life. This function would include the estimates of the requirements of the major economic groups during a given year, and the estimate of the sources from which these requirements were to be met. On the other hand, it would be responsible for preparing the budget of the world producers' federation, and of deciding upon the course that must be adopted in order to meet these necessary outlays. Thus the board would correspond, in a sense, to the finance committee of a modern parliament or to the department of finance in a modern cabinet.

9. The Adjudication of Disputes Board

The organization of the world producers' federation places before it certain judicial functions. The federation would be called upon to adjudicate:

1. Disputes between any of the industrial groups involving more than one division.

2. Disputes between one of these industrial groups and the world producers' federation.

3. Disputes between various departments of the world producers' federation and its subdivisions.

These functions would devolve upon the adjudication of disputes board, which would constitute a court or committee of review, charged with the duty of hearing issues in dispute before they went to the board of managers, the executive committee and the world parliament for final decision. The adjudication of disputes board would not be, in any sense, a court of last resort. Rather it would be a court of original jurisdiction, sifting out the issues as they arose, and presenting its findings to a higher body. Most of its decisions would, as a matter of routine, be final, but on any issue of importance, the right of final decision would rest in the world parliament, unless that right were assumed by the people through a dissolution of the parliament.

The present governmental system, with its checks and balances—legislative, executive and judiciary—has proved far from satisfactory, since it results either in a deadlock between the various authorities, or else some one of them, as for example, the courts in the United States, assume the final authority. In neither case is it possible for the average man to get to the bottom of the difficulty.

With all the functions of government centering in the world parliament, there would be less chance of friction between the various parts of the governmental machinery, and a greater likelihood of effective co-operation between the various departments of the government. Above all, the citizen would know where to look for action and where to place the responsibility for failure to act.

10. The Detail of World Administration

There is something of the grotesque in discussing the problems that would come for solution before a world producers' federation. The organization in question does not exist. How impossible, then, to predict what it will do when it comes into being. Still, the effectiveness of any proposal must be determined by its results in the realm of those routine affairs with which the organization will be called upon to deal. A world producers' federation will be constituted for the purpose of handling certain world economic problems, and the means by which this control will be exercised is a matter of the first importance.

The plan for world administration, as here outlined, is based on two general ideas. The first is that certain problems of world importance would come before the world parliament for solution; the second is that in dealing with any problems of administration, local autonomy should be preserved, the function of each administrative group should be clearly defined, and the control of the central authority should be exerted primarily for the purpose of approving or of disapproving the actions of the administrative divisions, leaving with them the task of initiating and carrying out the plans involved in the work of their respective divisions. With these simple principles of administration in mind, it is easy to plan almost any kind of administrative organization.

The real test will come when an issue is raised over the status of a given problem. When has the question of resource distribution ceased to be a local matter and become a world matter? When has the problem of credit become a world problem? To such questions there is but one answer: when these matters are of vital concern to more than one division or to more than one of the major industrial groups—in other words, when they pass beyond the control of one group, they are matters for world jurisdiction.

No plan can be drafted that will anticipate the difficulties of world economic organization. The utmost that men can hope to do is to draft a set of working rules that will enable them to act wisely when confronted by difficulties.

The world is still in a state of chaos. There are many local authorities, but no central authority. There are plans and policies, looking to the relief of the more pressing economic and social difficulties, but all of them are conditioned upon the establishment of some world power that shall prove competent to handle world affairs. Out of this chaos there must emerge, first, clear thinking as to the next steps that are to be taken in the reorganization of the world; second, a willingness to make the concessions necessary to this reorganization, and third a conscious purpose to build a better living place for human society.

VII. TRIAL AND ERROR IN ECONOMIC ORGANIZATION

1. Trying Things Out

A society, like the individuals of which it is composed, learns first by trial and error. The earliest lessons that the human race received were obtained by this method, and all new information is thus secured. The numerous economic difficulties that lie ahead of the present generation must be met and solved by the method of trial and error, or, as it is sometimes called in political jargon, "muddling through."

During historic times men have spent vast stores of energy in trying things out. It has frequently been observed that man is a social animal. It might be said with equal truth that he is an experimenting animal. He is curious, he is venturesome, he enjoys change, he relishes novelty, he is eager to better his condition. Animals live on from generation to generation, building nests after the same pattern and migrating over the same territories. But man investigates, ponders, experiments, improves.

This principle of experiment—the appeal to trial and error—holds true of social as well as of individual life. The hunter tries out a new snare or weapon, the machinist constructs a new tool, the chemist works out a new formula, the architect creates a new variety of arch or buttress, the educator writes a new kind of text-book, the sanitary engineer devises new methods for securing and safeguarding a water supply, the statesman plans a new system of roads that will open up the rural districts, the social scientist draws the design for a new type of economic organization. From the most personal to the most social, from the most local to the most general or universal, human activities are directed over new fields and into new channels on the principle of experiment, by the method of trial and error.

The scientist or inventor works in his laboratory or in his shop, devoting his energies to investigation and research which are nothing more than the application of the principle of trial and error to the particular problems with which his science is confronted. Once the experimenter has discovered a way to compel mechanical power to toil for man, or to destroy the typhoid germ, or to talk across a continent without wires, the next task is to find a better way or an easier way. Far from decreasing the necessity for experiment, each new discovery in the realm of natural science opens the door to additional possibilities. To-day every important college, most cities, many industries, and public institutions maintain experimental laboratories in the various fields of applied knowledge, and employ highly trained experts whose sole duty it is to try things out.

Inventors frequently hit upon new ideas or upon novel devices by chance, but for every such chance discovery, there are scores and probably hundreds of ideas and devices that have been carefully thought out, worked over, rejected, revised, modified, until they produced the desired results. There is a margin of chance in all experiment, but surrounding it there is a vast field of careful thinking and planning and of endless purposeful endeavor.

These observations are commonplaces in the laboratory and in the department of research. They have filtered through to thinking people who begin to understand the part that experiment plays in all forms of scientific progress. There is a general agreement that if there is to be an increase in the knowledge that men possess regarding the mechanical forces, the only sure way of gaining this knowledge is to weigh, measure, describe and classify. This applies to solids, liquids, gases, rocks, plants, animals, and even to the structure and function of the human body. But when it comes to social institutions, even the wisest hesitate and question. Is it possible that social knowledge can be gained only in this way?

There is no other way! Like the individuals of which it is composed, society must investigate, experiment, and learn through trial and error. Indeed, that is the tacitly accepted method by which social knowledge is accumulated. History is a record of social experiments—not so consciously directed nor so carefully planned as the experiments that are taking place in the chemical laboratory, but experiments none the less. What other explanation can account for the many forms of family relationship, the many varieties of religious organizations, the numerous types of political institutions, the multitude of educational institutions. "Educational experiments" are the commonplaces of the pedagog. Slavery was one of society's economic experiments, feudalism was another, capitalism is a third. Through successive generations these institutions have been built up, reformed, discarded and replaced. The history of social institutions is a history of social experiment—of community progress through trial and error.

Obstacles are thrown in the way of the social experimenter. Vested interests seek to convince the credulous and the ignorant that whatever is, is right. The jobs of office holders, the possessions of property owners, the security of ruling classes, depend upon their ability to sit on the lid of social experiment. "Do not touch, do not think, do not question!" is the warning of masters to their social vassals. Those who eat of the apple of experiment acquire the knowledge of good and evil, and with this knowledge comes the desire to reject and destroy the evil while they hold fast and augment the good.

Those who have learned, and who have dared to protest, have been ridiculed, persecuted, outlawed. Sometimes their bones have bleached on the gibbet or rotted in dungeons. Still, the jail, the gallows and the lynching-bee have not kept experimenters quiet in the past, and they will probably not do so in the future.

During recent times—particularly in the last fifty years—the changes in economic and social life have been so rapid that the "always was and always will be" protest is having a harder and harder time to make itself heard above the clatter of the social house-wreckers, and the rap and beat of the social construction engineers.

2. The Capitalist Experiment

The present economic society is an experiment—less than a century old in most parts of the world. It has evolved rapidly through a series of forms, corresponding with the rapid advances in the methods by which men wrested a living from nature.

The masses of the people in industrial countries have abandoned their farms, their villages and their rural life, have moved into the cities, and have gone to work in the mines, factories, mills, stores and offices, very much as the mechanics and farmers dropped their accustomed tools and rushed to the gold fields of California and Australia. Within two or three generations the whole basis of life has been shifted and a new order has been established. This change has been made for the purpose of securing a better living.

The people in the industrial countries have accepted capitalism as an essentially desirable means of gaining a livelihood. The new order has given them an opportunity for mass living that has been reserved in the past for a small percentage of the people. It has provided an immense number of things, for the most part inconsequential and tawdry, but things nevertheless which would appeal to the possessive instincts of those who had never enjoyed many possessions.

The new order has made each family in an industrial district doubly dependent—dependent on a job which it can in no wise control, and dependent on the economic mechanism for the supply of goods and services without which mass city life is quite impossible. The rural family had a supplementary source of living in its chickens, pigs, cows, goats, bees and garden. Fuel was cheap and nature provided berries, nuts and game. Life was rough, but the means of maintaining it were relatively abundant. City life has cut away almost all of these forms of supplementary income, at the same time that it has imposed upon the family the need to pay for practically all goods and services. The city breadwinner must get and hold a job, if his family is to live.

Mass life in cities, mass work in factories, job-dependence—all of these experiments are being made in a field that up to the present time has been virtually untouched by the human race. Mankind has gone into these experiments hopefully, trustingly, blindly, without any guarantee of their workability.

A casual examination of the premises on which the capitalist experiment is built will show the extremely precarious position in which the people who are dependent upon it now find themselves.

The capitalist experiment is built on the assumption that competition rather than co-operation is the effective means of promoting social well-being. Acting under this theory, each man is to forage for himself. This individual activity was relied upon to promote initiative and to stimulate ambition. In practice, capitalist society has been compelled to abandon competition in many of its aspects. Monopoly is the opposite of competition, yet the modern capitalist world is full of monopoly because monopoly pays better than competition—it is a more workable economic scheme.

Following out the assumption that competition is the life of economic society, one arrives at a necessary corollary to the general theory. The purpose of competition is to injure, wipe out and dispose of the competitor. Therefore the misfortune of our competitors is our good fortune. This would lead, as applied to the actual conditions of life, to some such formula as:

1. Bankrupt your competitor and you will profit.

2. Impoverish your neighbor and you will benefit.

3. Injure your fellow-man and you will gain.

Stated thus baldly and harshly, these three propositions sound incredibly silly, particularly in view of the example the world has just had of large scale competition—the World War—yet they are a fair picture of the line of thought and conduct accepted as rational by modern economic society. The normal processes of competition are directed to the destruction of competitors. War is a frankly avowed means of smashing rivals. Nationalism is built on the theory that "our" nation is superior to all other nations, and that, in the long run, it is capable of defeating (injuring) them.

The practice of such ideas render an effective organization of society virtually impossible, and it renders social catastrophe almost inevitable. Bankruptcy breeds bankruptcy. Impoverishment is a contagious economic plague. Injury leads to bitterness, hatred and further injury. These logical fruits of competition once admitted into the economic body, threaten its very life.

The tenets upon which capitalism is founded have already been abandoned in part by their sponsors as unworkable. But at best they represent a standard of social morality that is essentially destructive of social well-being.

The human race has no guarantee of the success of any experiment, and recent experiences with the war, and with the present post-war plight of Europe suggest that the capitalist experiment will fail disastrously unless some extraordinarily successful efforts are made to put things to rights.

Society experiments, trying first one means of advancement and then another. A certain number of these new ventures, which prove to be of social advantage, are adopted and incorporated into the social structure. The vast majority are rejected as inadequate to meet the social need. Capitalism is apparently in this latter class.

3. The Cost of Experience

Experiment is the necessary road to new experience, and the cost of experiment is written in the immense wastes that it involves. Experience gained through experiment is sometimes very costly. It is never cheap.

Frequently these costs, measured in terms of misery, are so great as to overbalance the advantages gained through the experiment. If, therefore, there were another way to gain knowledge except through the processes of experiment, it would result in an immense saving for mankind.

4. Education

There is a way, other than experiment, in which knowledge may be gained. Instead of relying on experiment (direct experience) for the spreading of knowledge, it is possible to utilize the indirect channel called education. If this method is followed, and the results of the race experiment and experience are made available to the young of each generation, the need for experiment will be limited to a narrow field, since most of the necessary knowledge will be communicated through education.

The individual need not repeat all of the experiments of his ancestors with animal breeding, harvesting, weaving, smelting, writing, house-building, etc. One by one these arts and crafts were built up—each generation adding its quota to the total of knowledge. These results of past experience, which were first passed from hand to hand, then from mouth to mouth, and finally written down, and which have been handed from generation to generation through the processes of education, are among the most important of all social assets.

The farther the race goes in its accumulation of knowledge, the more important does education become, since there is more to transmit from one generation to the next. Among primitive people the educational process is completed at a very early age. With the emergence of arts and crafts, the apprenticeship to life becomes longer. At the present time, the individual may continue his education as long as he is capable of acquiring new ideas. Under the present society, therefore, the educational processes are the chief reliance for the transmission of new ideas.

5. Facing the Future

The accumulated knowledge of the ages, handed on from one generation to the next, enables the scientist to suggest the direction in which new experiments should be made as well as to predict their probable outcome. His work ceases to be haphazard. It has a well-understood policy and common problems.

Particularly in the realm of natural science, has there been a vast accumulation of verified knowledge, from which there have been deduced principles and laws which enable the electrician or the astronomer to predict the action of the electric current or the course of the stars with almost unerring accuracy. To be sure, these predictions do sometimes go wrong, but for the most part they are founded on verified and tested hypotheses.

The past thus advises the present, which, from the vantage ground so gained, prepares its contribution to the future. If each generation were compelled to learn how to build fires, to employ language, to shape pottery, to weave, to print and to harness electricity all over again, it would seldom get farther than the rudiments of what is now called civilization.

The new knowledge that is gained in each generation is obtained through experiment, but many costly errors are avoided in these experiments through the wisdom that is based on the accumulated knowledge of the past.

Thus each generation of scientists accepts from its predecessors a trust for the future. Not only must it preserve the body of knowledge, but it must verify, amplify and enrich it. This is as true of the social scientist as it is of the natural scientist. The difference between them is that the natural scientist has worked out his technique and established his field, while the social scientist has reached only the threshold.

6. Accumulating Social Knowledge

Social knowledge is yet in its infancy. It is only within the century that Comte, Buckle, Marx, Spencer and other historians and sociologists have made an attempt to place the accumulations of social knowledge on a par with the accumulations of mathematical or chemical knowledge.

Until some effort was made to study society in a scientific spirit, there was no reason for supposing that men might be able to cope with social ills or to prevent social disaster. Even to-day, while there is no longer any question as to the possibility of classifying social facts, and while sociology is regarded as a science of great promise, the feeling lingers that social events are fore-ordained. Many people feel to-day about social disaster as the men of the middle ages felt about the plague—that it is outside the field of man's preventive power. Another fatalistic school of thought holds that men learn their social lessons only through failure and disaster. According to the first line of thought it is useless to interfere with social processes because they are in the hands of the gods; according to the second, men will not interfere until they have been whipped into rebellion by the adverse conditions surrounding them.

Men in the past have modified the course of human events in the most profound way. The first smelter of iron and the first constructor of a wheel began a series of events that is still molding social life. It is quite possible to say that these events were fore-ordained, but it is at least equally possible to reply that the same process of fore-ordination is still busy, and that the changes that it will make through the present generation will be at least as important as those which it has made in the preceding ages.

Those who believe that the race learns only through hardships and suffering should bear in mind: first, that most of the knowledge communicated to the individuals of each generation is communicated indirectly through some process of education; second, that society is composed of those individuals; third, that modern communities have built a vast machine whose sole purpose it is to influence opinion by teaching (indirectly) in the school, in the church, through the printed page and the film. In Japan this machine is employed to teach the people the sanctity of the emperor; in Britain it is used to convince the masses of the sanctity of business-as-usual; in France it is used to proclaim the sanctity of property; in Russia it is used to inculcate the sanctity of the revolution. If people learned only through first hand experience, these propaganda machines would be failures. In practice, they are highly successful.

Social disaster is not the only path to social knowledge. It is not necessary for a generation to suffer from typhus or to be ruined by war in order to be convinced that these dread diseases are menaces. The desire to prevent famine is felt by millions who have never come any nearer to it than the stories in the papers. Society learns, indirectly, through education—slowly of course, but none the less surely.

The average man is convinced of the desirability of trying to avoid disease, hunger and the other ills that effect him personally and immediately. He is not yet convinced of the efficacy of a similar attitude toward war, revolution and other disasters which inevitably destroy some portion of society, and which, in the end will prove as preventable as disease and famine. Social disaster seems more inevitable because it strikes more people at one time, while individual disaster has been more carefully studied, is better understood and is more localized.

Grave dangers menace present-day society. Economic breakdown, war and social dissolution with their terrible scourges—pestilence and famine—have already overtaken millions. It is plain that some new course of social action must be planned; that some social experiment must be inaugurated that will ward off the impending disasters.

Social experiments should be made, as chemical and electrical experiments are made, after all of the available facts have been carefully considered and digested. The results of such wisely planned experiments in the social field may be just as dramatic as the results of similarly planned experiments in the field of natural science.

Never in the history of social change has there been an intelligent direction of social processes. Many men in many ages have had ideals and aspirations, coupled, in some cases, with a limited knowledge of social practice, but social changes have come upon mankind for the most part, as a meteor comes upon the earth's atmosphere—unexpected and unheralded, startling those who have seen it by the suddenness of its appearance. Nor has there been any attempt on the part of the ruling powers to instill a different point of view with regard to these matters. On the contrary, there has been a determined effort to convince men that social changes were beyond their ken. The air of mystery has been blown away from natural phenomena, but it is encouraged and permitted to surround social changes. While it endures, an intelligent direction of social life is, of course, quite out of the question.

This attitude is being broken down, however. The past hundred years of experiment and experience with a competitive order have convinced multitudes that such an order is unworkable. During the same period, the development of economic organization on ever broader lines has emphasized the need of common purposes and common activities.

Recent social experience teaches plainly that an injury to one is an injury to all; that a benefit to one is a benefit to all; that men rise in the scale of well-being with their fellows and not from them, and that a co-operative social life is the only one that will prove livable and workable. These four propositions include the best thinking of the modern world on the fundamentals of a social structure that will prove livable and workable.

The acceptance of any such standards of social life involves a right-about-face in the basic social philosophy of the world.

1. The doctrine of laissez-faire must be accepted for what it is—an exploded theory that has promoted, not social well-being, but the interests of favored classes.

2. Catastrophe must be recognized as the most costly avenue to progress.

3. Social science must be made at least as effective, in guiding the life of the world as is physical science.

Social science alone will not protect men from the dangers that surround them. Every social group is dependent for its effectiveness upon the kind of individuals of which it is composed, and their ideas and ideals limit the ideas and ideals of the group. At the same time, a carefully thought out course of social action, like a carefully thought out course of individual action presents a standard toward which society may work.

A plan for social organization is like the blue-print with which the mechanic works. Science comprises his rules and methods of procedure, but the driving power comes, not from the blue-print and not from the formulas, but from the man himself. This holds equally true of society.

7. Conscious Social Improvement

Conscious social improvement is the improvement made by society in pursuance of plans that are prepared and carried out with the knowledge and approval of the mass of the community. It is the product of community intelligence directed to public affairs.

The individual can make conscious improvements in his condition only through observation, analysis, conclusion and experiment. The community is under the same limitations. Its progress will be intelligent only when it works rationally and purposefully upon the problems with which it is confronted.

The individual faced with a perplexing situation in his business or in his private life, sits down and goes over the matter, examining it point by point, until he thinks that he has a solution for his difficulties. Society, under similar circumstances, must follow a like course of action. People must ponder and discuss the issues before them until there is some consensus of opinion as to what course should be followed. It is only under such conditions of intelligently directed social action that conscious social improvement is made.

Conscious social improvement is therefore practicable when the available knowledge about social problems has been socialized or popularized to a degree that renders the community intelligent concerning its own affairs. The task of popularizing any form of knowledge falls primarily to the educator, the journalist and the other moulders of public opinion.

8. The Barriers to Progress

There are two important barriers to intelligent social progress. One is the lack of organized knowledge concerning social matters. The other is the restriction of this knowledge to a tiny fraction of the population.

Social science, still in its infancy, has ahead of it decades of advancement before it attains a position corresponding with that of the physical sciences. Even at that its progress must be slower, first because of the intricate nature of social phenomena, and second because of the herculean efforts that the vested interests make to destroy any form of social experiment that threatens their privileges.

Equally serious, as a limitation on the efficacy of social knowledge, is its restriction to a very small fraction of the community. Progress in the physical sciences is initiated in the laboratory, without any considerable participation by outsiders, but progress in social science depends on the attitude if not on the consent of the community, and therefore the socialization of social knowledge becomes one of the indispensable elements in social progress.

The handling of social problems has been confined, in the past, to a very small minority of each community. An aristocracy or plutocracy has taken charge of domestic and foreign affairs, and has made the decisions on which community well-being has depended. With the advent of "popular government" certain of these decisions have been turned over to the masses of the people or have been seized by them. The essential economic decisions, however, are still made by the owners of private wealth. If there is to be an organization of economic society that will function successfully and autonomously, the knowledge on which the decisions affecting economic policy are made must be public property. Until that step is taken the economic life of society will be directed by the chance desires of those who own the machinery of production.

Social students will accumulate knowledge and reach deductions, but that is not enough. The task is not completed until the results of their researches are common property.

Recent inventions and discoveries make the distribution of knowledge comparatively easy. Cheap paper, rapid printing, the newspaper, the magazine, the book, have all facilitated the scattering of information to those who could read, and in the western world this is more than nine-tenths of the adult population. For those who cannot read, the camera is an educational power. The machinery for public education—the schools, the press, the lecture-platform, has grown within a century to a point that renders possible the speedy distribution of knowledge to the most remote parts of the world. One of the greatest single steps in the reconstruction of the economic life of the world is the use of this machinery to distribute such information as is essential to a clear understanding of the economic problem and the normal course of its development.

9. Next Steps

Accept the foregoing analysis, and what lies immediately ahead of society?

1. The socialization and persistent distribution of extant knowledge.

2. A decision with regard to the next great social experiment.

3. The selection of the group best able to carry through this adventure.

4. The preparation of this group for its task.

5. The placing of the task upon their shoulders, and the backing of them with every possible assistance.

The working out of the detail of this program is far afield from the purpose of the present study, which must confine itself to the problems of world economics. Let it suffice to indicate here that in pursuance of the program outlined above there must be inaugurated a widespread propaganda the object of which will be to get the facts and their implications to the people: the facts regarding the disintegration of the present order; regarding the possibilities of a new society; regarding the next steps that are necessary in its establishment.

This propaganda is being carried on by those branches of the labor movement that are concerned with the working out of a new order of society. Since it is apparent that the organized producers will be the dominant element in the new society, they are its logical architects and builders. It is to this end that the energies of labor education must be directed.

When the producers are ready for their stupendous task, and when the time is ripe, they will assume the responsibility for erecting the superstructure of the new society. They will make costly blunders, some of which may be anticipated. They will be compelled to face difficult questions of tactics. In the course of their activities they will make day-to-day decisions that will play a vital part in the ultimate outcome of their experiments.

10. The Success Qualities

For the rest, the movement for a producers' society needs an emphasis on those qualities that will bring triumph out of defeat, and that can convert the most menacing situations into assets:

1. A willingness to learn better ways of doing things, and to abandon outgrown ideas and ideals for new ones.

2. A faith that will stand up under failure.

3. A vision that sees beyond a lowering horizon.

4. The courage to keep looking and trying, even in the face of difficulties that seem insuperable.

All human achievement is conditioned on these qualities, and their development is a pre-requisite to successful experiment.

VIII. ECONOMIC LIBERATION

1. Why Organize?

From many sides echo voices urging the human race to co-operate for the general advantage. The world, torn and distracted by the subsistence struggle, yearns toward a method of life that will ease the strain and relieve the heart-ache that are involved in the present-day conflict. It seems that this world-need can be met by a world economic organization built along the lines of productive activity controlled by those who produce, and sufficiently powerful to utter the final word with regard to the disposition of resources and raw materials, of transport, of credit, and of the more general phases of production and consumption.

There can be little difference of opinion concerning the necessity for some such organization. A question may well be raised, however, with regard to the probable developments of so vast a world machine. What are its ultimate purposes? Why, in the last analysis, do men seek to improve the economic and political structure of human society? Why organize at all?

There is a clear-cut answer to these questions: Men desire changes and improvements in their economic life in order that they may attain greater freedom, and they organize for the purpose of making these changes and improvements more easily.

Man is subject to many drastic limitations. First, there are the physical limitations of his own body—its height, its reach, its flexibility, its resistance, its fund of energy. Then he is limited by nature—by the climate, the altitudes, the fertility of the soil, the deposits of minerals, the movement of water. Man is further limited by habit, custom, tradition, and by the opinions of his friends and neighbors. Again, he is limited by ignorance, by fear, by cowardice, by prejudice, and by his own lack of understanding as to the true nature of freedom. In addition to all of these restrictions he is limited by the economic bonds that hold him to his job, that tempt him with gain, that drive him, day by day, to seek for food, clothing, shelter: for comfort and luxury.

Only dimly do men realize these limitations. The more they learn, the more clearly they understand the nature of the bonds that hold them, and the better are they prepared to break down the most hampering barriers, and to follow where aspiration and hope beckon. Yet, even among the masses of the people, who have had little time to learn, and less in which to reflect, there is a persistent longing to be free. The plea for liberty always awakens a response in them because, through their own lives they come into such intimate contact with the hateful burdens that oppression lays upon its victims.

The longing to be free is probably one of the most widely distributed of human qualities, and one, moreover, which men share with many of the higher animals. The World War focused this longing and raised it to a pitch of frenzied exaltation, under the spell of which hundreds of millions fought and worked, as they thought, for liberty. The fact that they were mistaken in their ideas regarding the purposes of the war does not in any sense detract from the sincerity of their desires, nor from the earnestness of their efforts.

The World War fervor was typical of the eager attempts that men have made at intervals all through history, to win freedom against immense odds. During the past three or four centuries this struggle has been particularly severe in the political, the social and in the economic fields alike.

Although the Dark Ages almost obliterated the expression of creative energy in the Western World, the Renaissance, the Reformation and the industrial revolution, following in quick succession, proclaimed its reawakening, and to-day there is scarcely a group of people—in Egypt, in Ireland, in Korea, in the Philippines, or in dark, enslaved Africa that does not hold a molten mass of sentiment surging toward freedom,—a seething, smouldering pressure, continually seeking an outlet.

Economic emancipation does not include all aspects of freedom. Many other chains remain to be broken. But the economic organization of the world would be one step in the direction of freedom, and would burst many a bond that now holds the human race in subjection.

2. Freedom from Primitive Struggle

The first step in economic liberation is to free man from the more savage phases of the life struggle—the struggle against nature: the struggle with other men.

Since those far-off times when men lived by tearing away clusters of nuts, by picking berries, by digging roots, by snaring fish and by clubbing game, they have been compelled to wrest from nature the means of subsistence. In this struggle, there have been the terrible phantoms of hunger, thirst, cold, darkness and physical suffering of every sort, driving men on. He who won in the contest with nature was able to escape the worst of these miseries, but he who lost was tortured by them as long as life remained in his body. The race is saddled, even to-day, by an oppressive fear of these physical hardships that makes the strongest a willing servant of any agency that will promise to ward them off.

The first victory that men must gain in their battle for economic liberation, will be won when hunger, thirst, cold, darkness and other aspects of physical suffering are banished from the lives of all people as effectively as yellow fever and cholera have been banished from the western world during recent generations.

This end has already been attained for the favored few in most countries, but famine still stalks periodically among the peoples of Asia, and even Europe, since the Great War, has felt its grip. Among the industrial workers of the imperial countries, and among the citizens of the exploited countries, the wolf is a far more frequent visitor than is the fatted calf.

Liberation from this widespread physical hardship can be achieved by producing enough of the necessaries of life to feed, clothe and house all of the people of the world, and by supplementing an adequate production by a system of distribution that will eliminate hunger and cold. Machine industry has made such an achievement possible. It only remains for a world economic organization to co-ordinate the resources, the productive machinery and the labor, and to distribute the commodities produced to those who need them.

The conflict with nature is but one aspect of the primitive struggle in which men are engaged. In addition, there is the struggle of man against man; not to aid, to emulate, to excel, but to rob, cripple and destroy.

The existing economic system is built upon the assumed desirability of a struggle whose outward manifestations are: (1) competition between economic groups; (2) the class war between owners and workers, and (3) wars between the nations. Throughout the business world one establishment seeks to build up its organization by wiping out its competitors; one class seeks to win supremacy at the expense of a rival class, and one nation seeks to found its greatness on the prostrate remains of those opposing nations that it has been able to overthrow. These three phases of competition are accompanied by three forms of war—the economic war, the class war and international wars.

All three forms of war have an economic background. The economic war is the contest for resources, trade, markets, monopolies and investment opportunities. The class war between the exploiter and the exploited, grows out of the economic relations existing between the owner and the worker. International wars are fought for economic advantage—for resources, trade, markets.

The object of all war is the destruction of a rival by resorting to those measures calculated to bring the desired result. Since all is fair in war, the end (destruction) justifies the means, no matter what it may be.

What need is there to speak to this generation of the devastation caused by these wars? of the killing, the maiming, the famine, the disease, the disorganization and chaos?

The western world has not yet recovered from the latest international war, while the economic war and the class war are being fought on the six continents and the seven seas. The cost of wars in blood, treasure, happiness and usefulness is an intolerable one. The chains with which Mars loads the human race weigh men down to the earth.

The organization of a world producers' society would go far toward freeing men from the ravages of war. The necessity for economic competition being removed, and exploitation being done away with, the basis of international war and of the class war would be swept away. Thus the same economic world organization that enabled man to free himself from the more brutal phases of the struggle with nature would likewise enable him to eliminate the principal causes of war.

3. Freedom from Servility

The organization of a producers' society would do more than abolish the cruder aspects of the present economic struggle. It would lay the foundation for a new culture founded on the dignity and the worth of labor.

There are two groups of human instincts in ceaseless contention for supremacy—the possessive and the creative. Both are of immediate economic importance, and the triumph of the one usually means the subordination of the other. The instincts which urge in the direction of acquisition and accumulation tend to make the man a conservator. Once let him possess an abundance of the world's goods and his chief object is to hold what he has gained. The instincts which urge toward construction and creation tend to make man an innovator, initiator, an improver. The side of man's nature that urges him to possess, directs him toward wealth and power. The side of his nature that leads him to create points to invention, to craftmanship, to artistry. Thus the possessive and the creative instincts are not merely at odds. Possession leads to status while creation leads to improvement.

There are some natures that are definitely inclined toward acquisition. There are others as firmly set in the direction of creation. For such natures the social standards possess little importance. They have their bent and they follow it. The great mass of men, however, have no positive set in either direction. Their lives will be primarily possessive or primarily creative, depending upon the kind of training that they receive.

Modern society lays its emphasis on possession and accumulation, and upon the wealth and power which they yield. The owner of land or of capital, under the present economic order, is not required to work for his living. His rents and dividends furnish him a source of income far more regular and much more dependable than the wage of the worker, or even than the salary of the man higher up. The rewards of the property owner, moreover, are far larger than those of the worker. Compare the income tax returns of Germany, Britain and the United States with the wage scales from the same countries. The incomes above ten thousand dollars (two thousand pounds or 40,000 marks in pre-war values) per year are derived largely or exclusively from the ownership of property. It pays far better to own than it does to work. The ownership of capital, like the ownership of land, carries with it power over those who must use the capital and work the land, thus setting up an owning group or class which is able to control the lives of the workers, at least to the extent of taking a part of their product and living upon it without rendering any commensurate service in return. With the economic rewards go social honors and distinctions, and the wealthy enjoy social as well as economic privileges. They develop a system of dress, of language, of manners and customs that will distinguish them as far as possible from the common herd, namely, those who work for a living. Veblen describes the process admirably in his "Theory of the Leisure Class." The leisure class, he says, has its origin in some form of ownership, on which it builds the structure of its prerogatives.

The existence of an owning, ruling class divides society into factions, whose contentions threaten the destruction of any social group in which they take place. From the intolerable social situation which they create, there seems to be but one logical means of escape, and that is through the establishment of a society in which labor and not parasitism is the ideal toward which children are taught to strive.

Such a society would shift the emphasis from possession to creation (production) by rewarding the worker rather than the owner. This result may be accomplished quite simply by giving the chief rewards to those who create, and by denying to the owner any direct reward for his ownership. Another step in the same direction could be taken by limiting individual ownership to the things that men use, and concentrating in the producing group the ownership of all productive tools.

When economic rewards are withdrawn from possession and given to creation, it will pay better to create than it will to own. Furthermore, since ownership of itself would involve no power over others, another important incentive to accumulation would be removed.

A producers' society, as a matter of course, would accord the most honor to those who engaged in productive activity, thus registering the social opinion in favor of creating rather than of possessing and exploiting. With the economic and the social rewards going to producers, the young of each generation would learn that it was more worth while to be a producer than to be an owner.

Again a producers' society would aim to secure the common participation in the necessary social tasks—the drudgery and the "dirty-work." With the essential work performed in part by all able-bodied persons, no stigma would attach to those who were engaged in it, the class of economic pariahs would be eliminated, and each participant in the necessary economic work of the world would feel that he belonged to the group in which he was playing so important a rôle.

"But," argues the doubter, "all of this is against human nature. How is it possible to expect that men will stop possessing, or will lose the desire for possession?"

They cannot be expected to do either, of course. But it so happens that, in any industrial society, the group living on its ownership is a very small one compared with the group living by its labor. The preference, in an industrial community, can therefore easily incline to labor rather than to ownership. As for the chief rewards of life going to producers rather than to owners, this is historically practicable. Greek society worked out an elaborate system of honors and rewards for those who could create. Human nature has not been fairly or adequately tested in recent years. Only certain of its phases have been developed by social demands, and those phases—the possessive instincts—are among the least socially advantageous of human qualities.

An emphasis on production rather than on accumulation would have another important result—more important, in a sense, than any of those named. It would establish a feeling of self-respect among those who work by giving them the only conceivable economic basis for self-respect—the ownership and control of their jobs.

While one man owns a job on which another man must work in order to live, the job-owner is the master, and the job-taker is his vassal. Necessarily, the vassal occupies a position of servility. When he asks for an opportunity to work, he is asking for an opportunity to live. When he takes a job he is binding his life and his conduct under terms prescribed by the job-owner. If he has a family, or owns a home, or is in any way tied to one spot, he is doubly bound.

The establishment of a producers' society would make each man his own master in somewhat the same sense that the farmer or the artisan who owns his land or tools is the arbiter of his own economic destiny. That is, he would own his job and share in its control.

Thus society would eliminate the inequalities that are now created by the concentration of ownership and power in a few hands, and would establish a relative equality among those who produced. The great fear of the modern worker—the fear of unemployment or job-loss—would also be eliminated, since the producers, in a society of which they had control, would be able to hold their own jobs.

These various means would serve to dignify labor and production, and to establish a society in which prestige and honor would attach to creation rather than to ownership.

4. Wisdom in Consumption

One of the chief weapons of a leisure class is some mark that will easily distinguish its members from the workers. This mark, in modern society, is conspicuous consumption. By the quality and style of its wearing apparel, by the scale of its housing, by the multitude of its possessions, its luxuries and its enjoyments, the leisure class sets itself apart from the remainder of the community, advertising to the world, in the most unmistakable manner, its capacity to spend more than the members of the working class can earn.

This need for distinction through consumption has set a living standard which the less well-to-do families seek to emulate. Among the leisured, there is an eager race to decide which can spend the most lavishly, while those of less economic means make a determined effort to put on front and to appear richer than they really are.

The result of this competition among neighbors is an absurd attention to the quantity and to the cost of possessions, with a comparative indifference to their intrinsic beauty or to their utility. Nowhere is this better illustrated than in the rapidly altering styles of woman's dress. One season silk stockings and low-cut waists are worn in the middle of winter: the next, expensive furs appear in mid-summer. With little reference to artistic effect, and with even less attention to the needs of the individual, the procession of the styles moves across the social stage with tens of millions eagerly watching for the tiniest change in cut or color.

The devotion of an entire class to this conspicuous leisure has no social justification save the silly argument that "it makes work." It is one of the logical products of a stratified or class society where the lower classes seek to ape the upper classes, while the latter engage in a mad scramble to determine which shall set the most grotesque standards of social conduct.

A producers' society will of necessity take a stand of far-reaching consequence on the question of consumption. In the first place it will realize that one of the most signal failures of the present order lies in the inability of the people to find either happiness or growth in the accumulation of possessions. If the multitude of things owned would satisfy men's needs, the upper classes of the present society would be the happiest that the world has ever known, since they are able to command a quantity and a variety of things that far surpasses previous historic records. Instead of bringing happiness, however, these things have merely brought care, anxiety and finally disillusionment. Now, as always, it is true that a man's life does not consist in the abundance of his possessions, or, as Carlyle puts it, "Not what I have but what I do is my kingdom."

The citizens of a producers' society will therefore teach to their children, and will practice an abstemiousness in the midst of plenty—a withdrawal from possessions—in order that the body may have enough, but not too much, and that the spirit may be freed from an undue weight of things. The Greeks understood the principle well; so did the American Indians. They desired, not many things, but an enrichment of life, which they realized could come only through understanding, tranquillity and inner growth.

As a matter of course, a producers' society will enforce the axiom: No luxuries for any until the necessaries are supplied to all. This corresponds with the well-established practice of many primitive peoples. It is likewise the application of the highest ethical principles to economic life, and is the course of procedure that man's most elemental sense of justice demands.

A more or less rigid adherence to the principle of necessaries first, and an understanding of the futility of seeking for happiness through possessions, will place a rigid limitation upon the amount of time devoted to satisfying economic needs, and will release a generous share of time and energy that may be devoted to supplying the other needs of man. Heretofore, leisure has been absorbed by one class or group. Under a producers' society it would be distributed, like any other social advantage, on an equitable basis.

Already sufficient advances have been made in machine production to enable the human race to produce the economic necessaries of each day in a few hours of labor—two, or three, or four, perhaps. It remains for a producers' society to take advantage of this productive efficiency, and to convert the increased productivity, not, as at present, into more goods, but rather into more free time for people.

5. Leisure for Effective Expression

The primary aim of a producers' society would be leisure rather than goods—an opportunity for expression rather than an increase in the amount of possessions. One of its great tasks would therefore be the education of its citizenship in the effective use of leisure.

This new, socialized leisure, which yesterday was a privilege of the ruling classes and of many of the artisans and farmers, which is to-day the heritage of primitive peoples, and which has been so largely lost in the rush of machine production, will be used: (1) to make and to maintain social contacts; (2) for creative activities; (3) for recreation, and (4) for whatever other means are necessary to promote the growth of the individual.

An effective society must be composed of effective individuals. In no other way can a high social standard be maintained. The growth of the individual, in a modern community depends, in large measure, on the way in which he uses his leisure.

6. Culture and Human Aspiration

At various stages in the development of society there have emerged cultures founded on some particular group of human aspirations. Thus the forward-looking side of man's nature expressed itself.

After he had finished the daily tasks by means of which he earned a subsistence, or, more usually, as a member of a leisure class that was exempt from the necessity of labor, the man dominated by strong creative impulses sought to embody, in some concrete form, the desires which he felt springing up within him, and which could not be satisfied by physical activity. He turned, therefore, to drawing, to painting, to music, to speculation, to discussion.

The present age has not as yet developed its culture, and it seems now as though capitalism, with its heritage of revolution, and its curse of instability and hurry, would not persist long enough to establish a well-defined culture. Hence, in the present society, multitudes feel that certain finer things are excluded from their lives because the ground is so littered with possessions, and because life is too harried and too sordid to give them place.

These forces, the creative impulses of the artist and the builder, yearn unspeakably for expression. Each human breast holds a void that is the result of their suppression, and it is this, perhaps, more than anything else, that accounts for the unrest and dissatisfaction that are so characteristic of the present generation.

In the past only the favored few had a chance to express their most holy aspirations. The development of modern industry, with its facility in the production of livelihood, promises a time, and that at no very great distance, when this opportunity may be common property, and men everywhere may be able to participate in that unending search after love, beauty, justice, truth—the highest of which humanity is capable.

All of these things lie outside the realm of economics, yet none of them is possible for the masses of mankind until there is established a system of economic life that will provide the necessaries upon which physical health depends, together with an amount of leisure sufficient to enable a generation to find itself.

This is the goal toward which men are working in their efforts to organize economic life, as they strive to provide a fit dwelling-place for the descendants of the world's seventeen hundred millions.

WHAT TO READ

No reader should accept the statements made in this book unless they appeal to his reason and correspond with his experience, nor should he reject them merely because they run counter to his prejudices or his convictions. If the subject-matter of the book is as important as the author believes that it is, the reader should not stop with these brief chapters, but should search farther. The many recent articles, pamphlets and books devoted to economic and social reconstruction give an excellent chance for selection. Here are a few suggestions:

H. deB. Gibbins has written one of the best descriptive books on the economic changes surrounding the industrial revolution. ("Industry in England" London, Methuen, 1896.) See also his "Economic and Industrial Progress of the Century" (London, Chambers, 1903).

Supplement this by reading another old book, "Recent Economic Changes," by D.A. Wells. (New York, Appleton, 1898.)

More up to date, and in the same field, are "The Great Society," (Graham Wallas, New York, Macmillan, 1914, Chapter I); "Economic Consequences of the Peace," J.M. Keynes, (New York, Harcourt, 1920, Chapter II); "The Fruits of Victory," Norman Angell (Glasgow, Collins, 1921) Chapters I and II.

The economic chaos resulting from the war has been described with journalistic accuracy by Frank A. Vanderlip, American banker, in his "What Happened to Europe?" (New York, Macmillan, 1919) and in "What Next in Europe?" (New York, Harcourt, 1922). The European situation is dealt with in great detail by the "Manchester Guardian Commercial." Beginning with April 20, 1922, the "Commercial" has published a very complete series of articles under the general editorship of J.M. Keynes. The series is entitled "Reconstruction in Europe." "America and the Balance Sheet of Europe" (J.F. Bass and H.G. Moulton, New York, Ronald Press, 1921) is a study by two experts that goes into great detail with regard to budgets, public finances, exchange rates and the like. "Our Eleven Billion Dollars" (Robert Mountsier, New York, Seltzer, 1922) gives the same facts, brought up to date and popularized.

The science of economic organization is approached from three quite different positions. First, there are writers who discuss ways of making the economic mechanism efficient. ("Theory and Practice of Scientific Management," Boston, Houghton Mifflin, 1917; "The Administration of Industrial Enterprises," Edward David Jones, New York, Longmans, 1920; "Principles of Scientific Management," F.W. Taylor, New York, Harpers, 1911.) In the second place, there are writers like Thorstein Veblen ("The Engineers and the Price System," New York, Huebsch, 1921, and "The Theory of Business Enterprise," New York, Scribners, 1904) and H.L. Gantt ("Organization for Work," New York, Harcourt, 1919) who desire to see vital changes made in the aims of the whole economic order. Third, there are reformers and radicals who write of a re-made or revolutionized economic order.

At the present time these radical writers fall into three general groups: (1) The Syndicalists of France, (2) the Guild Socialists of Britain, and (3) writers who describe actual economic experiments that are going on in Russia, and to a lesser degree elsewhere. (Note that the "One Big Union" movement of Canada and Australia and the "Industrial Workers of the World" movement in the United States have produced much controversial material but little constructive writing.)

French Syndicalism is well presented by E. Pataud and E. Pouget ("Syndicalism," Oxford, 1913); by Bertrand Russell ("Proposed Roads to Freedom," New York, Holt, 1919) and by Georges Sorel ("Reflections on Violence," New York, Huebsch, 1912).

The case for Guild Socialism is stated by A.R. Orage ("National Guilds," London, Bell, 1914), by G.R.S. Taylor ("The Guild State," Allen and Unwin, 1919), and by G.D. H. Cole ("Self-Government in Industry," London, Bell, 1918, "Chaos and Order in Industry," London, Methuen, 1920, and "Guild Socialism Re-stated," London, Parsons, 1920).

Actual experiments in the control of economic life by the producers are described by C.L. Goodrich ("The Frontier of Control," New York, Harcourt, 1920), who seeks to answer the question: How much control over industry do the rank and file of those who work in it and their organizations in fact exercise? "The Collectivist State in the Making," (Emil Davies, London, Bell, 1914) and "Socialism in Theory and Practice," (H.W. Laidler, New York, Macmillan, 1919), cover somewhat the same ground. The Whitley Committee, in its "Report of an Enquiry into Works Committees" (Great Britain, Labor Ministry) goes into detail on this point. The experiments in Russia are nowhere adequately covered, "The Soviets at Work" (Lenin) was a prediction and a hope rather than a review of achievements. More recent books have been either violently partisan or else so superficially descriptive that they conveyed no idea of the actual state of the economic experiment. It is, of course, in Russia, that the experiments in workers' control are being carried forward on the largest and most complete scale.

There are many other books in English, books in German, French and Russian, pamphlets, magazine articles by the thousands, and reports of special investigations in various technical fields, all of which offer ample opportunity for further study along the lines suggested in this book.

INDEX

Acquisition, menace of, 156

Administration, basis of world, 119

Administrative and producing groups, 111

Administrative authority, concentration of, 81

Administration boards, function of, 122

America, resource monopoly of, 19

American imports, 125

American industry, phases of, 59

Association, scope of, 53

Authority, centralization of, 81

Bankers, as arbiters of industry, 102

Bankers, power of, 102

Barriers to progress, 147

Basic industries, and resources, 19

British foreign investments, 39

Brotherhood, new possibilities of, 20

Budget board, 131

Budget deficits, 30

Business and geographic lines, 62

Business federation, development of, 105

Business organization, nature of, 61

Business, world character of, 62

Capital, transfers of to producer groups, 131

Capitalism and nationalism, 63

Capitalism and profiteering, 65

Capitalism and the class struggle, 66

Capitalism, assumptions of, 139

Capitalism, centralization of, 63

Capitalism, establishment of, 36

Capitalism, failure of, 62

Capitalism, growth of, 66

Capitalism in the Western world, 36

Capitalism, initiative under, 63

Capitalism, limitations on, 62

Capitalism, modifications in, 140

Capitalism, plutocracy under, 65

Capitalism, world rôle of, 62

Capitalist experiment, 138

Catastrophe, menace of, 146

Centralization, in American industry, 59

Chance, part of in progress, 136

Change and chaos, 48

Chaos and change, 48

Class struggle, and capitalism, 66

Climate and civilization, 45

Civilization and climate, 45

Coal, as a factor in civilization, 78

Coal, production of, 17

Coal surplus, where found, 18

Commerce, growth of, 20

Commodity basis for money, 129

Communication, as a world problem, 127

Communication, development of, 16

Competition, and war, 34

Competition, justification of, 38

Competition, morality of, 140

Competition, place of, 139

Competition, profit incentive in, 39

Conflict and economic antagonism, 41

Conscious social improvement, 146

Consumption, education for, 161

Consumption, wisdom in, 159

Co-operation, in modern industry, 37

Co-operation, necessity for, 80

Co-operative world organization, 102

Copper production, world figures, 18

Credit, as a business factor, 103

Creation, stimulation of, 157

Creative forces, scope for, 163

Culture and human aspiration, 162

Debts of European nations, 29

Deficits, in European budgets, 30

Depression, present condition of, 13

Disputes, adjustment of, 132

Disputes board, 132

Distribution and the social revolution, 46

Distribution of world wealth, 42

Distribution of resources, 17

District and division compared, 93

District committees, 91

Divisional congress, organization of, 94

District economic units, 72

District organization, detail of, 90

Divisional and district organization compared, 93

District federations, functions of, 110

Divisional federations, listed, 111

Divisional organization, 72

Economic activity, worldizing of, 15

Economic affiliations, series of, 73

Economic authority, location of, 102

Economic aggression, future of, 125

Economic bureaucracy, 59

Economic causes of war, 34

Economic change, working basis for, 70

Economic changes, frequency of, 62

Economic chaos, source of, 33

Economic competition, extent of, 38

Economic co-operation, necessity for, 20

Economic depression, results of, 31

Economic determinism, effects of, 15

Economic disaster, menace of, 29

Economic disintegration, signs of, 31

Economic district organization, 90

Economic evolution illustrated, 66

Economic federalism, 59

Economic forms, 60

Economic foundations, 51

Economic foundations for world organization, 23

Economic groupings, listed, 57

Economic institutions, instability of, in Europe, 28

Economic interdependence, 18

Economic isolation no longer possible, 15

Economic justice, need for, 26

Economic leadership, 85

Economic life, chaos in, 67

Economic life, new basis for, 47

Economic machinery, ownership of, 84

Economic muddle, 28

Economic organization by divisions, 92

Economic organization, details of, 88

Economic organization, need for science in, 69

Economic needs, 14

Economic needs, enumerated, 44

Economic organization, by districts, 72

Economic organization, lines of, 58

Economic organization, nature of, 60

Economic organization, world units of, 72

Economic power, and the bankers, 103

Economic power, for the producers, 117

Economic problems, enumerated, 36

Economic problems, growing complexity of, 15

Economic problems, nature of, 36

Economic program, basis for, 22

Economic questions of world scope, 121

Economic reconstruction, principles of, 25

Economic rivalries and war, 41

Economic self-government illustrated, 88

Economic statesmanship, 23

Economic states rights, 59

Economic structure, nature of, 69

Economic structure, variation in, 69

Economic system, divisions of, 57

Economic units, character of, 70

Economic units, classes of, 71

Economic units, efficiency in, 69

Economic units, integrity of, 80

Economic units, local control of, 89

Economic units, nature of local units, 71

Economic units, needs of, 79

Economic units, productivity in, 80

Economic world outlook, 28

Education, function of, 141

Education, possibilities of, 142

Energy, rewarding of, 83

Engineers, present position of, 34

European bankruptcy, threat of, 28

European budget deficits, 30

European war debts, 29

Exchange and credit board, 128

Executive, functions of, 86

Executives, selection of, 86

Expansion, costs of, 64

Experience, costs of, 141

Experiment, social value of, 135

Experiment, uncertainty of, 140

Expert, selection of, 86

Exploitation, increase of, 41

Federalism, principle of, 53

Federation, in social organization, 104

Finance, derangement in, 29

Financial imperialism, costs of, 64

Financial imperialism illustrated, 39

Food Imports of Great Britain, 19

Financial stability, basis for, 29

Forethought, possibilities of, 142

Foreign exchange, demoralization of, 31

Foreign investment as a science, 39

Freedom, human desire for, 152

Freedom, struggles for, 152

Functional economic units, 57

Geographic divisions, organization of, 92

Geographic units, scope of, 72

Government control of industry, 37

Great Britain, food imports of, 19

Great Britain, foreign investments of, 39

Great revolution, phases of, 49

Hard times, history of, 31

Hiring and firing, new plan for, 89

Human aspiration and culture, 162

Human effort, results of, 46

Human nature, limitations on, 158

Human values, conservation of, 79

Hunger struggle, elimination of, 153

Ideal and the real, 74

Improvements and betterments, 25

Imperialism, costs of, 64

Imports of the United States, 125

Income distribution, 36

Indebtedness, since the war, 29

Industrial change, through discovery and invention, 16

Industrial efficiency, need of, 25

Industrial federation, groups of, 108

Industrial federations, problems of, 107

Industrial leaders, change in type, 67

Industrial organization, evolution of, 61

Industrial revolution, and production, 47

Industrial revolution, effects of, 47

Industrial revolution, spread of, 15

Industrial revolution, suddenness of, 47

Industrial system, characteristics of, 101

Industrial waste, 32

Industrial waste, responsibility for, 32

Industrialism, effects of, 16

Industries, interrelation of, 37

Industry, dependence on raw material, 16

Industry, divisional organization of, 92

Industry, government control of, 37

Initiative, loss of under capitalism, 63

Initiative, stimulation of, 83

Intelligent social direction, 145

Iron ore, production of, 17

Job-ownership, 36

Judiciary, basis for, 132

Knowledge, accumulations of, 143

Knowledge, additions to, 143

Knowledge through suffering, 144

Knowledge, through trial and error, 135

Labor federation, development of, 105

Labor units of value, 129

Laissez-faire, abandonment of, 146

Leadership, changes in type of, 67

Leadership, classes of, 86

Leadership in economic affairs, 85

Leadership, methods of selection, 87

Leadership, selection of executives, 86

Leadership, through heredity, 87

Leadership, through self-selection, 87

Leadership, through social choice, 88

League Covenant, principles of, 23

League of nations failure, 23

Leisure, function of, 162

Liberty, through producers' organization, 159

Life, continuity of, 14

Limitations on capitalism, 62

Livelihood, guarantee of, 45

Livelihood struggle, 43

Loans, under a producers society, 131

Local autonomy, necessity for, 60

Local economic problems, 36

Local economic units described, 71

Local economic units, details of, 88

Local federations, character of, 109

Local federations, problems of, 109

Local initiative under capitalism, 63

Machine ownership and self-government, 85

Manufacturing, divisions of, 58

Mass life, effects of, 139

Mass meetings, for public issues, 92

Maximum advantage, law of, 75

Maximum efficiency, need of, 78

Maximum returns, essentials for, 79

Meliorism, interest in, 74

Militarism, in Europe, 35

Minimum outlay, law of, 77

Modern business methods illustrated, 39

Modern warfare, costs of, 64

Money as a commodity, 129

Money, function of, 128

Money, future of, 128

Money, labor as a basis for, 129

Money, present uses of, 129

Monopoly profit, law of, 33

National boundaries and business, 62

Nationalism and capitalism, 63

Nationalism, and existing problems, 121

Nationalism, and world progress, 63

Nationalism, costs of, 64

Nationalism, failure of, 64

Nationalism, narrowness of, 64

Natural resources, classified, 45

Necessities, provision of, 161

Next steps, 149

Next war, preparations for, 35

Organic function, 54

Organic nature of society, 53

Organization, difficulties in, 152

Organization, need for, 151

Organization of world federation, 113

Organization, world need of, 101

Owners, organization of, 61

Ownership of economic machinery, 84

Paper money, issues of, 29

Parliament, for the world, 113

Physical hardship, elimination of, 154

Plutocracy, growth of, 65

Policy, decision of by self-direction, 85

Political federation, experience with, 104

Political life, organization of, 73

Politics, elimination of, 112

Possession, emphasis on, 156

Poverty, losses through, 14

Power, centralization in industrial groups, 112

Present-day economic problems, 36

Primitive society, economic issues in, 15

Primitive struggle, freedom from, 153

Producer groups, organization of, 73

Producers, future of, 117

Producers, power to, 117

Producers' federations, by districts, 110

Producers' federations, groups of, 108

Producers' world federation, character of, 111

Producer groups, control of industry by, 104

Production, necessity for, 44

Production of raw materials, 17

Productivity,  necessity for maintaining, 80

Producing and administrative groups, 111

Production versus profit, 33

Profit and competition, 39

Profit versus welfare, 68

Profiteers, and capitalism, 65

Progress, barriers to, 147

Progress of self-government, 97

Progress through experiment, 137

Raw materials, limitations on, 17

Raw materials, struggle for, 39

Reconstruction, economic basis for, 49

Reconstruction, principles of, 25

Resource control, as a world problem, 122

Resources and raw materials board, 124

Resources, relation of to basic industries, 19

Results and initiative, 84

Sabotage, 33

Science and society, 51

Sectionalism, failure of, 100

Self-government in local economic affairs, 88

Self-motivation, need of, 80

Self-government, progress of, 97

Selection of leaders, 87

Separatism, passing of, 20

Servility, elimination of, 155

Shop committees, organization of, 88

Social administration, difficulties of, 74

Social book-keeping, function of, 103

Social change and intelligence, 145

Social disaster, as a means to knowledge, 144

Social drive, basis of, 82

Social experiment, basis for, 145

Social federation and social activity, 57

Social groups, federation of, 57

Social functions, specialization of, 56

Social improvement, 146

Social inertia as a problem, 82

Social knowledge, accumulations of, 143

Social knowledge, limitations on, 52

Social machinery and body machinery, 54

Social organization, of the owners, 61

Social organization through federation, 104

Social organization, through producers, 117

Social philosophy, restatement of, 146

Social problems, handling of, 148

Social relations, growing complexity of, 56

Social revolution and distribution, 46

Social science, future of, 148

Social science, needs of, 146

Social science, principles of, 51

Social structure, nature of, 61, 69

Society, as an organism, 53

Society, science of, 52

Sources of economic waste, 32

Soviet Russia, and world peace, 34

Specialists, place of in world administration, 123

Specialization in society, 55

Standard Oil Company, 59

Statesmanship, economic foundations of, 23

Success qualities, 150

Suffering as a basis for progress, 144

Surplus, effect on human effort, 77

Transport, place of in industry, 127

Trial and error in society, 135

Underground organization of business, 67

Value, new standards of, 130

War, economic causes of, 34

War debts, 29

War, elimination of, 154

World finance, chaos in, 29

War, forms of, 154

War, increased cost of, 64

War, new preparations for, 35

War, object of, 155

War promises, failure of, 13

War-menace, and chaos in industry, 34

Waste in industry, 32

Wealth concentration, effects of, 43

Wealth distribution, 36

Wealth, distribution of, 42

Wealth of nations, 42

World administration, 119

World administration, basis of, 119

World administration, detail of, 133

World administration, field of, 120

World authority, lack of, 106

World commerce, growth of, 20

World common interests, 26

World conflict, sources of, 27

World disillusionment, 13

World economic organization, detail of, 88

World economic organization, diagram of, 97

World economic questions, 121

World economic solidarity, 22

World economics and the League, 23

World economics, chaos in, 28

World federation, detail of organization, 113

World industrial congress, organization of, 96

World industrial units, 72

World industry, organization of, 95

World isolation, passing of, 20

World need of organization, 101

World organization, beginnings in, 24

World organization, principles of, 25

World parliament, organization of, 113

World organization, problem of, 24

World parliament, possibilities of, 120

World politics and the League, 23

World problems, enumerated, 122

World problems, method of approach, 121

World producers' federation, character of, 111

World producers' federation, form of, 107

World producers' federation, scope of, 112

World producers' federation, structure of, 113

World reconstruction, basis for, 49

World resources, distribution of, 17

World thinking and organization, 26

World thinking, basis for, 100

World thinking, economic basis of, 22

World wealth, distribution of, 42

Worldizing economic activity, 15

HAMMOND PRESS
W.B. CONKEY COMPANY
CHICAGO

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