Delphi Complete Works of Stephen Leacock, page 790
“The poor you have always with you,” so at least it seemed for ages. Among primitive mankind, shuddering in the dripping woods, alternately warmed and frozen, gorged or starved, poverty was a part of life itself. No primitive language has a word for “poverty.” Even among half-civilized men some had to be poor. Barbaric splendour, Athenian culture rested on poverty as the base of the social pyramid. The wisest people, the Platos and the Aristotles, said that it had to be so; there was not enough of wealth to go around, and so all that was to them highest in life could only exist on condition of the existence of a servile class.
Plato and Aristotle both declared poverty, even in its main Greek form of slavery, to be natural, an essential part of the necessary order of things. This assumption of inevitable social distinction between high and low, between “gentle” and “simple” as things that had to be, in other words the assumption of a class system, has carried down the centuries almost, if not quite, until today. Indeed in the older countries, certainly until yesterday in England, it lay at the basis of the thinking of many people, even of the best and kindliest of people. It expressed itself in the rubric of the Established Church enjoining on each the duty of doing his duty in the state of life into which it had pleased God to call him.
It is indeed one of the distinctions between the older world and what we still call the new countries that this assumption of a class system (a fixed system as apart from the ups and downs of money) does not exist. In Canada it died away with the feudalism of New France and the misplaced “aristocracy” of Governor Simcoe’s Upper Canada. In a country as happy as ours in its heritage of open land and forest the idea of the necessity of poverty was replaced by the idea of the necessity of work, the duty of each one to support himself. Hence the notion of a class system was replaced by the conception of a mobile society, its individuals now up now down according to luck and ability — as expressed in the common saying, “shirt-sleeves to shirt-sleeves in three generations.”
But we were saying that this class system and the ideas that accompanied it, grew up because all through the centuries poverty seemed inevitable. The change from ancient times to mediaeval made no difference in this respect. For with all the external differences that separated the two epochs there remained in this regard the same environment and the same attitude towards it — poverty as man’s necessary lot redeemed as might be by charity and by the vision of a life to come. In the Middle Ages the rich lived in a rude and dirty comfort. The poor lived like hogs. Certain historians like to talk of the “rude plenty of the fourteenth century.” But it was rude indeed, a wattled hut, rushes on a dirt floor, a pig included, lots to eat — acorns, dead crows, all sorts.
As against this were the savage countries, our North America, where no one worked but everybody shivered. The shirt-tail savage in his blanket alternately froze and thawed. The “noble savage” of the poets, living on the plenty of “the chase” is just a fiction. In reality he had to chase himself.
The march of poverty down the ages is stamped upon our literature. Our children’s stories which date back through the centuries begin with, “Once upon a time there was a poor fisherman,” or better still, “a poor woodcutter”: to be poor meaning to be honest and deserving. Hence the child’s social outlook began with a wistful pity for poverty but with the understanding of course that it was an inevitable part of life.
Then came into the world a great light like the dawning of a new day over the hills. This was around the middle of the eighteenth century, in other words, in time’s long record only yesterday. At this period began the two great moving forces, the doctrine of individual liberty and the rise of machine industry that have since transformed the world. The advance of science and the progress of invention began to accelerate man’s power of production beyond all previous dreams. The purely abstract science of the previous century, the work of Galileo and Newton, here bears fruit in the practical works of Watt and Arkwright and Stephenson, the use of steam power, the invention of mechanical spinning and weaving, the smelting of iron with coal, all the new glory of the machine — drab and dirty and clangorous but announcing a new world. Such was the Industrial Revolution that originated in England and within a century spread over western civilization, multiplying its power with every decade.
Nor was the advance only mechanical. The transformation of man’s work was accompanied by a transformation of man’s thoughts. The fires of the old theological controversies that previously absorbed the best intellects died low, religious toleration turning them to ashes — never quite dead, alas! but at least no longer obstructing the path of the new speculative thought. In the place of angry argument over dogma arose the new philosophy of individual rights, of individual happiness to be achieved by freedom. There is no need to delineate its origins in England, France, and America. It belonged in all three, and in all three changed and even revolutionized society, in America as the basis of a new state, in France by the overthrow of an old one, in Great Britain as a means whereby the treasured glory of the past was preserved by rebuilding it into the present. The Declaration of Independence of 1776, the French Declaration of the Rights of Man of 1789 and the Great Reform of Parliament that swept Britain like a tidal wave, delayed by the war era beyond its time but all the more powerful for the delay — these are the charter documents of individual freedom.
The sophist and the cynic may analyse as they will the doctrine that all men are born free and equal. There is no doubt of what the enunciation of this equality did in re-making the world. Yet even this was only one part, only one phase of the new light. With the new ideal of political liberty as the basis of just government went the doctrine of economic liberty as the basis of a new world of economic effort and reward. The whole clumsy structure of industrial life, the mediaeval survivals of regulated trades, the codes and restrictions that beset work and wages, the laws of migration and settlement that immobilized population — all such interference with free impulse appeared in the new light as only fit to be cleared away as debris of the past from the ground on which the new commonwealth was to rise.
With this began the science of Political Economy. Adam Smith in his Wealth of Nations (1776) wrote it out with Scottish deliberation, taking twelve years to the task. In the half century that followed a hundred and one economists wrote it out in books, condensed it into pamphlets, converted it into laws and made it the guiding policy of Great Britain. John Stuart Mill writing in the middle of the nineteenth century asserted that there was nothing left in it for himself or any future writer to clear up.
Thus rose the famous science of Political Economy, in its earlier days as dogmatic and self certain as its companions the physical or natural sciences. Its proportions were, or seemed, as clear and simple as Euclid. Its tenets could all be written down, as the late Lord Balfour once said of Free Trade, on half a sheet of note paper. It was based on the doctrine that if everyone were left free to follow his own interest then his own interest would lead him as by an invisible hand (the phrase is that of Adam Smith) to advance the welfare of all his fellow men. Free competition would direct all single efforts in the direction most favourable for the common good. Capital would move where it was most needed; labour would be directed to exactly the tasks where labour would bring the greatest return; wages, even if not high, would always under free competition be at least as high as they could be. Production would adjust itself so that the output of a surplus of any commodity would be checked by a fall in its price and a shortage of any commodity would, by raising the price, issue a call for more labour and more capital.
This marvellous automatic machine needed nothing but to be let alone. Laissez Faire was its motto. Such things as combinations of labour and strikes, even if successful, merely aided, so it claimed, one set of workers by plundering all the others. In other words, any interference by combination or by authority or law with what was thought of as the “natural” course of industry was bound to be as futile, as ineffectual as an attempt to interfere with the physical laws of cause and effect, with the law of gravitation itself. Strikes couldn’t raise wages; law couldn’t raise wages. When it was first proposed to pass a Factory Act to shorten the cruel hours of Factory Labour, revealed in all their hideous outline by the Royal Commission of 1833, a leading economist of England (his name was Nassau William Senior) told the nation that to cut one hour of the factory day would bring the factory to a standstill. That hour, he said, was vital to the making of the profit which alone kept the factory in operation. Senior’s “last hour” they called it, and solemn dullards, as dull as the professor himself, took that last hour to their hearts as a consoling drug justifying them in doing nothing. One thinks with equal shame of Senior and of the people who believed him. They are dead this hundred years back but let us see that that spirit does not walk among us. And let us remember that in all such errors of thought or act in the imperfect and abortive free enterprise of a hundred years ago there is not one grain of responsibility or one iota of argument against true free enterprise that we can enjoy today.
One might ask in the words of the American comedians, “Why bring all that up?” The reason is, as said already, that the hand of the past lies heavy on the present. We are seeing here how it was that private enterprise got its bad name and the “profits system” fell under the obloquy of Senior’s last hour. I want to show that those who rant and rave against the “profits system” are ranting and raving against things that happened a hundred years ago — things that in our larger wisdom never need happen among us; that what happened was not the fault of free competition but a result of the lack of it.
It is only those who have read these pages of industrial history who realize the extraordinary prestige and influence of this doctrine of individual freedom in the economic world, now called private enterprise and the profits system. Its ascendancy came from the fact that it was not only an industrial doctrine but a moral one. The doctrine of economic liberty as enunciated by Adam Smith took its place alongside of the doctrine of the political freedom and equality of mankind as enunciated by Thomas Jefferson in the same year. It did not take its full place at that time, for war prevented it, but rather a half century later when the economists and finally John Stuart Mill gave to the theory its classical form recognized throughout the world. Mill’s theory became a gospel. Revolutionaries, persecuted under European tyranny, secreted his forbidden books among their treasures and hugged them to their hearts. A generation of Americans in the United States took it all as axiomatic truth of which the circumstances and environment of their country seemed to afford the proof.
I do not doubt that the essential basis of this was all true. But this first proof, alas, both on paper and in fact was premature, all too simple, took too much for granted. It tried to show that by leaving everything to free competition the industrial world would obtain social justice. All prices high or low, it was claimed, were regulated by the actual costs of making things, all interest on capital freely and competitively used, must conform to the natural return, the natural increase of production which it made possible. The greatest proposition of all was that wages under free competition were at least equitable and socially just in the sense that each man got what he was worth and was worth what he got. If a common labourer got a dollar a day, and a skilled artisan a dollar and a half, the difference, it was said, corresponded to their different productive contribution: and if the manager of an industry received not a dollar a day but fifty dollars a day, that corresponded to the actual superior value of his services. The proof of it, so they argued, was seen in the fact that people were willing to pay him fifty dollars, knowing it would bring a return, whereas, they said, to pay fifty dollars a day to the artisans would bring disaster. Hence they reached the comfortable conclusion that every man gets what he is worth and is worth just what he gets.
Running through all this argument is a track of fallacy as wide as a wagon-track and running round to where it began in what is called a “vicious circle.” For we notice that in order to show what natural price is we add up all the wages that have been paid and declare that to be the cost and then say that the cost governs the price. Then if we are asked why are wages what they are, we turn the argument backward and say that since the selling price is so and so the wages then can be paid out of it only amount to such and such. This explains nothing. It is mere argument in a circle. It is as if one tried to explain why one blade of a pair of scissors is four inches long by saying that it has to be the same length as the other. This is quite true of either blade if one takes the length of the other blade for granted, but as applied to the length of the scissors it is worse than meaningless.
Limited though it is, this economic doctrine of a self-adjusting world has remained as the working outline on which all the later college economics have been based. But the pity is that there is no generally accepted and simple view, stated in language which ordinary people can understand, of the extent to which we need to modify it. We have denials of its validity in toto as from the socialists and the communists, substituting the impossible for the imperfect. And along with this the orthodox college economists have worked the old doctrine over, backwards and forwards, have introduced all kinds of subtleties and all kinds of analysis, translated it into mathematical formulas (which refuse to fit, being incapable of measuring social forces), turned a plain matter into a complex one, an everyday science into an esoteric arcanum, and get no further. Hence I do not think that any outside person — outside of college, I mean — can get much light on the problem of private enterprise from the textbooks. The elementary ones are too vague and too void of conclusions. The really advanced ones, dealing with graphs, curves, marginal satisfactions and saturations are quite unintelligible to the public at large.
Not theory but fact, the course of industrial history, soon showed the shortcomings of individual freedom in its unrestrained form. Wealth it could create: poverty it could not cure. It made the strong all the stronger; the weaker went to the wall. The story of the Factory System of England, let us say from 1820 till 1850, remains one of the darkest pages of social history; the hours of labour adjusted only to the limits of human endurance: children at work as full time workers at ten years of age, and many even at seven; and for wages just enough and no more to equal the “cost of production” — food, shelter and clothing enough to keep the worker at work — no more. The cost doctrine proved here only too true.
Indeed as time went on fact and theory both showed that the old argument had taken too much for granted. It seems amazing that so few people saw the false assumptions involved in this scheme of political economy, and the vital things to be taken for granted before its conclusion could be warranted. Originated in a nation of land owners whose tenure dated back for centuries, it took for granted the right of property and, above all, of property in land as an indefeasible right. It needed the environment of a new country which inspired Henry George’s famous book Progress and Poverty to open the eyes of the world to the dubious aspects of property in land. Inheritance, plenary and unlimited, was also taken for granted, indeed it seemed the very basis of stable society until the new industry brought such huge accretions of wealth that men began to ask that the dead fingers of the dead hand should be opened wide to loosen the wealth they clutch. The cruel facts of the factory industry revealed the fallacy of “free competition” applied to the wages of labour when the so-called free bargain was between employers who could afford to wait and penniless men with starvation at their elbow, compelled to take whatever they could get. Indeed free competition in the means of production was presently seen to be of social value only if the strong, by reason of their strength, are not able to crush the weak, and vested interests cannot by the sheer security of their holdings take their toll of necessity.
Much is thus made in the indictment of “capitalism” and the “profits system” of the suffering and misery of these days of the factory and the slum. In a certain sense the indictment is true but in another sense entirely wrong; indeed, it turns the case around the wrong way. Those things happened not because of free enterprise but for the lack of it. The parties to the bargain were not free, or rather one side, the employers, were free for they were able within wide limits that grew wider still with each advance of wealth, either to run their factories or shut them down: for a long time if need be they could live on what they had. What to them would merely be an enforced holiday would mean for the workers the strangle of starvation. Free enterprise to be really free both for employers and employees must mean for each side of the bargain a certain reserve power. Gradually the power of organized labour has supplied for the worker this reserve. It was cruelly long and slow in coming, with an arduous and painful path to travel. Slowly the twelve hour day of the workers of a century ago has been reduced to the eight hour day of the typical workers of today — a working day that still needs the supplement of a workless Saturday and of a fair plenty of holidays to break the year and an annual vacation to round it out.
Let us admit that this great advance is owed chiefly to organized labour. No mere increase of machine production power would of itself have effected it; nor economic argument; nor would the warmest humanitarianism, the sympathy of a Charles Dickens, or the invective of Thomas Carlyle, have ever asked for more than a part of it, no legislation of any party that ruled during that period in Britain or America would ever have sanctioned it. Time’s economic change has since then turned a full cycle. We realize that organized labour itself, granted a wide enough organization and a deep enough pay chest can become the social tyrant, especially where organized labour is applied to the vital services of our community life. All these forces of today must be balanced fairly in our commonwealth.
