Twentieth Century Socialism Part 10

-- 2. CROSS FREIGHTS

Another waste attending the compet.i.tive system results from "cross freights," the double freight a refiner sometimes pays for hauling oil from the well, or sugar from the nearest seaboard and back over exactly the same ground, when refined, to the customer. So also the steel manufacturer sometimes pays freight for hauling ore to the coal mine or coal to the ore, and back, after smelting, to the customer.

This waste resulting from cross freights is only a small part of a similar waste that results from compet.i.tion in the task of distribution--or retail trade.

We are all familiar with the amazing results obtained by the national enterprise known as the Post Office, and how, for the insignificant sum of two cents, a letter written in New York can be delivered in an incredibly short s.p.a.ce of time in San Francisco, and even perhaps more incredibly in the heart of the Rocky Mountains.

Let us consider for a moment the cost of doing this were letters distributed throughout the country in the same way as our other commodities, as for example, milk, coal, or bread. It would be interesting to calculate how many hundred dealers in milk there are in New York[68] or London, equipped with their own horses, wagons, and men, each engaged in delivering milk all over the city; add to these the thousands distributing in like manner bread, and the thousands distributing coal, and so on with b.u.t.ter, eggs, meat, fish, vegetables, and all other things that enter into our daily consumption.

Every block of houses is served with milk by this large number of milk dealers instead of by one, as would be the case if the distribution of milk were in the hands of one agency; so every block is furnished with b.u.t.ter, eggs, meat, fish, and vegetables by this large number of dealers in b.u.t.ter, eggs, meat, fish, and vegetables, instead of by one, and so on, through every article that enters into our daily use.

Compare with this the economy of time, labor, and expense effected by the Government Post Office through sorting letters beforehand according to streets, and confining the distribution in any one street to a single carrier who distributes the letters with the greatest economy of time and labor, from door to door.

No practical business man would be guilty of the stupidity of putting a hundred men to do the work that could be done just as well by a single man; and yet, this is exactly the stupidity of which the compet.i.tive system is guilty. Let us consider the unnecessary number of butcher shops in the city of New York.[69]

Before methods of communication had attained their present development, it was necessary that there should be butcher shops in every block to satisfy the needs of the people in the block. But to-day, the telephone service permits of ordering meat at a great distance, and the automobile permits of this meat being rapidly delivered to the consumer. The best housekeepers residing downtown to-day go for their meat to a butcher who lives in Harlem. Now there is no reason why this Harlem butcher should not furnish all the meat to the island of Manhattan, or indeed to all in Greater New York. But there is a reason why under our compet.i.tive system this should not take place, and this is the stupidity of butchers in particular and the stupidity of the community at large. Most butchers believe that they can make most money by cheating their customers; and the public at large believe all butchers equally dishonest and therefore deal with the butcher nearest them. This stupidity is to a great extent justified. The art of the butcher consists in finding out to which customers he can sell third-cla.s.s meat at first-cla.s.s prices;[70] and as a rule, he is so successful in doing this that no butcher is ever known to fail. On the contrary, they all grow rich. This being the rule, the public is justified in giving up the expectation of being honestly served, so that it is only the most intelligent housewives who discover that there are butchers who do not have dishonest methods. Thus the stupidity of butchers and public tends to encourage the multiplicity of shops and keeps in the butcher business an enormously larger number than is necessary. If now we take into consideration that what is true of butchers is true of almost every dealer in the articles of food we consume, we shall appreciate how much waste of human effort there is in this business of distribution.

But all this waste, encouraging stupidity in the customer and dishonesty in the retailer, is endorsed because it "makes character!"

Last but not least is the loss of by-products that inevitably results from manufacturing upon anything less than a gigantic scale.

The managers of the Standard Oil Trust testify that among the waste products capable of being utilized in sufficiently large refineries are gasoline, paraffine, lubricating oil, vaseline, naphtha, aniline dyes, and no less than two hundred drugs; and that the total value of these waste products is actually as great as that of the oil itself.[71]

Is or is not the contention with which this chapter started, justified? It was charged that the compet.i.tive system is stupid because wasteful and disorderly, and that it was unnecessarily immoral, unjust, and cruel. The testimony of men recognized as the highest authorities has been produced to demonstrate its wastefulness:

Waste of capital owing to bankruptcy, to working at irregular efficiency, to frequent change of dimension, to cost of "getting the market," to cross freights, to anarchy of distribution, to loss of by-products;

Waste of human energy in the work of compet.i.tion; and above all in unemployment leading to vagrancy and pauperism.

And we need produce no testimony to prove things so obvious as the immorality, injustice, and cruelty of overemployment and unemployment and the necessary results thereof: drunkenness, disease, pauperism, prost.i.tution, insanity, and crime.

One word only still needs explanation: It has been stated that this immorality, injustice, and cruelty are "unnecessary." It is useless to rail at these things if they are necessary. Nature is often immoral, unjust and cruel. The survival of the few fit and the corresponding sacrifice of the many unfit has no justification in morality. Death, deformity, and disease are often both unjust and cruel. Yet against these last we are in great part helpless. It is not enough to show that the compet.i.tive system results in evil; we have to demonstrate that these evils are avoidable; and that our remedy for them will not involve still greater evils. This belongs to the final chapters on Socialism; and is referred to here only to a.s.sure the reader that it has not been overlooked.

Sufficient emphasis, however, has not yet been put upon the lack of order that characterizes the compet.i.tive system.

FOOTNOTES:

[65] "A Plea for Liberty," p. 17:

"Under our existing voluntary cooperation with its free contracts and its compet.i.tion, production and distribution need no official oversight. Demand and supply, and the desire of each man to gain a living by supplying the needs of his fellows, spontaneously evolve that wonderful system whereby a great city has its food daily brought round to all doors or stored at adjacent shops; has clothing for its citizens everywhere at hand in mult.i.tudinous varieties; has its houses and furniture and fuel ready made or stocked in each locality; and has mental pabulum from halfpenny papers, hourly hawked round, to weekly shoals of novels, and less abundant books of instruction, furnished without stint for small payments. And throughout the kingdom, production as well as distribution is similarly carried on with the smallest amount of superintendence which proves efficient; while the quant.i.ties of the numerous commodities required daily in each locality are adjusted without any other agency than the pursuit of profit."

[66] Report of the Industrial Commission, pp. 829-831, Vol. I, 1900.

[67] Ibid., pp. 27-36.

[68] This work has been in part eliminated by combination. But the economies resulting therefrom have all gone to the combinations. The consumer pays just as much as he did before.

[69] Trow's Business Directory of New York city, 1909, lists about 4000 retail butcher shops in Manhattan and The Bronx. There are about 275 postal stations in the same territory.

[70] All good housekeepers know this by experience. I know it from the butchers themselves, who explained it in the course of an effort to arrange a combination of butchers in Paris.

[71] Testimony of Mr. Archbold (pp. 570-571) in the Report of the Industrial Commission, Vol. I, 1900.

CHAPTER III

CAPITALISM IS DISORDERLY

Nature is both orderly and disorderly. She is orderly, for example, in the general succession of her seasons, in the average rainfall, the average suns.h.i.+ne. She is orderly in the regular drawing of water from the ocean to the hills and the return of water from the hills to the ocean. But Nature is extremely disorderly in her detail. Some years rainfall is deficient and men starve because of drouth. Other years the suns.h.i.+ne is insufficient and men starve because of rain. The beneficent flow of water from the hills to the ocean is attended by disorder which is often calamitous; the river swells to a torrent in one place and spreads out to unwholesome marshes in another.

The power of man to profit by the order of Nature and to adjust its disorder is an attribute that makes man almost divine; for this power exerts as great influence over the soul of man as over the matter of Nature. Man has demonstrated his control over Nature by protecting himself against deficiency of water through reservoirs, and against excess of rain through drainage; he has robbed torrents of their terrors by d.y.k.es, and made them his servants by irrigation; he drains the swamp and waters the desert. In one respect only has he failed to exercise as yet sufficient control; namely, the compet.i.tive system.

The compet.i.tive system is applauded by Herbert Spencer because he finds it in Nature. But Nature does not proceed only upon the compet.i.tive plan. She furnishes us with the beehive and anthill as types of cooperation, from which man can not only learn a lesson, but receive a warning; for the evils that attend the cooperative plan of the beehive are almost as great as those that attend the compet.i.tive or predatory system.[72] What man then has to do is not blindly to follow Nature either as respects her compet.i.tive system or her cooperative system; but to do in this direction what he has done in others--profit by what is good and orderly in Nature and suppress what is evil and disorderly in it.

-- 1. ANARCHY OF PRODUCTION AND DISTRIBUTION

The intelligent business man has been at work in suppressing the evils of the compet.i.tive system. He has found the waste and disorder attending unlimited compet.i.tion so abominable that he has suppressed compet.i.tion to the utmost possible by the organization of trusts. It has been pointed out that the disorder attending our production and distribution gives rise to anarchy in both these departments of industry. As long as every man is free to produce exactly what he chooses--what he thinks will benefit him, there is no rational relation between supply and demand.

(_a_) _Tyranny of the Market_

This process is going on in every industry. Capital rushes away from business where there is no profit to business where there is profit.

The result is that the capitalist generally discovers a demand for an article too late to profit by it, and does not discover that there is no demand for an article until he is ruined by the discovery. The boasted "fluidity of capital" causes it to pour from one industry to another in obedience to what is called "the market"; and of all the despotisms that the folly of man has subjected him to, none for stupidity and pitilessness approaches the market. So long as there was no large-enough combination of capital to acquire knowledge of the supply and demand that determines market price or to any extent control it, no man, however intelligent, could tell when prices were going to rise and when to fall. And although the older economists loved to dwell upon the fluidity of labor as well as upon the fluidity of capital, they failed to take account of the bankruptcy that attends the one or the appalling conditions that attend the other. For when the supply of labor is large and factories are running at low capacity; when men and women are seeking employment, and the demand for labor is small, the effect of this law is to reduce wages below the rate necessary to support life; the unemployed are then reduced to a choice between the almshouse and starvation.

This evil consequence is a matter over which isolated employers have little or no control; for the very same cause that reduces wages reduces also the price of goods. It is because the demand for goods is small that the manufacturer has to run his factory at a reduced capacity; and the demand being small, the manufacturer cannot get a remunerative price for his goods. Now the thing that reduces prices is compet.i.tion, and the thing that reduces wages is compet.i.tion, and the main source of every financial, commercial, and industrial disaster is compet.i.tion. Employer and employee are alike subjected to the levelling principle. The moment a particular manufacture is found to be profitable, and therefore able to pay a high rate of wages, new factories are started and wages reduced by the compet.i.tion of workingmen. The flow to this industry, therefore, of both capital and labor, inevitably reduces not only wages by the direct compet.i.tion between workingmen, but also the profit out of which high wages were originally paid.

Employer, therefore, and employee are both slaves of the market; the employer cannot get more than the market price for his goods, and out of this he has to pay for his raw material, the cost of running the factory, and the wages of his men. He cannot reduce the price of raw material nor the cost of running the factory--rent, fuel, etc.; these too are determined by the market. The only thing he can reduce is wages: so he is driven to reduce wages or close his factory, for he cannot long run his factory at a loss.

And so anarchy of production and anarchy of distribution lead inevitably, as all anarchy does, to despotism--the despotism of the market.

(_b_) _Tyranny of the Trust_

Now trusts are an attempt of capital to escape from the tyranny of the market, to eliminate the waste of compet.i.tion and bring order in the place of disorder by making supply proportionate to demand. The testimony of John D. Rockefeller before the Industrial Commission is illuminating on this subject. In answer to Question 9, he says that he "ascribes the success of the Standard Oil to its consistent policy to make the _volume of its business large_." To Question 10, he says he did this "by cooperation, or what is the same thing, combination." But the necessity of keeping the volume of the business large made it indispensable to extend the market. He says "Dependent solely upon local business, we should have failed years ago. We were forced to extend our market and to seek for export trade." "And so," he says, "the Standard Oil spared no expense in _forcing_ its products into the markets of the world."

The despotism of the market extends over the whole world. It is impossible for any one nation to organize its industry, or for the industry of any one nation to organize itself, under a world-wide compet.i.tive system, without taking into consideration the conditions of the world market. The Standard Oil could not maintain prices in compet.i.tion with foreign oil. It had to carry the industrial war into Europe and Asia, and did this by eliminating compet.i.tion at home; putting an end to anarchy of distribution as well as to anarchy of production; by transforming the whole system through the building of pipe lines, the use of tank cars and tank steamers, through an enormous aggregation of capital, and the use of every ingenious improvement. The Standard Oil succeeded in doing this and "receiving in return from foreign lands nearly $50,000,000 per year."

Mr. Rockefeller is an adroit witness, and carefully refrained from reference to the methods by which compet.i.tion was crushed as an indispensable preliminary to what he calls the "enlargement of the business." Mr. H.O. Havemeyer, President of the Sugar Trust, was more frank. Here is his testimony on this subject in full:

_Q._ (By Senator Mallory) "Did I understand you to say--perhaps I may have misunderstood you a while ago--that it was your policy to make as much profit out of the consumer as you possibly could?"--_A._ "Consistent with business methods."

_Q._ "Consistent with business principles. In other words, your idea is that your organization, the American Sugar Refining Company, will, if it can, get the maximum profit out of its business from the consumer. Now, I also understood you to imply at least that it is the policy of the American Sugar Refining Company to crush out all compet.i.tion if possible."--_A._ "But that is not so; there is no such testimony. I understand it has been put in that form by one of the gentlemen here, but it is not the fact. What I said was that it was the policy of the American Sugar Refining Company to maintain and protect its trade, _and if it resulted in crus.h.i.+ng a compet.i.tor it is no concern of the American Company; if he gets in the press, that is his affair, not ours_."

_Q._ "And if anyone interferes with the business, profits, or compet.i.tion of the American Sugar Refining Company, it is its policy to prevent it if possible?"--_A._ "By lowering profits to defy it."

_Q._ "And if it results in crus.h.i.+ng him out?"--_A._ (Interrupting) "That is his affair."