The World As I See It Part 6

I believe that a refusal on conscientious grounds to serve in the army when called up, if carried out by 50,000 men at the same moment, would be irresistible. The individual can accomplish little here, nor can one wish to see the best among us devoted to destruction through the machinery behind which stand the three great powers of stupidity, fear, and greed.

A third ditto

Dear Sir,

The point with which you deal in your letter is one of prime importance. The armament industry is, as you say, one of the greatest dangers that beset mankind. It is the hidden evil power behind the nationalism which is rampant everywhere.…

Possibly something might be gained by nationalization. But it is extremely hard to determine exactly what industries should be included. Should the aircraft industry? And how much of the metal industry and the chemical industry?

As regards the munitions industry and the export of war material, the League of Nations has busied itself for years with efforts to get this horrible traffic controlled--with what little success, we all know. Last year I asked a well-known American diplomat why j.a.pan was not forced by a commercial boycott to desist from her policy of force. "Our commercial interests are too strong,"

was the answer. How can one help people who rest satisfied with a statement like that?

You believe that a word from me would suffice to get something done in this sphere? What an illusion! People flatter me as long as I do not get in their way. But if I direct my efforts towards objects which do not suit them, they immediately turn to abuse and calumny in defence of their interests. And the onlookers mostly keep out of the light, the cowards! Have you ever tested the civil courage of your countrymen? The silently accepted motto is "Leave it alone and don't speak of it." You may be sure that I shall do everything in my power along the lines you indicate, but nothing can be achieved as directly as you think.

Women and War

In my opinion, the patriotic women ought to be sent to the front in the next war instead of the men. It would at least be a novelty in this dreary sphere of infinite confusion, and besides--why should not such heroic feelings on the part of the fair s.e.x find a more picturesque outlet than in attacks on a defenceless civilian?

Thoughts on the World Economic Crisis

If there is one thing that can give a layman in the sphere of economics the courage to express an opinion on the nature of the alarming economic difficulties of the present day, it is the hopeless confusion of opinions among the experts. What I have to say is nothing new and does not pretend to be anything more than the opinion of an independent and honest man who, unburdened by cla.s.s or national prejudices, desires nothing but the good of humanity and the most harmonious possible scheme of human existence. If in what follows I write as if I were clear about certain things and sure of the truth of what I am saying, this is done merely for the sake of an easier mode of expression; it does not proceed from unwarranted self-confidence or a belief in the infallibility of my somewhat simple intellectual conception of problems which are in reality uncommonly complex.

As I see it, this crisis differs in character from past crises in that it is based on an entirely new set of conditions, due to rapid progress in methods of production. Only a fraction of the available human labour in the world is needed for the production of the total amount of consumption-goods necessary to life. Under a completely free economic system this fact is bound to lead to unemployment. For reasons which I do not propose to a.n.a.lyse here, the majority of people are compelled to work for the minimum wage on which life can be supported. If two factories produce the same sort of goods, other things being equal, that one will be able to produce them more cheaply which employs less workmen--i.e., makes the individual worker work as long and as hard as human nature permits. From this it follows inevitably that, with methods of production what they are to-day, only a portion of the available labour can be used. While unreasonable demands are made on this portion, the remainder is automatically excluded from the process of production. This leads to a fall in sales and profits. Businesses go smash, which further increases unemployment and diminishes confidence in industrial concerns and therewith public partic.i.p.ation in these mediating banks; finally the banks become insolvent through the sudden withdrawal of deposits and the wheels of industry therewith come to a complete standstill.

The crisis has also been attributed to other causes which we will now consider.

(1) Over-production. We have to distinguish between two things here--real over-production and apparent over-production. By real overproduction I mean a production so great that it exceeds the demand. This m4y perhaps apply to motor-cars and wheat in the United States at the present moment, although even that is doubtful. By "over-production" people usually mean a condition of things in which more of one particular article is produced than can, in existing circ.u.mstances, be sold, in spite of a shortage of consumption-goods among consumers. This condition of things I call apparent over-production. In this case it is not the demand that is lacking but the consumers' purchasing-power. Such apparent over-production is only another word for a crisis, and therefore cannot serve as an explanation of the latter; hence people who try to make over-production responsible for the crisis are merely juggling with words.

(2) Reparations. The obligation to pay reparations lies heavy on the debtor nations and their industries, compels them to go in for dumping, and so harms the creditor nations too This is beyond dispute. But the appearance of the crisis in the United States, in spite of the high tariff-wall protecting them, proves that this cannot be the princ.i.p.al cause of the world crisis. The shortage of gold in the debtor countries due to reparations can at most serve as an argument for putting an end to these payments; it cannot be dragged in as an explanation of the world crisis.

(3) Erection of near tariff-walls. Increase in the unproductive burden of armaments. Political in security owing to latent danger of war. All these things add considerably to the troubles of Europe, but do not materially affect America. The appearance of the crisis in America shows that they cannot be its princ.i.p.al causes.

(4) The dropping-out of the two Powers, China and Russia. This blow to world trade also does not touch America very nearly, and therefore cannot be a princ.i.p.al cause of the crisis.

(5) The economic rise of the lower cla.s.ses since the War. This, supposing it to be a reality, could only produce a scarcity of goods, not an excessive supply.

I will not weary the reader by enumerating further contentions which do not seem to me to get to the heart of the matter. Of one thing I feel certain: this same technical progress which, in itself, might relieve mankind of a great part of the labour necessary to its subsistence, is the main cause of our present troubles. Hence there are those who would in all seriousness forbid the introduction of technical improvements. This is obviously absurd. But how can we find a more rational way out of our dilemma?

If we could somehow manage to prevent the purchasing-power of the ma.s.ses, measured in terms of goods, from sinking below a certain minimum, stoppages in the industrial cycle such as we are experiencing to-day would be rendered impossible.

The logically simplest but also most daring method of achieving this is a completely planned economy, in which consumption-goods are produced and distributed by the community. That, in essentials, is what is being attempted in Russia to-day. Much will depend on what results this mighty experiment produces. To hazard a prophecy here would be presumption. Can goods be produced as economically under such a system as under one which leaves more freedom to individual enterprise? Can this system maintain itself at all without the terror that has so far accompanied it, which none of us "westerners" would care to let himself in for? Does not such a rigid, centralized system tend towards protection and hostility to advantageous innovations? We must take care, however, not to allow these suspicions to become prejudices which prevent us from forming an objective judgment.

My personal opinion is that those methods are preferable which respect existing traditions and habits so far as that is in any way compatible with the end in view. Nor do I believe that a sudden transference of the control of industry to the hands of the public would be beneficial from the point of view of production; private enterprise should be left its sphere of activity, in so far as it has not already been eliminated by industry itself in the form of cartelization.

There are, however, two respects in which this economic freedom ought to be limited. In each branch of industry the number of working hours per week ought so to be reduced by law that unemployment is systematically abolished.

At the same time minimum wages must be fixed in such a way that the purchasing power of the workers keeps pace with production.

Further, in those industries which have become monopolistic in character through organization on the part of the producers, prices must be controlled by the State in order to keep the creation of new capital within reasonable bounds and prevent the artificial strangling of production and consumption.

In this way it might perhaps be possible to establish a proper balance between production and consumption without too great a limitation of free enterprise, and at the same time to stop the intolerable tyranny of the owners of the means of production (land, machinery) over the wage-earners, in the widest sense of the term.

Culture and Prosperity

If one would estimate the damage done by the great political catastrophe to the development of human civilization, one must remember that culture in its higher forms is a delicate plant which depends on a complicated set of conditions and is wont to flourish only in a few places at any given time. For it to blossom there is needed, first of all, a certain degree of prosperity, which enables a fraction of the population to work at things not directly necessary to the maintenance of life; secondly, a moral tradition of respect for cultural values and achievements, in virtue of which this cla.s.s is provided with the means of living by the other cla.s.ses, those who provide the immediate necessities of life.

During the past century Germany has been one of the countries in which both conditions were fulfilled. The prosperity was, taken as a whole, modest but sufficient; the tradition of respect for culture vigorous. On this basis the German nation has brought forth fruits of culture which form an integral part of the development of the modern world. The tradition, in the main, still stands; the prosperity is gone. The industries of the country have been cut off almost completely from the sources of raw materials on which the existence of the industrial part of the population was based. The surplus necessary to support the intellectual worker has suddenly ceased to exist. With it the tradition which depends on it will inevitably collapse also, and a fruitful nursery of culture turn to wilderness.

The human race, in so far as it sets a value on culture, has an interest in preventing such impoverishment. It will give what help it can in the immediate crisis and reawaken that higher community of feeling, now thrust into the background by national egotism, for which human values have a validity independent of politics and frontiers. It will then procure for every nation conditions of work under which it can exist and under which it can bring forth fruits of culture.

Production and Purchasing Power

I do not believe that the remedy for our present difficulties lies in a knowledge of productive capacity and consumption, because this knowledge is likely, in the main, to come too late. Moreover the trouble in Germany seems to me to be not hypertrophy of the machinery of production but deficient purchasing power in a large section of the population, which has been cast out of the productive process through rationalization.

The gold standard has, in my opinion, the serious disadvantage that a shortage in the supply of gold automatically leads to a contraction of credit and also of the amount of currency in circulation, to which contraction prices and wages cannot adjust themselves sufficiently quickly. The natural remedies for our troubles are, in my opinion, as follows:--

(1) A statutory reduction of working hours, graduated for each department of industry, in order to get rid of unemployment, combined with the fixing of minimum wages for the purpose of adjusting the purchasing-power of the ma.s.ses to the amount of goods available.

(2) Control of the amount of money in circulation and of the volume of credit in such a way as to keep the price-level steady, all special protection being abolished.

(3) Statutory limitation of prices for such articles as have been practically withdrawn from free compet.i.tion by monopolies or the formation of cartels.

Production and Work

An answer to Cederstrom

Dear Herr Cederstrom,

Thank you for sending me your proposals, which interest me very much. Having myself given so much thought to this subject I feel that it is right that I should give you my perfectly frank opinion on them.

The fundamental trouble seems to me to be the almost unlimited freedom of the labour market combined with extraordinary progress in the methods of production. To satisfy the needs of the world to-day nothing like all the available labour is wanted.

The result is unemployment and excessive compet.i.tion among the workers, both of which reduce purchasing power and put the whole economic system intolerably out of gear.

I know Liberal economists maintain that every economy in labour is counterbalanced by an increase in demand. But, to begin with, I don't believe it, and even if it were true, the above-mentioned factors would always operate to force the standard of living of a large portion of the human race doom to an unnaturally low level.

I also share your conviction that steps absolutely must be taken to make it possible and necessary for the younger people to take part in the productive process. Further, that the older people ought to be excluded from certain sorts of work (which I call "unqualified" work), receiving instead a certain income, as having by that time done enough work of a kind accepted by society as productive.

I too am in favour of abolishing large cities, but not of settling people of a particular type--e.g., old people--in particular towns. Frankly, the idea strikes me as horrible. I am also of opinion that fluctuations in the value of money must be avoided, by subst.i.tuting for the gold standard a standard based on certain cla.s.ses of goods selected according to the conditions of consumption--as Keynes, if I am not mistaken, long ago proposed. With the introduction of this system one might consent to a certain amount of "inflation," as compared with the present monetary situation, if one could believe that the State would really make a rational use of the windfall thus accruing to it.

The weaknesses of your plan lie, so it seems to me, in the sphere of psychology, or rather, in your neglect of it. It is no accident that capitalism has brought with it progress not merely in production but also in knowledge. Egoism and compet.i.tion are, alas, stronger forces than public spirit and sense of duty. In Russia, they say, it is impossible to get a decent piece of bread.…Perhaps I am over-pessimistic concerning State and other forms of communal enterprise, but I expect little good from them. Bureaucracy is the death of all sound work. I have seen and experienced too many dreadful warnings, even in comparatively model Switzerland.

I am inclined to the view that the State can only be of real use to industry as a limiting and regulative force. It must see to it that compet.i.tion among the workers is kept within healthy limits, that all children are given a chance to develop soundly, and that wages are high enough for the goods produced to be consumed.

But it can exert a decisive influence through its regulative function if--and there again you are right--its measures are framed in an objective spirit by independent experts.

I would like to write to you at greater length, but cannot find the time.

Minorities