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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                                     13

CHAPTER II. THE ECONOMIC MUDDLE                                      28


2. _World Economic Organization_


III. ECONOMIC FOUNDATIONS                                            51

IV. ECONOMIC SELF-GOVERNMENT                                         76

V. A WORLD PRODUCERS' FEDERATION                                    100

VI. WORLD ADMINISTRATION                                            119


3. _Economic Progress_


CHAPTER VII. TRIAL AND ERROR IN ECONOMIC ORGANIZATION               135

VIII. ECONOMIC LIBERATION                                           151


WHAT TO READ 164


SECTION HEADINGS

CHAPTER    I. THE NEW ECONOMIC LIFE                                  13
               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                                    28
               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                                   51
               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                               76
               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                         100
               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                                  119
               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              135
               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                                   151
               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                                         164




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   Per Cent
                     Produced   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     Tons
                       Produced  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.

[Footnote 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.

[Footnote 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  "   "
   Italy        21  "   "
   Japan        17  "   "

   ("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?

[Footnote 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

           --------------------------------
          |                                |
          | Industrial Board of Managers,  | Sits
          | composed of committee chairmen | Continually
          |                                |
           --------------------------------
                         /|\
                       /  |  \      Each division
                     /    |    \    represented on
                   /      |      \  each committee
                 /        |        \
        ---------    ----------    ---------
       |Policy   |  |Industrial|  |Policy   |
       |Committee|  |Executive |  |Committee|
       |         |  |Committee |  |         |
        ---------    ----------    ---------
                 \        |        /
                   \      |      /
                     \    |    /
                       \  |  /
                         \|/
        -----------------------------------
       | Industrial Congress consisting of | Meets in January,
       | representatives from each of the  | no division less
       | world divisions                   | than twenty members.
       -------------------------------------
                       /|\          \
                     /  |  \          \
                   /    |    \          \
                 /      |      \          \
               /        |        \          \
             /          |          \          \
    ----------    -------------    ---------    \
   |          |  |             |  |         | The producers of each
   |Australian|  |Mediterranean|  |North    | of the world divisions
   |Division  |  |Division     |  |American | are the qualified
   |          |  |             |  |Division | electors for each
   |          |  |             |  |         | industry in each
    ----------    -------------    ---------  division.

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

            ----------------------------------
           |                                  | The world
           | Board of Managers consists of    | executive
           | chairman of administrative boards| with one
           |                                  | member from
           |                                  | each industry.
            ----------------------------------
                             /|\
                          /   |   \
                       /      |      \
                    /         |         \
                 /            |            \
    ---------------    --------------    --------------
   |Administrative |  |Administrative|  |Administrative|
   |Board          |  |Board         |  |Board         |
    ---------------    --------------    --------------
                \            |            /  Boards of
                   \         |         /   experts and
                      \      |      /    specialists with
                         \   |   /     chairmen selected by the
                            \|/      world executive committee.
        ---------------------------------------
       |                                       | Committee meets
       | World Executive Committee consists of | quarterly. No
       | ten per cent of World Parliament      | industry less than
       |                                       | five members.
        ---------------------------------------
                             |
        ----------------------------------------------
       |                                              | Meets in July
       | World Parliament consists of representatives | July. No
       | selected directly by the producers in each of| industry less
       | the major industrial groups                  | than fifty
       |                                              | members.
        ----------------------------------------------
                       /|\            \
                     /  |  \            \
                   /    |    \            \
                 /      |      \            \
               /        |        \            \
             /          |          \            \
    ------------    ----------    ------------    \
   |            |  |          |  |            | The producers in
   |Machine Man-|  |Transport |  |Agricultural| each of the major
   |ufacturing  |  |Industries|  |Industries  | industrial groups
   |Industries  |  |          |  |            | are the qualified
   |            |  |          |  |            | electors of the
   |            |  |          |  |            | industry.
    ------------    ----------    ------------

   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


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