Industrial Democracy (Lyman Abbott)

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In much of the writing and speaking on the subject of the industrial situation, it is assumed that the wages system, which divides society into two classes—capitalists and laborers, employers and employed—is the inherent, essential, and permanent industrial condition of society. It is, on the contrary, of recent origin; certainly modern, I believe transitional. A hundred years ago the weaver owned his loom, the tailor his bench, the cobbler his stall, the stage driver his coach, the woman her spinning wheel. The invention of steam, the spinning jenny, and the power loom, created a necessity for organized labor. Individualism gave place to combination, and combination created capitalism. I believe, and it is this faith which I wish to set before my readers in this article, that, as slavery gave place to serfdom and serfdom to the wages system, so in time the wages system will give place to industrial democracy.

What is industrial democracy? Aristotle divided government into three classes—government by the one, government by the few, government by the many. We have added a fourth —self-government. This is political democracy—"government of the people, for the people, by the people." Industrial democracy is the application of the principles concisely stated in this motto, to the organization of industry; it is the doctrine of wealth of the people, for the people, by the people. In this article I desire to set forth the essential characteristics of this industrial democracy, toward which I believe all industrial changes are tending and will eventually peacefully carry us.

The wealth of the nation is wealth of the people; that is, it springs from the people. It therefore belongs of right to the people. For what are its sources? In twenty-five years the wealth of the nation is reported to have grown from fourteen billion to forty-four billion. Why? What is the secret of this marvelous growth of wealth?

It is, first of all, discovery. We have found in this land unmeasured wealth, which God has in ages long past stored here— forests in northern and north-western States, waiting to do obeisance to the woodman's axe; water power in north-eastern streams, waiting to be lassoed and harnessed by Yankee enterprise; harbors and great river ways, built long before river and harbor bills were dreamed of; coal in Pennsylvania mines and oil in subterranean reservoirs, waiting for pick and blast to call them forth; wheat and corn, sleeping in western prairies until Prince Labor should awaken them with his wand to fruitful life; gold and silver in Colorado and California mines, imprisoned until civilization should unbolt their prison doors and summon them forth. To whom belong of right these treasures which are not of our making? To the people first in possession of the soil V Then they belong to the despoiled Indian races. To the first discoverers? Then to the Spanish and French races; certainly not to the present owners, who are neither the discoverers nor their heirs or assignees. To the men who bring them from their hiding places and make them of value to mankind? Then the forest belongs to the woodman, the coal mine to the operator, the prairie to the cultivator of the soil. Something might perhaps be said for each of these hypotheses; the one hypothesis that cannot easily be defended in the court of reason by any theory is the hypothesis on which we have in fact acted—that they belong of right to the strongest (or to the most grasping and unscrupulous) in a struggle, not for existence, but for wealth, luxury, and power. This wealth has been like a shower of gold pieces flung out into a populous Italian street by a passerby. We have all scrambled for it; a few of the strongest have won the prize, while the rest look on with covetous eyes. This wealth of the continent belongs to the nation; and justice demands such methods of legislation as will give most equitably to the nation this common wealth, and to each member of the nation his share of advantage in the common store.

Next to discovery of wealth hidden in the earth, is what we call invention, which is in truth simply the discovery and application of a like wealth hidden in the forces of nature. We are rich beyond all previous ages because we have found a way to make nature do our work and accumulate our wealth for us. God puts his muscles at the disposal of our brains. He is the genie of the lamp who has come to do our bidding; to be, as it were, our drudge and servant. His water courses grind our grist for us; his fire summons from the water its secret energy and puts at our service unestimated horse power to drive our machinery for us; his lightning comes from the clouds to carry our messages and light our streets and public halls and private houses. To whom belong these natural forces? There is a reason in justice, and a reason in expediency, why the nation should give a large measure of the first profits they yield to the men whose insight first discovers, whose wisdom first applies to useful service, these divine forces. But the forces themselves are not private property; they belong to humanity. The very existence of our patent laws is public testimony to the truth that every such force is public property; private property only so far as the public chooses to relinquish its larger right for its own larger benefit. Industrial democracy claims as its own the crude wealth hidden in the earth, and the more subtle wealth concealed in the forces of nature. Mr. Edward Atkinson estimates that seven persons can with our improved machinery provide bread for a thousand. This fact, which ought to reduce the labor and enhance the wealth of the entire population, enriches the few and leaves the labor and the recompense of the many substantially as before — the labor but slightly lessened, the recompense but slightly increased.

A third source of national wealth has been in franchises created by the people for the public welfare, and transformed into private wealth through public neglect and private sagacity. The railroads of the United States are estimated as worth above eight thousand million dollars, about one half of which is represented by stock. What gives them their value? It is not the road bed, the iron or steel rails, the stations and surrounding grounds; it is that the railroads are the public highways. Formerly our public highways afforded poor facilities for locomotion, but they were free; now they afford admirable facilities for locomotion, but they are private property. The telegraph wires are the nerves of the nation; the railroads are its arterial system. The body politic has sold or given away its nerves and its arteries. The nation could well afford to pay liberally the men who invented the telegraph and created the railroad system. It could afford to pay well for poles and wires, for road bed and stations. If it choose to leave pole and wire, road bed and station under private control, it may certainly do so; whether that is wise or not is matter for further consideration. Here it must suffice to say that the wealth of both telegraph and railroad, of long inter-State lines and of short electric or horse-car lines, is due to the fact that they are indispensable means of intercommunication; this wealth is derived from the public and belongs to the public. Like the wealth of the forests, the mines, and the prairies; like the wealth of gravitation, fire, electricity; it is a wealth of the people, and belongs of right to the people.

All these values, and indeed all values of any considerable consequence, are themselves the product of that civilization which is the common contribution of the nation. The wealth of America has attracted hither millions of immigrants, and has given to our country a growth unprecedented, which fills the student of national life sometimes with a sense of exaltation, sometimes with a sense of awe akin to alarm. But it is this immigration which has created the wealth. These hungry mouths have given a value to our breadstuffs; these multiplied homes have made a market for our coal; these rushing hordes of immigrants and traders have enriched our railway companies. No man ever, by himself, created or ever can create wealth. Into the locomotive have entered the hopes and fears, the successes and failures, the labors and achievements of many lives now ended. The railroad owner cannot, does not, recompense the grave. Your beautiful vase cost Palissy the potter many a pang, though he never saw it; and for the sake of it his wife and children often went supperless to bed. Can you pay them? The wharfage of New York City, which with reckless lack of prevision we have allowed to become private property, is valuable solely because of the three million people who live on and about Manhattan Island. Every farmer in Illinois helps to enhance the value of the Illinois Central Railroad; every shopkeeper in New York adds to the value of every warehouse.

Thus it is clear that our wealth is in its source and origin a common wealth. Our system of exchange is a rude method of balancing values with one another. Possibly there may be no better one discoverable; possibly no amendment of it may be conceivable; but no thoughtful man will contend that it affords absolute adjustment or represents a divine equity. The wealth of every millionaire comes from the resources of the land of which he has gotten control; or from natural forces, the chief grist of which falls into his meal bags; or from public franchises given by the state and created for the state; or from that general advantage which grows spontaneously out of the presence and power of a generally-diffused civilization and an increasing population. The least part of it is that which his own effort has created. The basis for a democracy of wealth is found in the fact that all wealth springs from the people. The basilar factor in our civilization is that wealth, like political power, is of the people.

And therefore it ought to be for the people. At present it certainly is not. It is not necessary, on the one hand, to contend that the rich are growing richer and the poor poorer; it is in vain, on the other hand, to point to the truth that wages are appreciating and interest depreciating. The fundamental fact remains, that while in the United States political power and public education are distributed, wealth is concentrated. The plutocracy which DeTocqueville dreaded is here. Elaborate statistics are unnecessary. Accurate statistics are impossible. A single brief statement may suffice to illustrate a fact patent to any observer of life or reader of the daily press. Mr. Thomas G. Shearman has made a careful collection and comparison of statistics for the purpose of considering the question, Who own the United States? and reaches the conclusion that 40,000 persons own one half the wealth of the United States; that one seventieth of the population own two thirds of its wealth; and that 250,000 families, aggregating possibly 750,000 to 1,000,000 persons, own upward of three quarters of the whole. A friend, an authority in economics, to whom I submit this article in manuscript to insure accuracy in its statistics, thinks Mr. Shearman's estimate of the number of owners too low, but he writes: "It is quite certain that one per cent. of the families of America own as much as the remaining ninety-nine per cent."; and he adds that the concentration of wealth is worse in Great Britain. If these estimates are either of them even approximately correct—and the latter one probably minimizes the concentration—it is clear that the second condition of a democracy of wealth does not exist in the United States; the wealth which really springs from the people is not in fact controlled by, or administered for, the people.

Industrial democracy does not demand simply a division of the wealth of the nation among its 60,000,000 of population. Such a division would have to be repeated in every generation, and would end, not in a common wealth, but in a common poverty. It does not demand that all labor shall receive equal wages, and all men possess equal wealth. It demands equity, not equality. It does not adopt as its own the motto of modern socialism: "From every man according to his ability; to every man according to his need." That is the motto of the church, not of the nation. It is the principle of benevolence, not of justice; and not benevolence but justice should be the basis of the state. But industrial democracy does demand, with Laveleye, "To each worker his produce, his entire produce, nothing but his produce." It agrees with him that "the great problem of social organization is to realize this formula of justice." I do not indeed hold with Laveleye that " if this were once applied, pauperism and divitism, misery and idleness, vice and spoliation, pride and servitude would disappear as if by magic " from among us. Social transformations are not wrought by magic, but by patient labor and painfully slow processes of evolution. There would still be lazy folk who would rather live by begging than by industry; still inefficient folk who could live only by servitude to the more efficient. But organized injustice would disappear from our industrial organization; and with injustice would disappear dangerous, because reasonable, discontent, and the division into the two classes of the very rich and the very poor. Society would still exist in grades, but no longer in castes; and Lazarus would no longer worry Dives with his importunity, nor Dives afflict Lazarus with his scorn.

What is the true basis of ownership? We brought nothing into this world; no infidel was ever so skeptical as to deny that proposition. How then do we get anything? There are three ways. We may create it by our own industry; that is, it may be the product of our labor. It may be given to us by some one who has created it by his industry, either as a free-will offering or in exchange for a product of our own; that is, it may be acquired by gift or purchase. Or we may take possession of it, without leave. In the latter case, if we take it from a private owner, the act is called stealing; if from the public fund, it is called speculation. The wages paid respectively to brain and brawn are perhaps not unfairly balanced; the values of the respective products of industry are perhaps not unfairly matched. But the great fortunes are not made by industry. They are made by men who have had the opportunity and the ability to get possession of the common wealth. They have been acquired by owners of coal and gold and silver mines taking as their own the wealth of the hills; by oil corporations taking as their own the wealth of the subterranean reservoirs; by railroad kings taking as their own the public highways; by landlords taking as their own the wealth of the prairies and the greater wealth of suddenly-upspringing cities. The just reformer will not condemn these makers of great fortunes. He may even commend their sagacity in discerning the opportunity, their forcefulness in seizing it, and their generosity in so using their advantage as to make the public real sharers in their wealth. But he will condemn the system which has to many workers given very much less than the entire produce of their labor, and to many others has given immensely more. Jay Gould commenced life with a mouse trap; after twenty-five years he displays securities worth $100,000,000. Who will claim that he has created this wealth by his industry? Part of it? Yes; but most of it our industrial system has enabled him to take from the public stores— from wealth of natural resources and of public highways that is the product of no man's labor and therefore of right the private property of no man. Industrial democracy may be quite willing that the ratio of profit between brain worker and brawn worker, between captains of industry and privates of industry, be left to be determined in a free and open market by the law of demand and supply; but it insists, and will insist more and more strenuously, that the wealth which is not the product of individual labor shall not become individual property; that what is by its nature common wealth shall remain wealth common to all the people.

Industrial democracy involves the further principle that, as the wealth of the nation comes from the people and belongs to the people, so it should be administered by the people. This is the point concerning which most readers will be skeptical, and here the advocates of the existing system will make their stand. The doctrine that wealth is properly a common wealth, is familiar to political economy and is the basis of the doctrine of eminent domain. The doctrine that it is to be used for the people, underlies the familiar doctrine of the New Testament that wealth is a trust, and the equally familiar doctrine of political economy that it must be active to be profitable. But the doctrine that the common people are competent to administer wealth, will be received with the same sort of skepticism with which its predecessors in the evolution of democracy have been received. Democracy, the doctrine that the common people are better able to manage their own affairs than any one is to manage for them, is accepted by Protestantism in religion, by republicanism in politics, and by industrial democracy in industrialism. The Reformation assumes the capacity of men to answer each for himself the profoundest questions of life: Is there a God? Is the soul immortal? Has God spoken to the soul? How? By church, Bible, conscience, or all three? What are the laws of right and wrong? On what do they rest and how are they enforced? And it regards all priests and prophets as advisers, not rulers, servants, not masters, of the people. Republicanism follows Protestantism in the evolution of liberty. If man can settle for himself the problems of the kingdom of God, he can settle those of the kingdom of men. If he can solve the problems of eternity, he can solve those of time. Priestcraft being repudiated, kingcraft follows. Democracy calls no man master and all men brethren; chooses its own leaders, who become, like the priests and prophets of the church, advisers, not rulers, servants, not masters. Industrial democracy carries this evolution one stage further. It is the necessary corollary of religious and political democracy. If the people are competent to govern an empire, they are competent to govern a cotton mill; if they can select servants to administer a treasury department, they can choose servants to carry on banking; if they can conduct a gigantic civil war to a fortunate conclusion, they can conduct civil industries with successful results; if they can select their own captains for a few years of military service, they can choose their own captains of industry. The real origin of what men miscall our labor troubles is to be traced back to Luther. When men were taught that they had a right to think, the whole world of thought was opened to them; when they were taught that they had a right to govern themselves in the church, self-government, first in the state, and then in industry, followed as the day follows the dawn. In America, our churches, our politics, our school boards, are based on the competence of the people; our industries on their incompetence. Both views cannot be right; one must overturn the other. We cannot permanently have a state based on democratic principles, and an industrial system based on oligarchical principles. We shall become, sooner or later, consistently democratic or consistently oligarchic. The whole labor movement, with its organizations of workingmen, its labor legislation, its strikes and boycotts, its brotherhood of industry, its demand for shorter hours and larger wages, its rude and sometimes barbaric attempts to exercise control over industrial enterprises in which it has no capital invested, its attempts at profit-sharing and cooperation, its proposed nationalization of land and of industries, is all a movement toward industrial democracy; that is, toward such an industrial reconstruction as shall recognize the truth that wealth, like education and political power, is of the people and for the people, and therefore should be administered by the people.

Industrial democracy is not anarchism and does not tend toward it. Anarchism is the doctrine that government is an evil and should be abolished; the doctrine that "government is a necessary evil," pushed to its extreme by striking out the word necessary; an exaggeration of individualism; laissez-faire gone to seed. It is, indeed, the antipodes of democracy, for democracy assumes in men a competence for organization, political, educational, industrial. The one is founded upon a profound distrust of man, the other upon a profound faith in him. Industrial democracy is not nationalism or state socialism. It does not confound the functions of government and of industry; it does not propose to put two incongruous duties upon the same organization. It does not propose that the state shall own all the tools and order all the industries of the community. It does not necessarily even look in that direction. It is certainly not individualism with its pagan motto, "Every one for himself and the devil take the hindmost," and the equally brutal motto (which belongs to the beasts of the forest, but not to man made in God's image and for the realm of mutual service), " The struggle for existence, the survival of the fittest," and, as a consequence, the tragic " unsurvival " of the unfittest. Yet it involves something of each one of these three systems. The industrial democrat would, with the anarchist, reduce government and enlarge liberty; but, unlike the anarchist, he would preserve government as a necessary and beneficent means of preserving liberty. With the socialist he would give to every man a share in the control of the world's industries, and, consequently, in their gains and losses; but, unlike the socialist, he would adjust both control and participation in the profits according to the measure of each man's contribution, not in the ratio of his need and in the inverse ratio of his contribution. With the individualist, he would leave each individual to a free contract in the open market; but, unlike the individualist, he would recognize the truth of the aphorism, "When combination is possible competition is impossible," and he would make unauthorized and undemocratic combinations impossible by promoting combinations of labor and capital upon democratic principles; that is, upon the simple principle of the greatest good to the greatest number.

If I am asked to be more specific, and to indicate what reforms industrial democracy involves, and what are the first steps it will take toward their realization, I reply illustratively, not comprehensively. Industrial democracy means the recognition in private industries of Prof. Jevons's aphorism, that combinations should be perpendicular, not horizontal; that is, that there should be a combination of labor and capital in one organization, in competition with a similar combination of labor and capital in a rival organization, not a combination of all capital in battle array against a combination of all labor. Thus it means an extension of profit-sharing and co-operation, for both of which the device of joint-stock corporations is preparing the way. It means certainly, not a nationalization of all wealth, but such legislation as will preserve to the people the values which properly belong to the people—the mines and oil wells, the undeveloped land values, the forests, the great franchises, and the forces of nature given by our present patent laws too absolutely to the patentee, who is rarely the real discoverer or inventor. It means such reform of taxation as shall prevent the imposition of taxes on the many, to create a surplus in the treasury out of which to pay bonuses or to lend money to the few, whether the borrowers be manufacturers, railroads, ship-owners, sugar-growers, or farmers. It means the total abolition of the methods of partnership now in vogue, by which the state furnishes funds to certain enterprises—sometimes ecclesiastical, sometimes educational, sometimes industrial—and leaves the control in private hands, and the profits, when there are any, in private pockets. It means the adoption of the broad principle, "No appropriations by government to any organizations not under public control and for the public benefit." It means, not the conduct of the industries of the community by the state, but the regulation by the state of all industries on which the life of the state depends; of all natural and necessary monopolies, such as telegraphs, railroads, water-supply, public lighting, and the like; and the absolute ownership and administration by the state of all such industries, in the measure in which cautious experiments may indicate that the public can serve itself cheaper and better than it can hire private corporations to serve it. It seems to me to involve municipal ownership and administration of all street-lighting, and all streetcar routes; federal ownership of the telegraph and telephone service; State regulation of all mines and oil wells; and federal regulation, though probably not federal ownership, of all interstate railway systems.

These seem to me to be first steps in the forward movement. Yet respecting these specific steps I am not dogmatic. My object is accomplished if I have succeeded in setting clearly before the reader the process of the evolution of industry—from slavery, or ownership of the laborer by the capitalist, to feudalism, or ownership by the capitalist of the land, with a lien on the laborer; from feudalism to individualism, or free competition, in an open market, of an almost wholly unorganized industry; from individualism to the wages system, or the organization of industry on oligarchic principles under captains of industry, responsible only to God and their own consciences; from the wages system to industrial democracy, or a system of industry founded upon, and effectually applying, the principle that wealth is of the people, should be for the people, and must eventually be administered and controlled by the people.

Lyman Abbott.

This work is in the public domain in the United States because it was published before January 1, 1924. It may be copyrighted outside the U.S. (see Help:Public domain).