Popular Science Monthly/Volume 33/June 1888/The Philosophy of Commercial Depression
|THE PHILOSOPHY OF COMMERCIAL DEPRESSION.|
IN seeking the explanation of highly complex phenomena, many simple and entirely inadequate causes are apt to be assigned by men who have become absorbed in them to the exclusion of other factors; and an ultimate comprehension of the problem is usually reached when some wide generalization, including many single causes, is found.
Thus^ to account for the recurring waves of commercial depression to which the modern world is a prey, the bimetallist, the protectionist, the free-trader, and other specialists, urge their pet theories as individually sufficient; while in some far-reaching chain of influences, of which these are but necessary links, is probably to be found the complete cause. What follows is as much of an attempt as so brief a space will permit to find for these phenomena a generalization of this kind.
Life, or in more general terms the persistence of any organic aggregate, depends upon adaptation to surrounding circumstances. In the animal creation this adaptation is of two fundamental descriptions: first, the development of structures for the assimilation of nutriment; and, secondly, the development of structures for the obtainment of nutriment in competition with other organisms.
In the physical struggle, which grew more intense with the multiplication of organic forms, this second mode of adaptation reached its culmination in man. Indirectly, through the use of a more developed brain, the human being so employed the forces of Nature as to overcome the teeth and claws and brawn of his animal rivals, and command the life-supporting products of the earth. These transcendent powers, by which the brute creation had been subjugated, men soon turned against each other, and the battle of life between man and man became as terrible as that between man and beast. But, unlike the fierce predatory mammals and the antediluvian monsters over which he had triumphed, the human animal soon ceased to carry on an isolated, individual, effort of self-preservation. Out of the early sexual association of mating, which he developed in common with many other creatures, there sprang the family, the tribe, and finally the nation. Co-operative organization was begun, from which has grown what we call civilized life.
The first grouping of many individuals into a tribe was the birth into the world of a new organism. This new organism has in the course of ages so grown, and developed, and differentiated in the complexity of its functions and structures, that it is recognized by modern philosophy; and the dawning study of the laws under which it lives constitutes the infant science of sociology.
We can not stop here to demonstrate this assertion, which the advanced thought of to-day has accepted and which the world at large is coming more and more to understand, that society, like the individuals of which it is made up, is an organism living by constant adaptation to its environment. To those who deny this, no inquiry into the main topic of our discussion is possible. Assuming it, therefore, to be a necessary postulate to all economic study, let us proceed to examine the character of that organism at the earliest stage of its growth.
The prehistoric human being, or unit with which the social structure was built, must have been, from our nineteenth-century standpoint, near akin to the brutes in the savageness of his instincts. Bred to a life of peril and physical conflict, the aggressive and predatory in his nature must have far exceeded any germs of those gentler attributes at present thought to be distinctively human, Now, as the nature of any whole must be determined by the aggregate natures of its component parts, the super-organic whole which the combination of these earlier individuals created must have displayed in a general way their common traits. In a word, the early tribe or germinal society was an aggressive, predatory organism, striving to perpetuate itself by the annihilation of all similar organisms with which it came into competition.
Why this fact is of importance to our discussion we can at once show. If all organisms perpetuate themselves by the adaptation of their structures to the particular circumstances of their lives, then a knowledge of these circumstances must be a key to the structural peculiarities of any given organism. It follows, therefore, that if the earliest human societies lived, like the animal creation from which they were evolved, by an aggressive struggle with their neighbors, the fundamental social structure must have been one adapted to war.
Let us see if this is not the fact.
The first differentiation traceable in the savage tribes of all times is the rise to power of the strongest or ablest individual of the group, and the growing subordination to his authority of his followers. Along with this is traceable that change in the primitive instincts by which the individual energies are directed to the tribal, rather than the individual welfare, and the latter is in a degree sacrificed to the general good—the germ, in fact, of what we now call patriotism. What advantage to the tribe these changes involve hardly needs stating. Complete subordination to a directing head, like the rapidly co-ordinated muscular actions of a fighting animal, is an absolute necessity to the warlike success of a co-operating group of men. And the willingness of each individual to value the general triumph above his own safety, is no less important to the same end. Out of these two earliest structural adaptations there have grown, in the course of social evolution, a vast complexity of others based upon them, and tending to the successful performance of the same great function—the prosecution of war.
For the elaboration of this truth we refer all who may be skeptical to Herbert Spencer's discussion of the "Militant Type of Society." It suffices for our purpose to point out that this "militant type" is the one in which social organization begins.
In pursuing the ends of early militancy, the active brain of man struck upon a course which has forever lifted him above all other living things, the use and adaptation of external forces for the furtherance of human ends. With the first weapon fashioned by some prehistoric warrior was opened a new field for the exercise of human energy. Work for the purpose of creating was initialed in contrast to the destructive activities of the animal world. Step by step expanding intelligence led the labor of brain and hand first to producing appliances for war, the prosecution of which against both man and beast was necessary to the support of life, and then to supporting life directly by the creation from natural sources of its requirements. To manufacture for man's wants out of Nature's resources began to take the place of a mere sanguinary struggle over her raw materials.
Labor became a partial substitute for fighting.
It needs no demonstration that this new use of the energies had nothing in common with the earlier animal instincts from which the militant social structure evolved. What, then, could be more natural than to find that, with its growth, a structural readaptation of the social organism has been taking place? Such a readaptation has been, and is, in constant progress; and the great authority, to whom we have above referred, traces out, under the title "Industrial Type of Society," the character and tendencies of the structures it is producing.
Thus, starting with the dictum of modern sociology that society is an organism living by constant adaptation to surrounding conditions, we find that its earliest structure is the "militant," fitting it for the predatory life of war; and that a new structure, suited to living by the fruits of productive labor, is being constantly developed by it. Let us briefly contrast these two social structures as they appear in our highly evolved life of to-day.
"Militancy," as is shown in its early development of a chief or tribal leader, entails, above all, autocratic government. A nation, to fight well, must act under one centralized control. It necessitates, furthermore, the existence of the individual for the benefit of the state; as, the more complete the subordination of the part to the whole becomes, the more will the combined energies be concentrated for national ends, and freed from waste in the direction of mere personal requirements. In its completeness, "militancy" means the absolute monarch ruling unquestioning subjects; the development of tyranny in the superior, slavishness in the subordinate, and all those harder and more savage traits which are best suited to the needs of war. It means the worship of might, and the creation of rigid social classes based upon it, such as survive even to-day in the aristocracies of civilized Europe. If "militancy" could be complete in its sway, the word "freedom" would not exist in language, for freedom denotes the assertion of individuality, and "militancy" the merging of all individualities save those of rulers. In a word, society under unqualified "militancy" is very naturally best typified by an army and the system which governs it.
What under this régime would be meant by the word prosperity? When is a militant society prosperous? Obviously, when the end for the achievement of which its structure has been evolved is completely attained; or, to specify, when the maintenance of the liver, of its component individuals has been assured by the forcible destruction of competitors, and the acquisition by capture of all coveted fruits of the earth.
To illustrate by an example: Rome was a community in which the militant organization immensely predominated, and whose unchallenged mastery of the ancient world justifies, as applied to her condition, the word prosperous. This prosperity was achieved through the gradual acquisition, by force of arms, of nearly all the territory of the known world; through an enslavement and absorption of rival communities analogous to the assimilation of food, by an animal organism; and, in fine, through, a literal devouring of all the social organisms in her environment^ which lasted until, like a great parent-cell, she burst into the many smaller cells that constitute the nations of modern Europe.
Turning to "industrialism," as its distinctive features are beginning to show themselves in our modern civilization, we find tendencies almost directly opposite. To begin with, the effort to sustain life by productive labor requires, for its success, that the best energies of each individual should be concentrated on the particular work his capabilities fit him for, and taxed as little as possible by the requirements of society as a whole. Every man must be left to develop himself to the utmost, as the total product of the labor of all can only increase with the efficiency of each. This necessity is soon rendered still more imperative by that early, differentiation in industrial organization which localizes the production of different forms of commodities, and leads to barter; for only in the absence of the capricious meddling of authority can producers of one commodity measure the permanent value of their work in relation to the products of others. Furthermore, that a strong enough motive for the greatest individual exertions may ever exist, the returns of labor must be proportioned to energy expended; and this they never can be when the natural working of cause and effect is set aside by the artificial action of government. The outcome of these facts is the assertion of freedom; the belief, exactly opposed to that of "militancy," that the state exists for the benefit of the individual, and the consequent tending toward popular government.
"Militancy," then, sacrifices the individual to state-preservation. "Industrialism" uses the state as a means to individual betterment. Growing "militancy" produces concentration and increase of governmental power; restriction of the larger human sympathies involved by national enmities; rigidity of class distinctions, and subordination to authority. With growing "industrialism" the sphere of governmental control diminishes; its hold upon individual freedom is relaxed; the common brotherhood of man grows with the intermingling of commercial life, and the class distinctions built up by brute force melt away in the competition of productive energy. The community lives by the separate activities of its units carried on for personal ends, and unimpeded by the unnecessary meddling of central authority. That prosperity under this régime, in its completeness, differs from the prosperity of "militancy," above defined, as daylight from darkness, a moment's contemplation of it will show.
In order to insure it, the aggregated toil of the earth's inhabitants would be left to produce from the soil all the needs of human life. Unhampered by artificial restrictions, and untaxed by waste or destruction, the wealth so produced would more than suffice for this end. Its distribution, left to the natural laws of competition and of supply and demand, would be such that the greatest energy and skill expended would bring the greatest returns; and men would obtain of the world's goods according to their deserts. The prosperity of "industrialism" in its perfection would be but another name for the millennium, when all men would toil in common brotherhood, and each take from the store of wealth produced the equivalent of the work he contributed.
A wide and all-pervading difference thus exists between these types of structure into which the social organism tends to grow, showing itself especially in the utterly unlike conditions each requires to realize prosperity. That they are at variance, and must strive to displace each other wherever they coexist, is too obvious a corollary to need verification. How this fact points to a true conception of the philosophy of commercial depression, let us now see.
A universal law of social progress, with which we are all familiar, is that established systems in thought, morals, manners, government, or any department of human activity, struggle to perpetuate themselves by a fight against all innovations. Whatever is new and progressive, or represents the requirements of an enlarging field of life, has got to gain its foothold in the face of the powerful opposition of the old and pre-established. Those more perfected and exact conceptions of Nature, which we call scientific ideas, have prevailed only after centuries of mortal strife with the inherited superstitions and imperfect generalizations of our semi-civilized forefathers. The progressive and liberal governments of our most advanced nations to-day have been established in spite of the bitter opposition of their predecessors, and are themselves fighting tooth and nail the higher forms that will succeed them. In literature and art old schools strive to deny existence to the new; and, even in the little affairs of our daily lives, we are all permitting the things that are, and "have sufficed to our fathers before us," to keep out the better things that might be.
The result of this universal war between the old forms and the new is, to the former, ultimate change or destruction; while to the latter—and here is the vital point of what we are trying to demonstrate—it is constant retardation.
Every triumph of superstitious ignorance retards the harmonious spread of science; every point gained by the political conservative is a set-back and a hindrance to the attainment of the liberal's greatest ends; and so on, throughout human affairs, is there a check—beneficial in its regulative influence, but still a check—to progress.
Now, what are these substitutions of science, in our knowledge of men and things, for a relative ignorance? Of the newer and better for the old and worn-out in political institutions? Of the new art and literature of broader life for that which stood for simpler feelings and ideas? Of the future of all things human for their past? They are simply the details of the one all including change by which the social organism is passing from "militancy" into "industrialism," That change in which the life of destructive violence, inherited from the brute creation, is giving place to the life of productive labor we call civilization. And, if what is true of these details is true, as it must be, of their collective sum, then the evolution of "industrialism" is constantly suffering retardation from the persistence of established "militancy."
This is the generalization at which we aimed. Commercial depression is due to the retardation of industrial growth produced by the survival of militant organization.
There is but one test for the validity of all theories, and that is their application to the facts of which they treat. To fulfill this test in the case before us, let us turn our attention to Europe, whence the cry of commercial depression has for some years been exceptionally acute.
We find there an armed camp of nations in constant readiness for war; the fruits of the tireless labors of the people drawn off for the nourishment and support of ever-increasing military organization, so that every year turns what should be the reward of growing wealth into accumulating public debt; militancy in the prepondering forms of government; militancy in international relations, successful militancy the ruling ambition at the sacrifice of all industrial aims! But, bear in mind, it is no longer militancy in its prime—like that of Macedonia or Rome. It is modern militancy, riddled through and rotted at the core by civilization. Not one of the great nations, wasting its substance in the costly armament of war, can ever get a return on the fatal investment. The day for enslaving neighboring states and living on the fruits of battle is past. Every costly struggle of the century has left the combatants poorer and retarded their growth. Where are the fruits, to the prosperity of France, of Napoleon's fabulous conquests? to England, of the Crimean war? to Germany, of the war of 1870? to Russia, of her struggle with the Turk? Not one of the parties to these wars has fattened on the spoils of the enemy, and all have been joint losers in the wealth destroyed. How clear, then, is the source of commercial distress! The machinery of war, which can no longer be made profitable, exhausts, in its unnecessary perpetuation, what ought to be the surplus of production. It has become a system of disbursements without counterbalancing receipts, producing scarcity and want.
With what state of facts could our theory more exactly correspond? Is not the condition one where surviving "militancy" is impeding that "industrial" growth in which alone civilized prosperity can be found? Then the only remedy for European poverty and distress is plain. The disappearance of autocratic governments, the disbandment of armies, the repeal of artificial restrictions on trade imposed to raise the revenues of war; in a word, the removal of all that has its roots in "militancy." Slowly, indeed, will this great, far-reaching change come about, but with it alone can the growth of what we call prosperity proceed.
Leaving warlike Europe, and turning home to our own great, peaceful, and hard-working commonwealth, it would seem that "industrialism" being so manifestly the type of American civilization, the existence of commercial depression with us affords evidences fatal to the theory we have been elaborating. How, if this theory be sound, can a land of peace and free government ever be the scene of "hard times"?
First, as a partial substantiation of our position, we would point to the familiar fact that the accompaniment of the predominating "industrialism" of the United States has been a growth of wealth and prosperity far exceeding in rapidity that of any other historic people. All that remains for us to show, therefore, is that the interruptions to this prosperity are to be traced to militant tendencies.
There are two great issues before the American people to-day, in the settlement of which, all are agreed, the national welfare is deeply involved. These are the tariff and the currency issues. Let us inquire into their nature. Institutions, like men, may largely be judged by their genealogy; so let us ask whence came this system of enormous taxes upon imports, the wisdom of which men view so differently. We find it had its birth in the necessities of war. True, the representatives of a number of wealthy industries, which have fattened at the public expense under this artificial barrier to competition, would have us believe that the function of a tariff is to start a nation into industrial activity—the extraordinary implication being that industrial activity would not arise independently of such a device; but of the almost impassable barrier, which confines our commerce to-day, war alone was the creator. To the philosophic observer, then. the tariff can yield but one interpretation: It is a militant appliance for raising money, which has been continued in existence after militant necessities have ceased; and our surplus revenue, drained from the labors of the people and poured into a treasury that has no outlet for it, fitly symbolized its uselessness and waste.
But how about the belief, ever rising to the surface of our political whirlpool, which, in its extreme shape, advocates printed pieces of paper as a medium of exchange; and to-day, in a modified form, urges the use of a silver coin of less than its pretended value? Was it in the slow experience of peaceful commerce that men first detected the supposed benefits of fictitious money? Did the developing needs of industrial life lead to its use? No. Again war was the parent. War, destroying more wealth than the savings of a community could be drawn upon to supply, mortgaged the future with a promissory note; and the mental weakness of many men, which incapacitates them from perceiving the necessary equivalence between a cause and its ultimate effect—from knowing that, in some form or other, every debt incurred must ultimately be met—deludes them into the belief that this note can pass current forever.
Twenty-seven years ago a reversion to militancy was forced upon us by our cruel civil war, which, like a disease, left its deadly taint in the body politic to linger on until to-day. In spite of the enormous growth that our vast territory, our active and laborious population, and the never-ceasing stream of immigration have rendered possible; in spite of conditions for wealth and plenty such as no people ever knew before—through the major part of these twenty years has been felt the influence of some vague deterrent to the completeness of prosperity, and the complaint of trade depression has been almost constant throughout the land. Militant forms, surviving in the tariff and dishonest money, will in time be recognized as the efficient causes of this state of things.
If what we have said stands for a real truth; and if the general underlying cause of all commercial reactions is to be found in the protracted life of a system that society has outgrown, which checks the growth of one more suited to its needs—the realization of the fact can not fail to be of value. All legislation, based on such knowledge, would proceed in the line of real commercial advantage; and a test by which to judge the fitness of new measures for the needs of modern life would be supplied. Lest this should seem too visionary, we shall close with an illustration of its possibilities.
The community to-day is deeply moved by a new disorder of the social organism known as the "labor problem." The lower classes, or those who are more distinctly physical as opposed to mental laborers, are striving to offset the corruption and abuses of the very wealthy by a system of organized aggressive action. They have accomplished nothing, so far, but harm to themselves, and diffused disturbance to the great mechanism of trade through which the entire people live. The generalization we have tried to establish furnishes the key to this difficulty.
The interest of the "laboring class" so called, as well as of the whole community in America, is purely industrial. The laborers are the product and symbol of industrial growth. No good, therefore, can be worked for them save through industrial appliances. Now, if we inquire into the character of the organization known as the "Knights of Labor," we find it to be as purely militant as the name it bears. It displays absolute autocracy of government; complete loss of individual freedom; the gospel of class hatred and strife preached in the place of the cooperation and sympathy of "industrialism"; and, finally, the natural outcome of all militant tendencies, a resort to physical violence for the attainment of ends. The "Knights of Labor" are a militant organization applying militant means to the betterment of industrial conditions. What wonder that they fail?
And, withal, the industrial means to the attainment of all legitimate ends that they may seek are ever at their disposal. What abuses could the rich few perpetuate in free America, if the poor many chose to use the ballot-box to crush them out? None. And if, as appears to be the case, it is a grievance that the able and hard-working triumph over the foolish and lazy in the struggle of life, the reconstitution of man, not of society, will alone remedy it. Is there not here a hint for Messrs. Powderly and George?