Popular Science Monthly/Volume 82/May 1913/Welfare and the New Economics
|WELFARE AND THE NEW ECONOMICS|
UNIVERSITY OF PENNSYLVANIA
ECONOMIC thought is undergoing a profound and rapid transformation. Linked, as it must ever be, with the problems of government, economics has been drawn into the maelstrom of progressivism which has gripped the western world. Vainly do the classicists protest. Futility grips the throats of the doctrinaires. Economic science is being wrenched from its eighteenth-century setting and thrown bodily into the arena of twentieth-century discussion. How sound is this tendency? With what disquietude or satisfaction should men view the efforts of economists to take their places "on the firing line of progress"?
Society was ruled during the middle ages by arbitrary laws, enacted by the church, or by the state, acting (theoretically) for the church. The light of the semi-democratic civilization of Greece and Rome had faded from the political horizon. Despotism, the patron saint of the time, reigned supreme with fate, her next of kin.
Here and there a bold spirit arose, contending with authority, questioning theological dogma, and calling men to thought and freedom. Cells and gibbets harbored many such. Above them, the bulwarks of social tradition loomed stolidly, proclaiming abroad the noisome doctrine that, while a true believer might slay twenty Mohammedans in the name of Jesus, he might not think one original thought in the name of truth.
Yet the light broke. From questioning the infallibility of a corrupt and dissolute church, men turned to question the infallibility of the Scripture. They would at least read for themselves. So theological dogma was thrust aside here and there, by the braver hearts who began to ask of all things:
1. What is it?
2. Why is it?
3. How can we employ it for our advantage?
Similar questions had arisen in classical days, but the age of Scripture had overshadowed them. Now they were asked again, with redoubled vigor.
Gradually the answers were formulated. The first question resulted in classification, which is the foundation of constructive thought. The question "Why?" gave rise to evolutionary science. The world, demanding fact as well as faith, was replacing theological dogma by scientific deduction.
Although it was freed from theological dogma, the progressive thought of the seventeenth and eighteen centuries was still dominated by the idea that laws of some kind were a human necessity. The social atmosphere still tingled with the spirit of past despotism. Hence, without a protest, men passed from the dominion of theological to the dominion of natural law. Even the ablest thinkers sought for principles which, like Newton's law of gravitation, would underlie and control all phenomena. The protest, "back to nature" was merely a demand that the world leap from the frying pan of theological absolution into the fire of nature-tyranny. Yet the thought of the eighteenth century teems with this demand. The Physiocrats voiced it; the natural theologians preached it; Rousseau popularized it. Its logical flower was the French Revolution, which was a blind effort to pour the new wine of emancipated thought into the old bottles of political pedantry. In the process much wine was lost. "Natural law" dogma bound the thought of eighteenth-century thinkers in exactly the same way that the "divine right" dogma had bound the thought of their ancestors.
Economics was born in the eighteenth century—born of natural theology and physiocratic philosophy. Hereditarily, economics suffered from inbreeding. Environmentally, it was hedged in by the narrowest of narrow concepts—that of subjection to "higher powers."
Was economics to become a science? Adam Smith and his contemporaries hoped that it was. How well marked, then, was the path! All sciences were founded on natural laws. If economics was to be raised into the hierarchy of sciences, a greater natural law must be found which would explain economic phenomena. The economists, therefore, applied the tests of science to their doctrines in order to establish their scientific nature. To the question, "What is it?" they replied, "A science of wealth." To the question, "Why is it?" they answered, "because of intelligent self-," "the law of supply and demand," "competition," and the like. The third question they did not ask because the eighteenth century accepted and obeyed nature's laws instead of trying to utilize them for human advantage.
Nevertheless, the third question must be answered. Of all things men will ultimately ask, "How can we employ these for our advantage?" The basis of the answer was laid in the sixteenth and seventeenth centuries, when free thought had largely escaped from theological dogma; when knowledge had ceased to be the right of the few and had become the privilege of all. In the eighteenth century the question was asked of the government. Men challenged the divine right of kings, and on both sides of the Atlantic democracy replaced monarchy. During the nineteenth century experimental science asked the same question of natural law; established the power of human thought; forged the tools with which the work must be done; and bent immutable nature to the service of man through applied science. Thus knowledge, government and natural phenomena have been turned to human service. The twentieth century voices a demand that economics undergo the same process of transformation from a science which serves laws, to a science which serves society.
The claim of economics for conversion to social service is a double one. On the one hand, science has demonstrated that all so-called laws may be employed to serve men, or else, if their influence is harmful, counteracted and offset. Gravitation has ceased to be an enemy; the lightning holds few terrors; the waterfall is harnessed; the plague stayed; the desert blooms; time and space have lost their vastness; men have triumphed everywhere through the mastery of human thought. Whatever laws economics may depend upon are no more changeless than these overwhelmed laws of nature.
On the other hand, men have learned that the laws of economics differ from the laws of natural science in that the whole subject matter of economics is man made—the product of human activity. The laws of physics and chemistry are laws of a universe, which man had no part in creating. Economics, however, is the result of a man's creative energy, for man has made the economic world. Interest, wages, competition, monopoly, capital and private property are all the products of his ingenuity. The concept of law presupposes a law giver. Who gave the laws of the universe? We answer, God. Who made the laws of political economy? Man, because he constructed the economic system to which alone the laws of economics apply.
We are no more subject to the laws of economics than our ancestors were subject to the law of military tactics; than we are subject to the laws of education; or than our descendants will be subject to the laws of the sanitary science which we are creating. There are formulas of thought called "laws" in all sciences, but Napoleon overthrew and remade the laws of military tactics; Froebel restated the laws of education; and Pasteur created the science of sanitation. There is an economic law giver—man, who can unmake or remake that which he has made.
The laws of economics are in truth mere incidents in social evolution. Queen Elizabeth and her successors granted trade monopolies to favorites. The eighteenth-century economists enunciated the laws of competition and equal freedom as the great law of economics—the cureall for economic woes, and lo, the Standard Oil Company, employing the law of competition as its most fearful weapon, has created a monopoly as complete as any ever granted by an absolute monarch. If we lived under a barter economy, we should work out its laws. We broke away from the domestic system of industry when inventors made possible the factory system. The economic world is still in the making. Men are doing the work.
So long as men regard the laws of political economy as immutable, so long will they be in the grip of the powers which these laws express. It is in vain that Karl Marx argues regarding economic determinism; it is futile for Henry George to "seek the law which associates poverty with progress"; the future is hopeless so long as men believe that political economy is "as exact a science as geometry." Under the domination of economic law, the exploiter will continue to exploit, and the exploited to suffer. Not until men realize that they are the creators and arbiters of economic laws will economic laws subserve human welfare. The dawning lies beyond the fetish of economic determinism; the hope for the future rests upon man's ability to make of political economy an eclectic philosophy.
The economists in the past have asked "What?" and "Why?" of economic phenomena. The time has now come when they must face the third question and discover how economics may be made to serve mankind. Progress in other sciences has led plain men to question the validity of the fatalistic philosophy of Ricardo; the gloomy forebodings of Malthus; and the necessity for poverty, overwork, untimely death and the devastations wrought by the brutal hand of cut-throat competition. The discovery that opportunity largely shapes the life of the average man, determining whether he shall be happy or miserable, has led to an insistence that the economists part company with the ominous pictures of an overpopulated, starving world, prostrate before the throne of "competition," "psychic value," "individual initiative," "private property," or some other pseudo god, and tell men in simple, straightforward language how they may combine, reshape or overcome the laws and utilize them as a blessing instead of enduring them as a burden and a curse. The day has dawned when economists must explain that welfare must be put before wealth; that the iron law of wages may be shattered by a minimum-wage law; that universal overpopulation is being prevented by a universal restriction in the birth rate; that overwork, untimely death and a host of other economic maladjustments will disappear before an educated, legislating public opinion; and that combination and cooperation may be employed to silence forever the savage demands of unrestricted competition. In short, the economists, if they are to justify their existence, must provide a theory which will enable the average man, by cooperating with his fellows, to bear more easily the burden and heat of the day.
How shall this be? What relief may economics—"the dismal science"—afford? Perhaps the matter can best be stated in an analogy suggested by Ruskin. Suppose that five men were to take a tract of a thousand acres for the purpose of running a general farm. Learned in the art of scientific agriculture, these men provide the necessary tools, equipment, fertilizers and seeds, prepare the ground, sow the crops, harvest the grain, potatoes, fruit and vegetables, and take them to market. Where they find their land too wet, they drain it; if, perchance, the tract is too dry, they irrigate; and if a test shows that a certain field needs lime, they promptly apply lime. These men are farming the land. They do not wait for the land to produce a living for them, but instead, they use the land in every conceivable way.
Suppose that, instead of fertilizing, irrigating and draining, these men upon discovering that one plot was very fertile, farmed only that plot, leaving the less fertile parts of the farm untilled; suppose that, when water stood in a field, they invoked the aid of physics and mathematics, ascertained that this field was low, and therefore bound to be wet; suppose that they abandoned a hill plot which would not raise tobacco without even attempting to ascertain whether it would grow buckwheat; suppose that after venturing timidly to try a few minor experiments, these men, discouraged and forlorn, should assemble around a stone, and, raising their hands to the sky, should beseech some higher power to make water run up-hill or tobacco grow on buckwheat land. Or, instead of praying, imagine their hopeless, hang-dog air as they gazed dejectedly over their thousand acres, exclaiming: "Alas, the law of gravitation makes our low land wet; tobacco will not grow on the highland; yonder field contains no lime for our clover crop; and even the cattle in the hill pasture suffer from lack of water."
What a picture! You sneer, contemptuously. "What sane man would talk so?" you demand. "The illustration approaches the ridiculous. Beseech a higher power? Bemoan the law of gravitation? Fiddlesticks! Irrigate, drain, lime, water, fertilize, and the land will bring forth in abundance."
True, true, but listen! Ninety million people, some of them intelligent men and women, living in one of the most fertile regions of the whole earth, possessed of boundless natural resources, of knowledge and of energy, have suffered for a century from devastating industrial depressions; have watched little children work their fingers raw in the coal breakers; have witnessed an exploitation of women that has required two hundred thousand of them to sell their bodies; have tolerated sodden misery, poverty, vice, criminality; have permitted one small group in the community to possess itself of the natural resources on which all depend, and to exact a monopoly price, from all, for the use of those resources; and now, after generations of this gruesome motion picture, these sane, strong men and women raise their hands to a higher power, or slink dejectedly into their caricature homes, making scarcely an effort to throttle their taskmasters—hunger and emulation—or to stay the hand of the grim reaper who annually sends seven hundred thousand of them to premature graves.
Irrigate! Drain! Lime! Fertilize! Aye, farmer, do these things, and you will reap a plenteous harvest. You possess the knowledge and the tools—then bend enthusiastically to your task.
Educate! Legislate! Reorganize! Adjust! Aye, citizen, do these things and you will gain a satisfying livelihood. You possess the knowledge, the wealth, the tools—then bend enthusiastically to your task.
The time has passed when the man with the hoe, "bowed with the weight of centuries," "gazes on the ground," toiling that he may pay an eternal tribute to the feudal overlord. To-day he looks the future full in the face, and, with the faith of a freeman, applies natural science to the solution of the heretofore inscrutable agriculture problems. The time is coming when the man at the machine—striving, frantically hurrying through the long reaches of the ten-hour day—that he may obtain the wherewithal to buy for him and his bread, books, shoes and pleasure trips—servile to economic laws which he can neither understand nor master—will look the present system of industrial society full in the face, and with the faith of an emancipated soul will consign its laws to the devil and use the knowledge and the tools which the past has given him, to provide himself with the means whereby he may live.
Political economy is not a science founded on eternal principles, but a philosophy of livelihood. Its aim is not to astound us with its mathematical premises, or to frighten us with its threats of world disaster, but to outline a method by which men may raise the heavy yoke of traditional servitude and secure a more satisfactory living.