<h2><SPAN name="CHAPTER_LIX" id="CHAPTER_LIX"></SPAN>CHAPTER LIX<br/><br/> FOREIGN MARKETS</h2>
<div class="blockquot"><p>(Considers the efforts of capitalism to save itself by marketing
its surplus products abroad, and what results from these efforts.)</p>
</div>
<p>If our analysis of present-day society is correct, we have the enormous
populations of the modern industrial countries, living always on the
verge of starvation, their chance for survival depending at all times
upon the ability of their employers to find a profitable market for a
surplus of goods. At first the employer seeks that market at home; but
when the home markets are glutted, he goes abroad; and so develops the
phenomenon of foreign trade and rivalry for foreign trade, as the basic
fact of capitalism, and the fundamental cause of modern war.</p>
<p>Let us get clear a simple distinction concerning foreign trade. There is
a kind of trade which is normal, and would thrive in a "free" society.
In the United States we can produce nearly all the necessities of life,
but there are a few which we cannot produce—rubber, for example, and
bananas, and good music. These things we wish to import. We buy them
from other countries, and incur a debt, which we pay with products which
the other countries need from us; wheat, for example, and copper, and
moving pictures with cowboys in them. This is equal exchange, and a
natural phenomenon. A "free" society would produce such surplus goods as
were necessary to procure the foreign products that it desired. When it
had produced that much, the workers would stop and take a vacation until
they wanted more foreign products.</p>
<p>But under capitalism we have an entirely different condition—we produce
a surplus of goods which we <i>have</i> to sell in order to keep our
factories running, and to keep our working population from starving. And
note that it does not help us to get back an equal quantity of foreign
goods in exchange. We must have what we call "a favorable balance"; that
is, we must have other people going into debt to us, so<SPAN name="vol_ii_page_152" id="vol_ii_page_152"></SPAN> that we can be
continually shipping out more goods than we take back; continually
piling up credits which we can "negotiate," or turn into cash, so that
we can go on and repeat the process of making more goods, selling them
for more profits, and putting the surplus into the form of more
machinery, to make still more goods and still more profits.</p>
<p>And then, after a while, we come upon this embarrassing phenomenon;
nations which buy and do not sell must either do it by sending us gold,
or by our giving them credit. The sending of gold cannot go on
indefinitely, because then we should have all the gold, and if other
nations had none that would destroy their credit. On the other hand,
business cannot be done by credit indefinitely; for the very essence of
credit is a promise to pay, and payment can only be made in goods, and
how can we take the goods without ruining our own industry?</p>
<p>Fifteen years ago I pointed this out in a book. The argument was
irrefutable, and the conclusion inescapable, but the few critics who
noted it repeated their usual formula about "dreamers and theorists."
Now, however, the business mills have ground on, and what was theory has
become fact before our eyes. We have trusted the nations of Europe for
some $10,000,000,000 worth of goods, and they are powerless to pay, and
if they did pay, they would bankrupt American industry. France wishes to
collect an enormous indemnity from Germany, but nobody can figure out
how this indemnity can be paid without ruining French industry. The
French have demanded coal from Germany, and have got more than they can
use, and are "dumping" it in Belgium and Holland, with the result that
the British coal industry is ruined. The French clamor that the Germans
must pay for the destruction they wrought in Northern France, and the
Germans offer to send German workmen to rebuild the ruined towns; but
the French denounce this as an insult—it would deprive French
workingmen of their jobs! So I might continue for pages, pointing out
the manifold absurdities which result from a system of industry for the
profit of a few, instead of for the use of all.</p>
<p>Ever since I first began to read the newspapers, some twenty-five or
thirty years ago, all our political life has been nothing but the
convulsions of a social body tortured by the constricting ring of the
profit system. Everywhere one group<SPAN name="vol_ii_page_153" id="vol_ii_page_153"></SPAN> struggling for advantage over
another group, and politicians engaged in playing one interest against
another interest! My boyhood recollections of public life consist of
campaign slogans having to do with the tariff: "production and
prosperity," "reciprocity," "the full dinner pail," "the foreigner pays
the tax," etc.</p>
<p>The workingman, under the profit system, is like a man pounding away at
a pump. He can get a thin trickle of water from the spout of the pump if
he works hard enough, but in order to get it he has to supply ten times
as much to some one who has tapped the pipe. But the tapping has been
done underground, where the workingman cannot see it. All the workingman
knows is that there is no job for him if the products of "cheap foreign
labor" are allowed to be "dumped" on the American market. That is
obvious, and so he votes for a tax on foreign imports, high enough to
enable his own employer to market at a profit. He does not realize that
he is thus raising the price of everything that he buys, and so leaving
himself worse off than he was before.</p>
<p>All governments are delighted with this tariff device, because they are
thus enabled to get money from the public without the public's knowing
it. "The foreigner pays the tax," we are told, and as a result of this
arrangement the steel trust just before the war was selling its product
at a high price to the American people, and taking its surplus abroad
and selling it to the foreigner at half the domestic price. And we see
this same thing in every line of manufacture, and all over the world. We
see one nation after another withdrawing itself as a market for
manufactured products, and entering the lists as a marketer. One more
nation now able to fill all its own needs, and going out hungrily to
look for foreign customers, adding to the glut of the world's
manufactured products and the ferocity of international competition!</p>
<p>At the close of the Civil War the total exports of the United States
averaged approximately $300,000,000, and the total imports were about
the same. In 1892 the exports first touched $1,000,000,000, while the
imports were about nine-tenths of that sum. In the year 1913 the exports
were nearly $2,500,000,000, while the imports were $600,000,000 less;
and in the year 1920 our exports were over $8,000,000,000 and our
imports a little over $5,000,000,000! So we have a "favorable<SPAN name="vol_ii_page_154" id="vol_ii_page_154"></SPAN> balance"
of almost $3,000,000,000 a year—and as a result we are on the verge of
ruin!</p>
<p>This "iron ring" of overproduction and lack of market exercises upon our
industrial body a steady pressure, a slow strangling. But because the
body is in convulsions, struggling to break the ring, the pressure of
the ring is worse at some times than at others. We have periods of what
we call "prosperity," followed by periods of panic and hard times. You
must understand that only a small part of our business is done by means
of cash payments, whether in gold or silver or paper money. Close to 99%
of our business is done by means of credit, and this introduces into the
process a psychological factor. The business man expects certain
profits, and he capitalizes these expectations. Business booms, because
everybody believes everybody else's promises; credit expands like a huge
balloon, with the breath of everybody's enthusiasm. But meantime real
business, the real market, remains just what it was before; it cannot
increase, because of the iron ring which restricts the buying power of
the mass of the people by the competitive wage. So presently the time
comes when somebody realizes that he has over-capitalized his hopes; he
curtails his orders, he calls in his money, and the impulse thus started
precipitates a crash in the whole business world. We had such a crash in
1907, and I remember a Wall Street man explaining it in a magazine
article entitled, "Somebody Asked for a Dollar."</p>
<p>We learned one lesson by that panic; at least, the big financial men
learned it, and had Congress pass what is called the "Federal Reserve
Act," a provision whereby in time of need the government issues
practically unlimited credit to banks. This, of course, is fine for the
banks; it puts the credit of everybody else behind them, and all they
have to do is to stop lending money—except to the big insiders—and sit
back and wait, while the little men go to the wall, and the mass of us
live on our savings or starve. We saw this happen in the year 1920, and
for the first time we had "hard times" without having a financial panic.
But instead we see prices staying high—because the banks have issued so
much paper money and bank credits.<SPAN name="vol_ii_page_155" id="vol_ii_page_155"></SPAN></p>
<h2><SPAN name="CHAPTER_LX" id="CHAPTER_LX"></SPAN>CHAPTER LX<br/><br/> CAPITALIST WAR</h2>
<div class="blockquot"><p>(Shows how the competition for foreign markets leads nations
automatically into war.)</p>
</div>
<p>In a discussion of the world's economic situation, published in 1906,
the writer portrayed the ruling class of Germany as sitting in front of
a thermometer, watching the mercury rising, and knowing that when it
reached the top, the thermometer would break. This thermometer was the
German class system of government, and the mercury was the Socialist
vote. In 1870 the vote was 30,000, in 1884 it was 549,000, in 1893 it
was 1,876,000, in 1903 it was 3,008,000, in 1907 it was 3,250,000, in
1911 it was 4,250,000. Writing between 1906 and 1913, I again and again
pointed out that this increase was the symptom of social discontent in
Germany, caused by the overproduction of invested capital throughout the
world, and the intensification of the competition for world markets. I
pointed out that a slight increase in the vote would be sufficient to
transfer to the working class of Germany the political power of the
German state; and I said that the ruling class of Germany would never
permit that to happen—when it was ready to happen Germany would go to
war, to seize the trade privileges of some other nation.</p>
<p>There was a time when wars were caused by national and racial hatreds.
There are still enough of these venerable prejudices left in the world,
but no student of the subject would deny that the main source of modern
wars is commercial rivalry. In 1917 we sent Eugene V. Debs to prison for
declaring that the late world war was a war of capitalist greed. But two
years later President Wilson, who had waged the war, declared in a
public speech that everybody knew it had been a war of commercial
rivalries.</p>
<p>The aims of modern war-makers are two. First, capitalism must have raw
materials, including coal and oil, the sources of power, and gold and
silver, the bases of credit. Parts of the world which are so unfortunate
as to be rich in these substances become the bone of contention between
rival financial groups, organized as nations. Some sarcastic writer has
defined a "backward" nation as one which has gold mines and no navy. We
are horrified to read of the<SPAN name="vol_ii_page_156" id="vol_ii_page_156"></SPAN> wars of the French monarchs, caused by the
jealous quarrels of mistresses; but in 1905 we saw Russia and Japan go
to war and waste a million lives because certain Russian grand dukes had
bribed certain Chinese mandarins and obtained concessions of timber on
the Yalu River. We now observe France and Germany vowed to undying hate
because of iron mines in Lorraine, and the efforts of France to take the
coal mines of Silesia from Germany, and give them to Poland, which is
another name for French capitalism.</p>
<p>The other end sought by the war-makers is markets for manufactured
products, and control of trade routes, coaling stations and cables
necessary to the building up of foreign trade. England has been
"mistress of the seas" for some 300 years, which meant that her traders
had obtained most of these advantages. But then came Germany, with her
newly developed commercialism, shoving her rival out of the way. The
Englishman was easy-going; he liked to play cricket, and stop and drink
tea every afternoon. But the German worked all day and part of the
night; he trained himself as a specialist, he studied the needs of his
customers—all of which to the Englishman was "unfair" competition. But
here were the populations of the crowded slums, dependent for their
weekly wage and their daily bread upon the ability of the factories to
go on turning out products! Here was the ever-blackening shadow of
unemployment, the mutterings of social discontent, the agitators on the
soap-boxes, the workers listening to them with more and more eager
attention, and the journalists and politicians and bankers watching this
phenomenon with a ghastly fear.</p>
<p>So came the great war. Social discontent was forgotten over night, and
England and France plunged in to down their hated rival, once and for
all time. Now they have succeeded: Germany's ships have been taken from
her, and likewise her cables and coaling stations; the Berlin-Bagdad
Railroad is a forgotten dream; the British sit in Constantinople, and
the traffic goes by sea. American capitalism wakes up, and rubs its eyes
after a debauch of Presbyterian idealism, and discovers that it has paid
out some $20,000,000,000, in order to confer all these privileges and
advantages upon its rivals!</p>
<p>Ever since I can remember the world, there have been peace societies; I
look back in history and discover that ever since there have been wars,
there have been prophets declaiming<SPAN name="vol_ii_page_157" id="vol_ii_page_157"></SPAN> against them in the name of
humanity and God. As I write, there is a great world conference on
disarmament in session in Washington, and all good Americans hope that
war is to be ended and permanent peace made safe. All that I can do at
this juncture is to point out the fundamental and all-controlling fact
of present-day economics: that for the ruling class of any country to
agree to disarmament and the abolition of war, is for that class to sign
its own death warrant and cut its own throat. American capitalism can
survive on this earth only by strangling and destroying Japanese
capitalism and British capitalism, and doing it before long. The
far-sighted capitalists on both sides know that, and are making their
preparations accordingly.</p>
<p>What the members of the peace societies and the diplomats of the
disarmament conferences do is to cut off the branches of the tree of
war. They leave the roots untouched, and then, when the tree continues
to thrive, they are astounded. I conclude this chapter with a concrete
illustration, cut from my morning newspaper. We went to war against
German militarism, and to make the world safe for democracy—meaning
thereby capitalist commercialism. We commanded the German people to
"beat their swords into plough-shares"; that is, to set their Krupp
factories to making tools of peace; and they did so. We saddled them
with an enormous indemnity, making them our serfs for a generation or
two, and compelling them to hasten out into the world markets, to sell
their goods and raise gold to pay us. And now, how does their behavior
strike us? Do we praise their industry, and fidelity to their
obligations? Here are the headlines of a news despatch, published by the
Los Angeles Times on December 10, 1921, at the top of the front page,
right hand column, the most conspicuous position in the paper. Read it,
and understand the sources of modern war!</p>
<div class="blockquot"><p class="c"><i>NEW ATTACK BY BERLIN</i><br/>
————<br/>
DUMPING GOODS BY WHOLESALE<br/>
————<br/>
Cheap German Trash Puts Thousands of Americans Out of Employment<br/>
————<br/>
Glove Plants Shut Down and Potash Industry Killed by Teuton
Intrigue</p>
</div>
<p><SPAN name="vol_ii_page_158" id="vol_ii_page_158"></SPAN></p>
<h2><SPAN name="CHAPTER_LXI" id="CHAPTER_LXI"></SPAN>CHAPTER LXI<br/><br/> THE POSSIBILITIES OF PRODUCTION</h2>
<div class="blockquot"><p>(Shows how much wealth we could produce if we tried, and how we
proved it when we had to.)</p>
</div>
<p>One of the commonest arguments in defense of the present business system
runs as follows: The amount of money which is paid to labor is greatly
in excess of the amount which is paid to capital. Suppose that tomorrow
you were to abolish all dividends and profits, and divide the money up
among the wage workers, how much would each one get? The sum is figured
for some big industry, and it is shown that each worker would get one or
two hundred dollars additional per year. Obviously, this would not bring
the millennium; it would hardly be worth while to take the risk of
reducing production in order to gain so small a result.</p>
<p>But now we are in position to realize the fallacy of such an argument.
The tax which capital levies upon labor is not the amount which capital
takes for itself, but the amount which it prevents labor from producing.
The real injury of the profit system is not that it pays so large a
reward to a ruling class; it is the "iron ring" which it fastens about
industry, barring the workers from access to the machinery of production
except when the product can be sold for a profit. Labor pays an enormous
reward to the business man for his management of industry, but it would
pay labor to reward the business man even more highly, if only he would
take his goods in kind, and would permit labor, after this tax is paid,
to go on making those things which labor itself so desperately needs.</p>
<p>But, you see, the business man does not take his goods in kind. The
owner of a great automobile factory may make for himself one automobile
or a score of automobiles, but he quickly comes to a limit where he has
no use for any more, and what he wants is to sell automobiles and "make
money." He does not permit his workers to make automobiles for
themselves, or for any one else. He reserves the product of the factory
for himself, and when he can<SPAN name="vol_ii_page_159" id="vol_ii_page_159"></SPAN> no longer sell automobiles at a profit, he
shuts the workers out and automobile-making comes to an end in that
community. Thus it appears that the "iron ring" which strangles the
income of labor, strangles equally the income of capital. It paralyzes
the whole social body, and so limits production that we can form no
conception of what prosperity might and ought to be.</p>
<p>Consider the situation before the war. We were all of us at work under
the competitive system, and with the exception of a few parasites,
everybody was occupied pretty close to the limit of his energy. If any
one had said that it would be possible for our community to pitch in and
double or treble our output, you would have laughed at him. But suddenly
we found ourselves at war, and in need of a great increase in output,
and we resolved one and all to achieve this end. We did not waste any
time in theoretical discussions about the rights of private capital, or
the dangers of bureaucracy and the destruction of initiative. Our
government stepped in and took control; it took the railroads and
systematized them, it took the big factories and told them exactly what
to make, it took the raw materials and allotted them, where they were
needed, it fixed the prices of labor, and ordered millions of men to
this or that place, to this or that occupation. It even seized the
foodstuffs and directed what people should eat. In a thousand ways it
suppressed competition and replaced it by order and system. And what was
the result?</p>
<p>We took five million of our young men, the very cream of our industrial
force, and withdrew them from all productive activities; we put them
into uniforms, and put them through a training which meant that they
were eating more food and wearing more clothing and consuming more goods
than nine-tenths of them had ever done in their lives before. We built
camps for them, and supplied them with all kinds of costly products of
labor, such as guns and cartridges, automobiles and airplanes. We
treated two million of them to an expensive trip to Europe, and there we
set them to work burning up and destroying the products of industry, to
the value of many billions of dollars. And not only did we supply our
own armies, we supplied the armies of all our allies. We built millions
of dollars worth of ships, and we sent over to Europe, whether by
private business or by government loans,<SPAN name="vol_ii_page_160" id="vol_ii_page_160"></SPAN> some $10,000,000,000 worth of
goods—more than ten years of our exports before the war.</p>
<p>All the labor necessary to produce all this wealth had to be withdrawn
from industry, so far as concerned our domestic uses and needs. It would
not be too much to say that from domestic industry we withdrew a total
of ten million of our most capable labor force. I think it would be
reasonable to say that two-thirds of our productive energies went to war
purposes, and only one-third was available for home use. And yet, we did
it without a particle of real suffering. Many of us worked hard, but few
of us worked harder than usual. Most of us got along with less wheat and
sugar, but nobody starved, nobody really suffered ill health, and our
poor made higher wages and had better food than ever in their lives
before. If this argument is sound, it proves that our productive
machinery is capable, when properly organized and directed, of producing
three times the common necessities of our population. Assuming that our
average working day is nine hours, we could produce what we at present
consume by three hours of intelligently directed work per day.</p>
<p>Let us look at the matter from another angle. Just at present the hero
of the American business man is Herbert Hoover; and Mr. Hoover recently
appointed a committee, not of Socialists and "Utopians," but of
engineering experts, to make a study of American productive methods. The
report showed that American industry was only thirty-five or forty per
cent efficient. Incidentally, this "Committee on Waste" assessed, in the
case of the building industry, sixty-five per cent of the blame against
management and only twenty-one per cent against labor; in six
fundamental industries it assessed fifty per cent of the blame against
management and less than twenty-five per cent against labor. Fifteen
years ago a professor of engineering, Sidney A. Reeve by name, made an
elaborate study of the wastes involved in our haphazard and planless
industrial methods, and embodied his findings in a book, "The Cost of
Competition." His conclusion was that of the total amount of energy
expended in America, more than seventy per cent was wasted. We were
doing one hundred per cent of work and getting thirty per cent of
results. If we would get one hundred per cent of results, we should
produce three and one-third times as much wealth,<SPAN name="vol_ii_page_161" id="vol_ii_page_161"></SPAN> and the income of our
workers would be increased one or two thousand dollars a year.</p>
<p>Robert Blatchford in his book, "Merrie England," has a saying to the
effect that it makes all the difference, when half a dozen men go out to
catch a horse, whether they spend their time catching the horse or
keeping one another from catching the horse. Our next task will be to
point out a few of the ways in which good, honest American business men
and workingmen, laboring as intelligently and conscientiously as they
know how, waste their energies in keeping one another from producing
goods.<SPAN name="vol_ii_page_162" id="vol_ii_page_162"></SPAN></p>
<div style="break-after:column;"></div><br />