Economic democracy

“ I expect to see a change throughout the world, which will take the great instruments of production which we call corporations and trusts, out of the hands of their present private owners, and make them the property, either of the entire community, or of those who do the work in them. This change is the "social revolution," and when it has completed itself, we shall have in that society an Industrial Republic, a form of business management which constitutes economic democracy. ”

“ At present, the State is largely concerned with the maintenance of conditions under which the economic and business life may operate equally and prosperously. The State in one sense is the master of the people. In another sense it is merely their creature and their agent for such purposes as they choose to assign it. Is the State, then, to absorb the industrial functions, and are we to develop into a socialistic commonwealth? Or, shall the political democracy and the coöperative organization of business life go on side by side, related at many points but in the main distinct from each other? ”

“ SUMMARY AND FORECAST.—Production in the economic sense consists in doing that which will satisfy human wants. Modern production is a vast and complicated process, involving the co÷peration of five factors: land, labor, capital, co÷rdination, and government. In a later chapter we shall find that there are wide differences of opinion as to the relative importance of some of these factors. We shall find, indeed, that the most vital economic problems which confront American democracy depend for their solution upon a clear understanding of the facts stated or implied in this chapter. ”

“ All our thinkers are quite agreed that the State, as such—the coercive instrument of economic class power—must disappear with the classes that have upheld it, and, in its place, must appear an "administration of affairs," an economic institution conforming to the needs and aspirations of an economically free and fluid industrial society. ”

“ Therefore the student of this text begins, not with the mechanism of government, but with the historical background of American democracy, its origin, development, and promise for the future. Following this is a brief survey of the economic life of the nation, because that economic life constitutes the fundamental basis of our problems. Considerable space has been devoted to a problem growing directly out of economic conditions, i.e. the question of social justice or industrial reform. ”

“ Or to state the Democratic problem in a more fundamental form, the see-saw is between the aspiration to vest the control over the instruments of production in Democracies of Producers, and the alternating belief that this control can best be vested in Democracies of Consumers. But it is abundantly clear, alike from history and economic analysis, that in any genuine Democracy both forms of organisation are indispensably required. In the modern State every person throughout his whole life consumes a great variety of commodities and services which he cannot produce ”

“ But the very task of dealing with vast resources, over vast areas, under the conditions of free competition furnished by the West, has produced the rise of those captains of industry whose success in consolidating economic power now raises the question as to whether democracy under such conditions can survive. ”

“ It stands to reason that in the long run the people who possess the political power will want a substantial share of the economic fruits. A prudent democracy should anticipate this demand. Not only does any considerable amount of grinding poverty constitute a grave social danger in a democratic state, but so, in general, does a widespread condition of partial economic privation. ”

“ Progress is threatened, secondly, by democracy, with its tendency to carry the notion of literal equality over into industry. When democracy becomes envious, it denies to exceptional ability an exceptional reward. The line of growth must be the resultant of the positive forces in these two principles. The energy of the social reformer must be directed along rational lines. If this can be done, the economic outlook is for a great development of wealth and popular welfare. Economics must be looked upon as the study of the forces in human nature as much as of the material resources of the world. ”

“ We justify the existence of an institution by showing that it meets the needs of a class in society and then determine the means by which it was established. All social institutions are rooted in economic necessity and we need only to know the mode of wealth production and distribution prevailing in any historical period to be able to explain all the social phenomena of that time. ”

“ Economic power constitutes the entire force of the capitalists—all modern institutions are based on that foundation—and when that power is undermined, when its protecting strength weakens and fails, all these institutions must naturally totter and fall. ”

“ Only after we have mastered the principles upon which American industry is based, shall we be in a position to solve the problems which arise directly from the nature of our economic organization.
46. INDUSTRIAL REFORM.—Our industrial life is so clearly based upon certain fundamental institutions, such as private property, free contract, and free competition, that an industrial "system" is said to exist. Certain great evils, notably poverty, have accompanied the development of this system. ”

“ Under conditions prevailing at the moment, it appears to be His decree that we shall store the wheat in elevators, and ship it in freight cars, and buy it through a grain exchange, with capital borrowed from a national bank; in other words, that our daily bread shall be the plaything of exploiters and speculators, until such a time as we have the intelligence to form an effective political party and establish Industrial Democracy. ”

“ Our country - this great Republic - means nothing unless it means the triumph of a real democracy, the triumph of popular government, and, in the long run, of an economic system under which each man shall be guaranteed the opportunity to show the best that there is in him. ”

“ With capital dethroned, the principles of the Republic will at last be applied with controlling power to the field of economics, just as they are to the field of politics, and political democracy will have ceased to be a farce, for it will have developed into its perfect flower, Industrial Democracy. ”

“ In the more than two centuries since then, we have struggled to balance the same forces that confronted Hamilton and Jefferson – self-interest and community; markets and democracy; the concentration of wealth and power, and the necessity of transparency and opportunity for each and every citizen. Throughout this saga, Americans have pursued their dreams within a free market that has been the engine of America’s progress. ”

“ The economy must be open to all who bring in new capital, new knowledge, new ideas and new levels of efficiency. We must broaden the base of economic participation. Let us, therefore, make this 9th Congress the instrument to free and democratize our economy. ”

“ Only he who thus conceives of mercantilism will understand it; in its innermost kernel it is nothing but state-making, not state-making in a narrow sense, but state-making and national-economy-making at the same time; state-making in the modern sense, which creates out of the political community an economic community, and so gives it a heightened meaning. ”

“ The economic organisation of the world has outstripped the development of its citizenship and government: the economic man, with his farsighted vision and scientific control of the resources of the world, must sit by and see the work of his hands laid in ashes by contending governments and peoples. No man can say how many generations must pass before the platitudes of the market and the exchange pass into the current language of politics. ”

“ If the French had not resisted tyranny and injustice in the Revolution, what would have been the civilization of the last hundred years? If the English colonists had not resisted taxation without representation, what would be the present status of America? If the artisan groups had not united and fought economic exploitation, what would be their life to-day? If Belgium had not resisted Germany, what would be the future of democracy in Europe? Thus, now and after the War, the need is for all necessary armament for self-respecting self-defense and not an atom to gratify aggressive ambition. ”

“ Competitive conditions have subjected the whole currency of the country to the control of a few men who thereby are masters of our commerce, our manufactures, our exports, our politics, our religion. In view of the fact [198] that this small group practically governs the country in matters of legislation, and by virtue of a sort of class solidarity between the judges and the possessing class, governs the courts also, the men who determine the making and executing of our laws should, in a democracy such as ours, be elected by the people. ”

“ What is chiefly needed today is the placing in the hands of the national government of more power to control national economic development. In a rapidly changing economic environment our political constitution must be reasonably flexible. ”

“ A new era in connection with capital and labour has for some time been coming into being; the era of democracy in industry has arrived. The day of the autocratic sway on the part of capital has passed; nor will we as a nation take kindly to the autocratic sway of [Pg 242] labour. It is obtaining a continually fuller recognition; and cooperation leading in many lines to profit-sharing is the new era we are now passing into. ”

“ All to-day are aware that sheer individualism in the economic sphere is an almost unmitigated evil; sheer individualism in the political sphere and sheer nationalism are equally evil. France at the beginning of last century was suffering from too much success, too much political liberty, too much nationalism. Having overthrown the old régime within the State quickly and easily, she began to think she could do without the State altogether: the result was anarchy, for which the only remedy is despotism. ”

“ Elsewhere, taking stock of power, I proved that a governmental democracy is only a reversed monarchy; I demonstrated that it would cost more than a monarchy, according to this principle of elementary economy, that the condition in which the product, with regard to expense is as great as possible, is that in which the producer acts alone and without the assistance of any worker or employee, and reciprocally; and that in any enterprise likely to expand, overhead costs grow faster than production and profit. ”

“ No one can question the control which business interests exercise over the jobs, the industrial product, and the economic surplus of the community. These facts are universally admitted. But the corollaries which flow naturally from such axioms are not so readily accepted. Yet given the economic power of the business world, the control over the channels of public opinion and over the machinery of government follows as a matter of course. ”

“ The people who understand an industry are those who work in it; and the way to combine democracy with efficiency is to make each industry a self-governing unit, and confine the part of government to supervision, and the regulation of prices. Let us have an industrial constitution and an industrial parliament, and let every man become a citizen of industry, with a voice in the control, and equal rights with all other citizens. ”

“ And as it is our pride to establish before the political world the worth of our political institutions; so should we solve our industrial problems and show to the industrial world the advantages of democracy operating practically in industry. Let us show that the spirit and aroused skill and ingenuity of our loyally co-operating labor will reduce the costs of production while largely increasing its output, to the advantage of mankind and the credit of our nation founded on individual freedom. ”

“ A democratic economic system, even more than a democratic political system, must delegate a large share of responsibility and power to the individual, but under conditions, if possible, which will really make for individual efficiency and distinction. ”

“ 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. ”

“ The victory of democracy will vastly accelerate the growth of the spirit of brotherhood throughout the world.
The terrible waste of the War must of itself produce a reaction of the people on kings and castes in all lands. The suffering that will follow the War, in the period of economic readjustment, will accentuate this. Surely the people, in England, France, America, Italy, Russia, and among the neutral nations, will strive that no such war may come again. ”

“ 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. ”