Laissez-faire economics

“ That there are more goods in the American market than is at present demanded, under existing conditions, is a certainty. But if over-production has glutted one market, why not seek another? Why stop mills and factories? Why turn laboring-men into the street? Is there no channel of least resistance for business to travel in? An over-production of goods is an over-production of wealth. Has the nation more wealth and comfort than it can manage or knows what to do with? ”

“ It becomes necessary for capital progressively to dispose ever more fully of the whole globe, to acquire an unlimited choice of means of production, with regard to both quality and quantity, so as to find productive employment for the surplus value it has realised. ”

“ The more prosperous the nation, the greater is the demand from those who cannot spend their huge incomes for safe, paying investment opportunities.
The immense productivity of the present-day system of industry has added greatly to the amount of surplus seeking investment. Each invention, each labor saving device, each substitution of mechanical power that multiplies the productive capacity of industry at the same time increases the surplus at the disposal of the plutocracy. ”

“ Until value, oscillating between its two poles,—useful value and value in exchange,—arrives at its constitution, thine and mine remain fixed arbitrarily; the conditions of fortune are the effect of chance; property rests on a precarious title; everything in social economy is provisional. What should social, intelligent, and free beings have learned from this uncertainty of value? To make amicable regulations that should protect labor and guarantee exchange and cheapness. ”

“ These difficulties are the present capitalistic ownership of the material and machines, a lack of properly organized coöperatively conducted sources of power, present land ownership, house arrangement, and of getting this power to the worker; and what is of much more moment, the complete possession by capitalistic interests of the entire system of trade or distribution from the great railway combination to the retail shop, through which the individual worker must market his products. ”

“ But as soon as it becomes a question of obtaining, instead of a certain mass of products, the production at any cost of surplus-value, the incessant multiplication of money, the possessor of the means of production strives relentlessly to make those means of production absorb the greatest possible quantity of surplus-labor. ”

“ Demand for commodities stimulates and regulates the machinery of production.
Those in control of the modern economic system have no choice but to produce surplus, and once having produced it, they have no choice except to dispose of it. An inexorable fate drives them onward—augmenting their burdens as it multiplies their labors.
Investment opportunities, of necessity, are eagerly sought by the plutocracy, since the law of their system is "Invest or perish"! ”

“ Nothing can be more chimerical than the fear that the accumulation of capital should produce poverty and not wealth, or that it will ever take place too fast for its own end. Nothing is more true than that it is produce which constitutes the market for produce, and that every increase of production, if distributed without miscalculation among all kinds of produce in the proportion which private interest would dictate, creates, or rather constitutes, its own demand. ”

“ And those embarrassed persons who have not been already overwhelmed by the times, would suddenly find, in the augmented value of their property, and the renewal of their business, ample means to extricate themselves from all their difficulties. The greatest want of civilized society is, a market for the sale and exchange of the surplus of the produce of the labor of its members. This market may exist at home or abroad, or both; but it must exist somewhere, if society prospers; and, wherever it does exist, it should be competent to the absorption of the entire surplus of production. ”

“ When, either by the monopoly of the home market, or by a bounty upon exportation, you enable our woollen or linen manufacturers to sell their goods for somewhat a better price than they otherwise could get for them, you raise, not only the nominal, but the real price of those goods; you render them equivalent to a greater quantity of labour and subsistence; you increase not only the nominal, but the real profit, the real wealth and revenue of these manufacturers; and you enable them, either to live better themselves, or to employ a greater quantity of labour in those particular manufactures. ”

“ And though it should be true that, in settled countries, the diversification of industry is conducive to an increase in the productive powers of labor, and to an augmentation of revenue and capital; yet it is scarcely conceivable that there can be anything of so solid and permanent advantage to an uncultivated and unpeopled country, as to convert its waste into cultivated and inhabited districts. If the revenue, in the meantime, should be less, the capital, in the event, must be greater. ”

“ If land in large bodies can be cultivated more cheaply than land in small bodies, to restrict ownership to small bodies will reduce the aggregate production of wealth, and, in so far as such restrictions are imposed and take effect, will they tend to diminish the general productiveness of labor and capital. ”

“ Economy without industry will barely appear in a whole coat; industry without economy will appear in rags. The first is detrimental to the community, by preventing the circulation of property; the last is detrimental to itself. It is a singular remark, that even industry is sometimes the way to poverty. ”

“ But the flames of a new economic evolution run around us, and we turn to find that competition has killed competition, that corporations are grown greater than the State and have bred individuals greater than themselves, and that the naked issue of our time is with property becoming master instead of servant, property in many necessaries of life becoming monopoly of the necessaries of life. ”

“ All unsold goods, therefore, constitute a part of the national capital, and of the capital of the producer or dealer to whom they belong. It is true that tools, materials, and the articles on which the labourer is supported, are the only articles which are directly subservient to production: and if I have a capital consisting of money, or of goods in a warehouse, I can only employ them as means of production in so far as they are capable of being exchanged for the articles which conduce directly to that end. ”

“ Nevertheless the theory of output as a whole, which is what the following book purports to provide, is much more easily adapted to the conditions of a totalitarian state, than is the theory of the production and distribution of a given output produced under conditions of free competition and a large measure of laissez-faire. ”

“ But to say that capital may limit the form of industry or the productiveness of industry is a very different thing from saying that capital limits industry. For the dictum of the current political economy that “capital limits industry,” means not that capital limits the form of labor or the productiveness of labor, but that it limits the exertion of labor. ”

“ People want the things the manufacturer makes as much as ever, just as the operatives want the things the storekeeper has to sell. But they do not have as much to give for them. Production has somewhere been checked, and this reduction in the supply of some things has shown itself in cessation of demand for others, the check propagating itself through the whole framework of industry and exchange. Now, the industrial pyramid manifestly rests on the land. ”

“ The nation which would keep its head above the tide must accurately adjust supply to demand, and eliminate waste to the last least particle. Standards of living will most likely descend for millions of people. With the increase of capital, the competition for safe investments, and the consequent fall of the interest rate, the principal which today earns a comfortable income would not then support a bare existence. ”

“ Thus we see how the different kinds of wealth successively come into being and become distinct. One part of the wealth accumulated by society is devoted by every one who possesses it to render labour more profitable by slow consumption, and make the blind forces of nature execute the work of man; this part is called fixed capital and comprises reclaiming, irrigation, factories, the tools of trade, and mechanical contrivances of every description. ”

“ To-day we are challenging another ownership,—the ownership of materials which go to make the goods we need. Private ownership of land, tools, and raw materials may at one stage of economic development be a method of stimulating production and one which does not greatly interfere with equitable distribution. When, however, the intricacy and length of technical production increased, the ownership of these things becomes a monopoly, which easily makes the rich richer and the poor poorer. Today, therefore, we are challenging this ownership ”

“ To prohibit either is to paralyze industry, to stand still as a producing power, and to stand still is only the temporary pause before retrogression begins. Commercial prosperity is simply this expansion of industry and trade consequent upon the development of new resources. ”

“ If, on the other hand, the worker will save from his surplus earnings, he will increase the community's capital, and this will tend, directly or indirectly, to cause the production of further commodities, so increasing the supply of commodities and therefore tending to reduce prices. ”

“ In this light the divorce of the manual workers from the ownership of the means of production was seen to be no passing phase, but an economic development which must, under any system of private control of industry, become steadily more complete. And it was argued that the terrible alterations of over-production and commercial stagnation, the anomaly that a glut of commodities should be a cause of destitution, were the direct result of the management of industry with a view to personal profit, instead of to the satisfaction of public wants. ”

“ When property is very unequally divided, the monied capital of a nation, upon the employment of which, next to its industry, its wealth, or revenue, depend, begins to be applied less advantageously. A preference is given to employments, by which money is got with most ease and [end of page #133] certainty, though in less quantity. A preference also is given to lines of business that are reckoned the most noble and independent.
Manufacturers aspire to become merchants, and merchants to become mere lenders of money, or agents. ”

“ The capital thus thrown out of employment in an industry in which we had no comparative advantage (when competition became free) would necessarily be employed in the industries in which we had an advantage, and would supply—and the transferred capital would be the only means of supplying—the commodities which would be sent abroad to pay for those, which by the supposition are now imported, but were formerly produced at home. ”

“ If they want to regain their former wealth they must adopt the same methods by which wealth is created elsewhere; they must produce more, much more than they spend, and they must carefully husband and gradually accumulate their surplus earnings. That is the way to create wealth and capital available for future production. ”

“ The efficiency of the new manufacturing processes has provided a large surplus of goods that must be taken somewhere, exchanged for food and raw materials, which must, in turn, be brought to the producers of manufactured goods. In the course of these transactions, a generous share of the values produced goes, in the form of profit, to the owners of the industry, another considerable portion goes into reinvestment, thus swelling the volume of productive capital.
The increased wealth, the larger capital and the greater amount of surplus all make possible the maintenance of a larger population. ”

“ The process of wasting the surplus profits in competition and luxury was slow and protracted, and meanwhile productive industry languished and the workers waited in idleness and want for the surplus to be so far reduced as to make room for more production. ”

“ Surplus capital presses forward with frenzy into all established branches of production, whose market suddenly widens, and into new ones, as railroads, etc., the need of which springs from this development. In all such cases must large masses of men suddenly, and without loss to the leaders of production in other places, be ready to be employed at the important point. These masses are furnished by the surplus population. ”

“ The practical operation of the plans I have endeavored to outline will work no injustice to the owners of existing manufacturing establishments, for it will be in the interest of the workmen to purchase such plants and business at their value, rather than to build up new and rival establishments. It is true that some persons now making a profit off the labors of others will be compelled to enlist their capital and energies in other lines ”

“ A short-timed monopoly of the abnormal profits of each new invention, and an enormous expansion of the field of investment for capital must be set against the gradual fall in the interest paid for the use of each piece of capital. But as the advantage of each new invention has by the competition of machinery-owners been passed on to the consumer, all other classes of the community have gained in proportion to their consumption of machinery-produced commodities. ”