# The Case for Capitalism/Chapter 6

So far we have seen that the claim of the capitalist to interest on his money and profit in return for risks which he takes, is fully justified on economic grounds and in equity, and that the claim of some champions of labour that labour is entitled to the whole of its product, is more than fully satisfied,—because already and as it is labour gets out of industry a great deal more than it could provide for itself if it were not supplied by capitalists with machinery, plant and organization by which its output is enormously increased.
Capitalism, then, is not based on injustice. Let us look now at the question of its practical success. A glance at the progress of mankind since the Industrial Revolution brought modern Capitalism into being, shows at once that its achievements have been enormous, one might ​almost say miraculous. An obvious test is that of population. Dr. Shadwell, in an article on the History of Industrialism in the Encyclopædia of Industrialism, shows that while in the last century before private Capitalism became powerful—between 1651 and 1751—the population of Great Britain rose from 6,378,000 to 7,392,000, an increase of 1,014,000, in the next century—1751 to 1851—it rose to 21,185,000, an increase of 13,793,000, and in the next so years—1851 to 1911—it rose by 19,350,000 to 40,535,000. In commenting on the difference between the increase in the two centuries—1651 to 1751, and 1751 to 1851—Dr. Shadwell observes (page 304) that "the difference is not, of course, wholly due to the industrial factor; but the two go together, and the vast increase of life during the second century negatives the common assumption that Industrialism produced a state of unprecedented and increasing misery. This is emphasized by the fact that the rate of increase was highest during the first decades of the nineteenth century, when the change was proceeding at its maximum intensity. The rates of increase in England were: 1801–11, 14.50 per cent.; 1811–21, 1805 per cent.; 1821–31, 16.24 per cent. ​1831–41, 14.58 per cent. These rates have only been approached in one subsequent decade—that of 1871–81—which included several years of the highest prosperity on record, when the rate was 14.5 per cent. The rising tide of vitality revealed by statistics is in keeping with the observations of the French traveller Louis Simond, quoted by Professor Smart, in 1810–11: 'I have found the great mass of the people richer, happier, and more respectable than any other with which I am acquainted.'"
Increase of population is not, of course, a wholly satisfactory test by itself. It is, in fact, maintained by some Malthusians that increase of population is a sign of a low state of civilization, and a low standard of comfort, and this contention is to some extent supported by the well-known fact that the birth-rate shows a tendency to decline among those classes whose circumstances are most comfortable and whose standard of life is highest. Nevertheless it is something for Capitalism to claim that it has enabled so enormous an increase to take place in the population of the country, in which modern Capitalism and the modern Industrial system first opened their keen young eyes, ​and have carried out their most characteristic development. Merely to enable so large a number of people to be alive is not everything, but it is a great deal. Under Capitalism all these millions saw the light of the sun, smelt the scent of spring, knew love and friendship, made and laughed at good and bad jokes, ate and digested their meals, made their queer guesses at the secret of life, played games, read books, cherished their hobbies and their prejudices, knew a little, thought they knew much more, and went their way leaving others behind them to take up the thread of life and spin another strip of its mysterious cloth.
If life is on the whole a good thing—and most of us waste little time in sending for a doctor if we do not feel well—Capitalism has made the enjoyment of that good possible to millions. And all the time during which that huge increase in our population was growing we were pouring out a stream of emigrants to fill and till the waste places of the earth, and sending them capital to help them to increase production there. Thus Capitalism has bred millions of active, busy men and women, spread them over the world, reclaimed its waste places and increased its output so fast that, as we shall see, ​the increased population has increased its command of goods even more rapidly than its numbers. All this has to be chalked up to Capitalism's credit and considered carefully before, just because it has not created an earthly Paradise for us, we throw it down and put an untried system in its place. Itis true that part of our population has lived and continues to live under circumstances of which our civilization has every reason to be ashamed. But even in their case the gift of life is something, and social reformers are rather apt to forget, in their eagerness to put right the evils which beset the destitute among us, that the greater part of our population leads and has led lives, which though far from being ideal from an economic or any other point of view, have taken them through the world in a state of fair contentment, and with a reasonable and growing share in the gifts which science has placed at man's disposal. Industrial and scientific progress in the control of the forces of nature, has proceeded with astonishing rapidity throughout this period of production under Capitalism.
It may be argued that science and invention have done the real work, and that Capitalism has only picked their brains, applying their ​lessons purely with the view to making profit out of them, and so has wrested the gifts of science from their true use and prevented their being enjoyed in full freedom by the whole of mankind. This may be so, but, on the other hand, science could never have wrought its miracles if there had not been a vast store of accumulated wealth to apply to the development of its discoveries. This accumulated wealth might perhaps have been produced by a system of society organized collectively, under which the Government would have seen the goals towards which science was struggling, and placed at its disposal an army of workers who were capable of carrying out its objects. But it is at least as likely that no Government which the world has yet known would have made use of the services of science with the readiness, adaptability and courage in taking risks, that have been shown by the organizers of industry spurred by the incentive of profit-making.
Whatever those people may think who like to amuse themselves with the pleasant science of hypothetics, that is to say, of wondering what might have happened if things had been otherwise, the fact remains that the material ​achievements under Capitalism have been enormous, and promise still greater miracles if we follow the same line. The world has been covered with a network of railways, and the shores of its various continents have been linked together by steamships of enormous power. Factories and machinery have been developed and improved with incredible speed. Telegraphs and telephones have made the whole world into one great listening gallery, and the exchange of goods and the communication of thought between one country and another are being continually developed in a manner which only shows what great possibilities still lie before us. The material output has grown at a staggering pace, and the British workman of to-day has his life embellished and made comfortable by the products of all the climates of the world, from tea to tobacco, with a freedom which would have been envied by many a mediaeval monarch. At the same time if there are terrible inequalities in the distribution of this wealth, if many at the bottom of the economic ladder lead lives of misery, owing to a lack of the good things of the earth, and many at the top lead lives of boredom owing to a surplus of luxurious enjoyment, it is possible to climb ​from the lowest rung of the ladder to the highest. We cannot claim that the "career is open to talent," or that there is anything like a fair chance for all in the race for the good things of life; this is an ideal for which we have to work by improving and cheapening education. Talent backed by individual enterprise in any case seems likely to have a better chance under Capitalism than under bureaucratic red-tape or Guild monopoly; and any one with exceptional ability and exceptional luck, or both, can already make his way through from the bottom to the top early enough in life to give him many years of enjoyment of his success.
Our output of goods is still not nearly great enough, being estimated before the war at about £42 per head of the population. Even if it were equally distributed, £42 worth of goods and services would not, even at pre-war prices, ensure a really high standard of comfort for the population as a whole. This need for an improvement in output we saw at the outset to be essential in order to secure that world in which it will be really pleasant to live. But because Capitalism has not yet produced as much as we want, is a bad reason for overturning it in favour of a system that might produce still ​less, when it is clear that capitalistic production can, if it is given a fair chance, do much better for us in the future as it learns and applies its lessons.
Industrial and agricultural development had also been assisted by an extremely ingenious financial machinery, and a great growth and improvement in banking, which provided credit and currency for the community with remarkable success; during the last half century before the war, the financial machinery was perfecting itself into a state of extraordinary elasticity and adaptability, and meeting with steadily growing composure the industrial crises which the speculative habits of man, and the risks inevitable from our present industrial system, necessarily produced. A machinery of investment and a market in the debts and securities of public bodies and public companies, had also been developed with great ingenuity by the Stock Exchanges of the world. Whoever wanted to borrow money and invest it in industry found ready listeners—only too ready in some cases—whether they applied to the banks for short credits, or to the investing public for permanent investments, or invited speculators to try their luck. Capital flowed with wonderful ​readiness from one country to another, and wherever there was a chance of devoting the proceeds of the labour and work of old countries to the development of new ones, in the hope of increasing mankind's output, and so gaining fresh profits, there was no lack of those who would risk their past and present labour and work on this process of continually expanding man's conquest over nature.
All classes had shared in the benefits produced by this expansion. Mr. Philip Snowden admits on page 38 of his book on Socialism and Syndicalism, that "between 1850 and 1900 the rate of wages as shown by Board of Trade index numbers, rose by 78 per cent., and in the same period the prices of commodities fell by 11 per cent." He adds that "it is not safe to take these figures upon their face value. The increase of wages was by no means spread uniformly over the whole wage-earning class, nor does a fall in the average of wholesale prices necessarily mean a corresponding reduction in the cost of living to the working classes. The fall in prices in the last half of the nineteenth century was mainly in comforts and luxuries. Many of the articles which enter into the economy of the workers increased ​in price. Milk, eggs, butter, coal and rent were all higher in price at the end than at the middle of the last century." On the other hand we may fairly urge that comforts and luxuries, such as tea, sugar, tobacco and meat, not to mention necessaries such as—bread, also entered largely into the economy of the workers.
When we find that during a half-century in which the population had increased rapidly, the average money wages of the workers had grown by more than three-quarters, while the average price of the goods they consumed showed a by no means negligible decline, we see what little basis there is for what Marx and other people have called the "iron law of wages," an entirely imaginary law, which is alleged to force the rate of wages always down to the level of subsistence. If there had been any real truth in this law, it would have been clearly impossible for wages to rise by 78 per cent. with a rapid increase in the number of wage-earners, while at the same time the average price of consumable goods had fallen by 11 per cent. Under the circumstances, and in view of his own figures, it is surprising to find Mr. Snowden saying on a later page (120) that ​"like the landlord who takes in the form of rent all above the subsistence of the labourer, so the capitalist takes all above the subsistence of the workman, above sufficient to maintain the workman in the standard of life of the class to which he belongs." How Mr. Snowden's clear and logical mind reconciles this assertion with the figures that we have quoted from him, is a puzzle that would baffle the Sphinx.
It has to be admitted that the great and steady improvement that was then shown gave way to the opposite tendency in the early years of the present century. Mr. Snowden continues on page 39: "After all, the important matter is not whether the condition of the workers' improved between 1850 and 1900, but whether it is showing a tendency to improvement now." (His book was published shortly before the war.) "About the end of the century we seemed to enter upon a new cycle of tendencies. The previous slight (sic) upward movement in the condition of the workers was arrested and eventually reversed. The permanent tendency now is for the rich to grow richer at an increasingly rapid rate, and for the workers to become not only relatively but actually poorer."
​Mr. Snowden is undoubtedly right in calling attention to a check, which showed itself at the beginning of the twentieth century, in the improvement of the position of the wage-earner. Wages rose little or not at all in money, and prices were rising. Whether he was right in assuming that the tendency was a permanent one, we shall never know, because the war intervened, upsetting the whole economic basis of society, and giving the workers a chance of sustained improvement, of which there is every reason to hope they will take full advantage; but it is at least possible that Mr. Snowden was wrong in assuming that the tendency for the buying power of wages to go back was permanent. It might have been merely the falling back of a wave in a rising tide, to have been followed by a still more rapid improvement, thanks to the determination shown by the wage-earners in the year before the war, to take drastic measures to improve their position. However this may have been, there can be no doubt that under the system of Capitalism the wage-earners did during the whole second half of the past century achieve a great and almost unbroken improvement in their lot, an improvement which was ​encouraging them to make still greater efforts for themselves in the future.
During the same period we had seen great improvements in education and sanitation, the lengthening of human life, the total extinction of the plagues which used to scourge Europe periodically, the practical abolition of certain diseases such as typhus and small-pox; and the general attention to health and the mental improvement of all classes, though it still left very much to be desired, was making progress which was perhaps as rapid as could be expected, owing to the ignorance and conservatism which are the common lot and the pride of most of us.
It may be true that Capitalism has had very little to do directly with these improve​ments in education and sanitation. There is even something to be said for the view that the representatives of the property-owning classes had done a good deal to resist the progress of these improvements, which had only been carried through by social reformers and a few scientific enthusiasts, after lives of thankless effort. This may be so, but nevertheless the store of wealth which was necessary in order to carry them out had been called into being by the working of Capitalism with the incentive of profit before it. It may not have been responsible for the excellent use thus made of its wealth, but it did at least provide the wealth which was so used by those who had nobler views than it of the use to which wealth should be put.
Such were the achievements of Capitalism in the land of its birth in its modern form and in the countries into which this land poured the men and capital that it produced. Its victories, unlike those other institutions that have dominated human life, could only be won by doing what somebody else wants. Industry and investment can only earn a profit if they produce an article or a service that somebody wants and wants enough to repay the adventurer ​his outlay, make good the depreciation of his tools and leave him a profit. He may sometimes win his victory at the expense of those whom he has underpaid, or in some rare cases by barbarous ill-treatment of natives whom he has enslaved, overworked and even tortured. But whenever a profit was made it could only be done by providing some one with something that he wanted or thought that he wanted. Capitalism working through competition and freedom must please the consumer to prosper, and the consumer is the mass of humanity. From this point of view its achievements, smirched and blotted as they are about the hinder parts, are sweet and cleanly as compared with those of diplomacy which have drenched the world in blood, or of churches that have used the torch of God's Word to light holocausts of good earnest people who differed slightly with them concerning their belief in Him.
Capitalism incidentally was working for peace though it is commonly accused of being the ally if not the father of Militarism. Seeing that the pages of history were black with Militarism long before Capitalism in its modern form was heard of, to make the latter the father ​of the former indicates an almost desperate search for a stick to lay on its back. It is true enough that Militarism could not have achieved a fraction of its destructive power if Capitalism had not provided the machinery and weapons. "What d'ye lack?" is Capitalism's cry, and when humanity said, "Weapons for killing one another, and see that they kill by heaps," Capitalism delivered the goods with a vengeance. If humanity will only ask for something more sensible, Capitalism, ever democratic and accommodating and anxious to please a customer, will oblige with equal readiness and success. Capitalism fears and dislikes war, because war means destruction, taxation, unrest and lack of confidence, and Capitalism knows that though it may seem to make big profits out of destruction it will pay heavily for them before the account is closed, and that it can only earn a good living out of prosperity and peace and progress. While some have accused it of fomenting war, others with a truer instinct have denounced International Finance as an incurable and incorrigible Pacifist.
And yet, when war came and there was no help for it, the men who had been born and bred under Capitalism turned out and fought ​with a heroism that has never been approached by the Paladins and Knights Errant of the days before we had been turned into shopkeepers and demoralized by profit-seeking. All who had watched industrial development and its effects in making us sleek and sedentary townsmen must have wondered whether the process would not soften us into folk who could not stand the test of battle. Yet all the battles that had ever been fought before were child's play to the Hell that both sides lately rained on one another for four-and-a-half years, and the nation of shopkeepers was in her old place in the front row, wherever the fighting was hottest by sea and land.
Says the critic, "There may be some truth in all this, but what of the disgusting ugliness and squalor that Capitalism has brought with it—lovely countrysides covered with sordid filthy towns that are a blot on their beauty, and men with their hearts still more foully smirched by scamped work and the scramble of competition?" This is a criticism that cannot be altogether gainsaid, but it is possible to exaggerate it, by imagining too rosy a picture of the system that Capitalism superseded. Capitalism committed crimes in its early days ​when it put young children to work for wickedly long hours under disgraceful conditions, and is now being punished by the natural bitterness of their descendants who see no cure for it but its destruction. But these evils have been largely cured and their remnants are being dealt with. Short-sighted Capitalism has often opposed reforming measures, but some good employers have worked for them. On the general charge of ugliness and deterioration the argument is not all on one side. Doctor A. Shadwell, an exceptionally well-informed authority on working-class conditions, published an article on this subject called "Town Life—Old and New," in the Edinburgh Review of January 1918. It is well worth study in detail and it may be hoped that Dr. Shadwell will develop the contrast on a larger scale. The following extracts will have to suffice for our present purpose:—
"The idea of a Golden Age is indestructible. Man will have his Golden Age when all the world was young and fair. He finds it by a comparison which sets the credit account of the past over against the debit account of the present. It is a false balance-sheet. The true account stands otherwise; it includes debit ​items against the past and credit items in favour of the present, and when the net balance is struck the result is very different. And so it is with this question of town life and town labour; a distorted and one-sided account has been put forward in order to make out a case. . . .
"Mills employing a number of workmen are mentioned at the beginning of the fourteenth century; journeymen formed a standing class and used to go on strike. But the scale of employment inaugurated in the eighteenth century amounted to a difference in kind, and the development of mechanical power made a still greater innovation.
"Both changes were attended by great evils, due to three main causes: (1) the rapidity of the development; (2) general ignorance and failure to understand the conditions; (3) the abuse of power by employers. The rapid development of industry on a large scale caused a corresponding hurried accumulation of persons in particular places in a haphazard way. . . . A slower pace would have resulted in a more organic growth, but the prevailing ignorance and indifference would have produced similar conditions in the end or rather worse ones. ​Mr. and Mrs. Hammond go so far as to admit that 'the old English towns were often over-crowded, insanitary, etc.' That does not meet the case at all. The old towns everywhere were not 'often,' but always, insanitary to a degree which it is difficult to realize now. They never were anything else, because there was no Sanitation, as we understand it. Sanitation was, in fact, the child of the new order: not because the evils were new, as is commonly supposed, but because they were recognized. The increase of population and growth of the towns presented them on a scale which compelled investigation in conformity with the advance of knowledge and the rising standard of living. It is important to understand this. . . .
"As to housing, we have Erasmus's description of the ordinary abode of the poorer classes in Henry the Eighth's time. It was a cabin of wood and clay, consisting of a single room, shared by all the inmates for all purposes and also by animals; no chimney; the floor of beaten earth, strewn with rushes, which were renewed every two or three years, and meantime received all the refuse and filth both ​human and animal. This type of dwelling is not yet extinct. . . . In the middle ages, which are held up to our admiration, it was the only type for the working classes. . . . From 'time to time complaints' were made of overbuilding in London, and houses were pulled down; and attempts were made to clear the streams and ditches, which were blocked with filth, dead animals, offal, and every kind of refuse. . . .
"We get a glimpse into mediaeval habits from the minute inventory of Sir John Fastolf's furniture at Caister Castle, one of the most sumptuous mansions in the kingdom. Out of twenty-six bedrooms only one—my lady's chamber—had any washing utensils, to wit—'1 basyn, 1 ewer, 2 pottys.' All the world lived in a state of indescribable filth down to a much later period. False generalizations are drawn from the beautiful buildings which have come down to us from old times. They have survived because they were exceptional; the common mass have perished. People who do not remember conditions thirty or forty years ago do not know what a real slum is. . . . The plain truth is that the old towns were nothing but slums—such as one cannot find now. ​Kings and nobles lived in a state of stench which would be thought unendurable to-day by any class, so greatly has the standard changed. . . .
"The same consideration of the prevailing standard applies to working conditions as well as to housing and sanitation under the new order. . . .
"The alliance of ignorance or stupidity with commercial greed runs through the whole story, and it is clear that the former was the greater obstacle of the two to improvement. Intelligent employers were the first to see what was wrong and to readjust their ideas. They introduced new standards, which gradually gained approval until public opinion sanctioned or demanded their compulsory application. In this process a powerful agent was combination among workmen, which was at once demanded and rendered possible by the conditions of work and the massing of large numbers together in the industrial towns. The same process has continued ever since, and is still going on with a progressively rising standard of living and working conditions, realized in a thousand ways, the mere enumeration of which would occupy pages. . . .
​"The stranger with different ideals in his mind may see nothing but what is repellent in the modern industrial town, and wonder how any one can live there. But the inhabitants do not think so; they are attached to it, warmly maintain its claims, and resent depreciation. They do not want any one's pity, and they have reason; for the truth is that they enjoy life a great deal more than those who pity them. . . . Nor is it true that they take no pride or interest in the products of their great workshops and factories, such as the mediaeval craftsman took in his handiwork. Here again a false balance is struck. The mediaeval craftsman who took pride in his work is the one we hear of, but what of the others? Were there no idle apprentices? Was there no bad work? There was so much that one of the chief functions of the Guilds was to prevent and punish it and to maintain the standard, which was always being threatened by scamped and dishonest work. As for the theory that the men of old worked for use and beauty, not for profit, there never was a greater craftsman than Benvenuto Cellini, or one who took more pride in his work and its beauty. Nor is there a workman to-day who looks ​more keenly after his wages and pockets them with more satisfaction than Cellini did the price of his masterpieces. On the other hand, there is to-day a great deal of pride among workmen in the products of their factory, in its good name, and in the reputation of the whole town for the quality of its manufactures. Those who do not know this have never been among them.
"In conclusion these observations must not be taken to suggest acquiescence in existing evils or denial of the need of improvement. The standard is always rising and there is no finality. But truth is not served by false balance-sheets, selected evidence, and one-sided statements."
Thus the Middle Ages give us Beauty, complicated by stench and the Black Death. Capitalism has provided an enormously greater output, better sanitation and better houses but has not yet given much thought to Beauty. It is an oversight of great importance, but it can be repaired.
* ↑ Professor Bowley in an article on "Wages" in the Encyclopædia of Industrialism says (page 514): "It appears certain that nominal and real wages increased from 1850 to 1874, that nominal wages fell and real wages remained steady from 1874 to 1880, that nominal wages remained steady and real wages rose from 1880 to 1887, and that both nominal and real wages rose from 1887 to 1899. . . . By 1910 real wages were back at the level of 1896–1898, but cannot be measured exactly." By real wages the Professor of course means wages as measured in actual buying power, as compared with nominal wages, measured in money alone.
* ↑ Dr. Shadwell's article is, among other things, a review of Mr. and Mrs. Hammond's book, The Town Labourer.