# The Case for Capitalism/Chapter 11

In putting the case for Capitalism in the foregoing chapters, I have by no means meant to argue that it is the best possible economic system, only that it has worked wonders, and can work still better wonders in the future and that we cannot be sure that any other system that has yet been suggested will do as well. I have tried to show that under it the capitalist—the man who owns the plant and material and takes the risk of enterprise—does not rob the wage-earner of "surplus value" created by the latter, because the surplus value is due to the existence of the plant, and is shared by the wage-earner through the far better standard of life that the equipment of industry has enabled him to secure. Without the plant, the labourer could only supply himself with a bare subsistence, if that. It is true that most of the plant has been made or put where it is wanted by the manual ​effort of wage-earners, but this was only possible because wage-earners were paid to do so, under direction supplied by capitalists, by capitalists who thereby, instead of spending their incomes on immediate enjoyment, invested part of it, always with more or less risk, in furnishing industry with equipment for an everexpanding output, so creating surplus value not only for themselves, but for the whole nation, and for the whole economically civilized world.
By making this investment and taking this risk, and applying labour under expert direction to the task of providing industry with plant in the widest sense of the word, Capitalism has made an enormous increase in population possible, and has put control over the forces of Nature into the hands of active enterprising venturers who certainly might have made better use of it, but have this excuse, that they were bound, in their search for profit, to work to meet the demand of the average consumer, whose quaint foibles in the matter of demand have resulted in the production of a great deal of ugliness and rubbish. But in spite of all that the fastidious may urge, on artistic, moral and common-sense grounds, against the use that has been made under ​Capitalism of the new powers which the Industrial Revolution has given to man, there is plenty to be said on the other side of the account. We have done things worth doing under Capitalism. Sir Leo Chiozza Money in an article in the Observer of November 23, 1919, told us that: "With coal we create an export surplus of manufactures; with that export surplus we purchase food and materials to feed our population and our factories, and thus obtain the means to create a further export surplus to import more food and materials. This process, continued during a period of five generations, changed the poor and backward agricultural Britain of 1750 into the comparatively wealthy State which found, at the opening of the nineteenth century, the means to fight Napoleon, and, a century later, the means to destroy German militarism."
It is only fair to Sir Leo to observe that he, being a convinced and earnest Socialist, doubtless believes that economic progress would have been much greater and better under some form of Collectivist management than it has been under Capitalism. And he may be right. But, as Aristotle says, "the fact is the starting line," and the fact is that these things were done under Capitalism, and that under it, as ​shown on a previous page, many millions of people were born and lived a life that had a good deal of comfort and jollity, and a certain amount of real nobility mixed up in its queer salad-bowl, who never would have seen the light without the industrial development that was in fact worked out under Capitalism. Far from robbing anybody of surplus value, Capitalism is like a benevolent ancestor who, instead of consuming all the port that he could get—as some ancestors did—laid down an enormous cellar of it for the use of future generations. And every one who is now alive in this country, and millions abroad likewise, are now able to help themselves to bottles of the grand old vintage then laid down and now ready for us, crusted, fruity, full of ripe flavour and rich bouquet. For none of us could have been so well off, and many of us could not have been born at all, if Capitalism had not done this deed, and done it judiciously and well. We all thus drink of the bottles laid down by those who went before us, those of us who work, because our work could not have been so well rewarded if we had not been members of a productively efficient community, those who cannot, will not, or do not work, ​because it would not have been possible for our needs to be provided as well as they are now. That some people have access to some of the bottles as a matter of legal right, is only because this privilege has been handed on to them by those who laid down the cellar. If we took their right away, there would be a few more bottles for the rest of us while the cellar lasted, but would the process of laying down for those who come after us be likely to continue on this voluntary basis? It would most probably have to be done by officials or Committees. Their efforts might appear at first sight to be cheaper than those of the private benefactor, who took a consideration for his forethought when he could earn it, but might cost the community dear in the long run if they laid down the wrong vintage or were too timid to try new brands.
Such is the debt that all of us owe to the capitalists of the past. But when we have taken off our hats to them and acknowledged it, we have to give our minds to reforming and improving the Capitalism of the present.
In our studies of the schemes that have been put forward for improving the economic system, we have found many aspirations that were highly desirable if they could be made into ​practical facts, but did not seem likely to be carried out by the proposed reforms, or only at the cost of loss of efficiency in output. First among these comes the desire for economic freedom. Most of us will admit that freedom is the most precious jewel that we can gain, and that without a certain amount of it no one's mind and character can achieve real growth, any more than his legs can grow if they are encased in plaster of Paris. Economic freedom means to most of us freedom to work or not to work, or if we do work, freedom to work to please ourselves and not at the bidding of anybody else. In this sense it is not possible to the great majority of mankind because we all have to work unless we can induce somebody else to keep us alive, and the work that we do has to be pleasing to somebody in order to make him give us in return for it the money with which, by our choice of the goods that we buy, we exercise control over the work of others and make them turn out things that we want. In other words, we sacrifice freedom as producers in order to increase our freedom as consumers.
A few can induce others to keep them alive, and in some cases exceedingly comfortable, by the claims that they exercise as hereditary ​owners of the equipment of industry in the widest sense of the phrase, including land. A few others can do it by appealing to the community's sympathy owing to physical and other inability to work. Most of us have to work, and to please others by so doing. If we lived in a wilderness and worked only for ourselves, we should still have to work, but only to please ourselves. Our control of goods would thereby be very greatly lessened, and would economic freedom, so gained, be really good for us? Is it not better that we should be forced to co-operate in order to enjoy, and to secure a good life for ourselves by helping to provide what others want? Those of us who take this democratic view must be ready to be bludgeoned with examples of the great artist prostituting his brush to boil his pot, and of the poet who starves because an ignorant public does not want the sonnets that the Muses bid him sing. These are special cases of special gifts, and one cannot feel sure that the artist or the poet would fare better at the hands of a Socialist Treasury Committee or of an Academy appointed by the Guildsmen. But for the ordinary workaday goods of life, there seems to be something pleasant and really "social" and sociable in this dependence on ​the judgment of others on our work; and a restriction of economic freedom that makes everybody work to please others, is very similar to the restriction on social freedom, which only allows people to do as they please as long as they obey the laws of the community, and do not allow their liberty to be a nuisance to others and a restriction on theirs.
If the decision about ahat is to be produced, and whether it is well produced, is left to the producers, it seems unlikely that the goods turned out will maintain so high a standard as when they have to pass muster before the consumer before they can earn any reward. And yet such seems to be the ideal of economic freedom aimed at by some at least of the Guildsmen, for we saw that Mr. Cole maintained that the workers must be free "to choose whether they will make well or ill."
To this extent, then, it seems that economic freedom must be limited, if we are to secure efficiency in production and freedom for the consumer to choose what goods he will enjoy. And since, as has already been pointed out, we most of us produce only one, or only a fraction of only one, thing, and consume thousands of things, our freedom as consumers seems to be much more precious than our ​freedom as makers, doers and growers of goods and services.
But when the need for this limitation is granted, there is a great range of economic freedom left, in respect of which Capitalism can contend that it confers at least as much as any other possible system that has yet been suggested.
With regard to the consumer's freedom, it beats State Socialism and Guild Socialism so hollow that they are hardly to be seen on the course. Under State Socialism, carried to its logical conclusion, the consumer's freedom, and the producer's likewise, does not even "Also Run." Bureaucrats will decide who is to produce what; and the consumer will take what is produced, on a rationing system with all its exasperating apparatus, or leave it. Mr. Cole paints too flattering a picture with his naughty but amusing jeer, when he says (Self-Government in Industry, page 122), "the greatest of all dangers is the 'Selfridge' State, so loudly heralded these twenty years by Mr. 'Callisthenes' Webb." Mr. Selfridge gives his customers plenty of choice, and with the help of the adroit Callisthenes invites them to come and choose. Mr. Sidney Webb, with scientific and kindly benevolence, would order our lives ​for us much better than we could, but they would lose all their zest because they would no longer be ours.
Under Guild Socialism either, according to Mr. Cole, the producers are to have the choice whether they will "make well or ill," or according to others the interests of the consumers are to be represented by apparently elected bodies which will leave little chance to those with eccentric tastes, or according to Mr. Stirling Taylor there is to be inter-Guild competition, which will give the consumer a chance, but seems to wreck the whole Guild fabric, which appears to be frankly based on monopoly.
Under Capitalism, as long as there is free competition, the average consumer decides what is to be produced, and the wishes of minorities are readily met as long as their demand is great enough to stimulate production to meet them. But is not the consumer's freedom to some extent threatened under Capitalism by monopoly, or at least by attempts in its direction on the part of trusts, "combines," amalgamations, rings, and "gentlemen's agreements"? If Capitalism plays this game, it will simply weave for itself a rope with which it will be hanged, and rightly, as high as Haman. ​Monopoly has stunk in English nostrils since the days of Elizabeth, and if Capitalism tries to impose it now, it is committing suicide and asking for State Socialism. It is true that under State Socialism monopoly would be more tyrannous than under private enterprise, because since the Government would itself be the monopolist, the helpless consumer would have no official stick to lay across the back of it. But if there is to be monopoly, it will be easy for Socialists to persuade the public that in the hands of the State the monopoly would create profits, not for a profiteering octopus, but for the general good. Already Mr. Sidney Webb has made the recent bank amalgamations, though they are far from having set up any real approach to monopoly, a text for an adroit and ingenious sermon on the need for State banking, in an article on "How to Prevent Banking Monopoly," in the Contemporary Review of July 1918.
In fact, if the movement in favour of nationalization triumphs and proceeds to its logical conclusion, the end of the system of private Capitalism, it will be an interesting inquiry for the economist of the future to consider, how much was done by private capitalists and the property owning classes to kill a system ​which might, if more sensibly developed, have enjoyed a much longer life. The stupid financial policy of belligerent governments during the late war has given a great opportunity to the enemies of Capitalism by debauching the currency, pouring fortunes into the pockets of shareholders and adventurers through the consequent rise in prices, and so stirring up unrest and suspicions of "profiteering." Mr. Keynes, who develops this theme with brilliant lucidity in his book The Economic Consequences of the Peace, observes (page 222) that "perhaps it is historically true that no order of society ever perishes save by its own hand." But for this breach in the walls of Capitalism, private capitalists, as such, are not alone responsible; it was made rather by the politicians of their class whom the wealth that they created enabled to serve their country according to their lights, with results that are now plainly to be seen.
In other corners of the economic field, however, capitalists have themselves worked hard to weaken their own position. By continually resisting the claims of the wage-earners for higher wages on the ground that industry could not stand them, when subsequent experience proved that it could, they have ​done much to embitter the mind of the workers, and to teach them to believe that they could only get what was their due from the State. By their action in the matter of piece-rates they have helped to increase the prejudice among the workers against being paid on this system, and so have done much to produce that deadly view, so fatal to efficient production, that the best workers should limit their pace to that of the average or of the worst.
It was no inherent wickedness that led them to make these mistakes. They were quite ordinary human beings doing their best according to their lights. But they looked to the interest of the moment, and their mental horizon was bounded by the date of their next balance sheet. If they had looked further ahead they would have seen that it would pay them well in the long run to pay, not the lowest wage at which they could get their work done, but the highest that their business could stand; and that if a man earned much at piece-work that was not a reason for cutting down the piece-rate, but for encouraging him to make more. They have been very conscious of the fact that they risk their money. Have they always remembered that some of the worst-paid wage-earners risk their lives?
​Again, there has been unnecessary reluctance on the part of the capitalist in publishing full and candid statements of the financial position of his business. The accounts issued by public companies often seem to be arranged to give as little information as possible. There is much excuse for this attitude owing to the desire to limit the power of possible competitors to pry into matters that it is more pleasant to conceal. On the other hand, it would be an immeasurable advantage if the workers in an industry could be shown more clearly how it is faring on the financial side, and if the problems that its managers have to deal with were put before them in a way that they can understand. By this system it is possible that very practical suggestions of great value might be made by the wage-earners. With regard to the control of the conditions under which they work, reform is now generally admitted to be due, but here again capitalist employers have been, in the past, much too ready to resent what they have regarded as interference with matters that concern them only.
To bring about improvement on these lines, no revolutionary change in human nature is required such as would be necessary for the smooth running of industry by State or Guild ​Socialism. We should not all have to be suddenly fired by zeal to work for others with no consideration for ourselves. Capitalists would still be working, as they have to now, to earn profit for themselves by providing the needs of the community. They would only have to recognize, as the best of them do already, that to earn larger profits for the moment by paying their workers less than they can afford to pay is bad policy in the long run; bad for themselves, and bad for the community on whose prosperity and stability they depend. If they would only reflect that if they earn the hostility of consumers by attempts at monopoly, and of the wage-earners by an abuse of the strength that their wealth gives them, they are weaving a rope for their own economic necks, they would be learning a lesson that would be of great benefit to themselves and to everybody else.
Besides their shortsighted attitude to those who work for them, capitalists have done much to undermine their own position in the eyes of detached observers by the use that they have made of the wealth that they have gained. Much of the academic Socialism that is rife among what are called the educated classes is due to the spectacle presented by the rich ​bounder spending money in vulgar ostentation. All who earn or own wealth have to remember how much of it they owe to the existence of a busy and prosperous community as part of their raw material, and how little they could have done apart from that environment, and consequently how much of it has been earned for them by the community which has given them their chance. By bad spending they ask industry to produce bad stuff. By good spend ing on worthy public objects they might transform the appearance of most of the ugly and depressing towns in England, and give us an educational system that could really afford to grant every citizen that is born to us a chance of growing up into a good and healthy man or woman, fully developed in mind and body. Here perhaps we are demanding too great and rapid a change of outlook. But it is surely not too much to hope that the capitalist may learn that, when he wastes money on luxury, he not only exasperates public opinion, but raises the price of necessaries, and so emphasizes the inequalities which are so dangerous to the social stability on which his existence depends.
​These inequalities would be lessened rapidly if the attitude of capitalist employers towards those who worked for them were modified as suggested above. But we want to see them attacked at the other end at the same time, by the wage-earners recognizing that Capitalism is not an evil monster that robs them, but a system that has improved their lot and given life to millions who could not have been born without the industrial development that has taken place under it. Owing to the shortsightedness of the capitalist employer, they have had to fight hard for the improvement gained, but if they want to emancipate themselves from dependence on him, is it not easier and safer to do so by becoming capitalists themselves, and providing for themselves the management, organization and plant without which labour is powerless to produce?
To this end again no great revolution in human nature is needed, but only a development of a process which has already in the Co-operative Movement produced astonishing results. The War Savings Campaign has taught millions who never saved money before to save it in order to save their country when threatened by a foreign enemy. All that is ​needed is that this process should be continued to save the country from the internal enemy that sets class against class. We want a financial organization by which wage-earners' savings, that now go into Government securities, can go into industry without having to face the risk that is attached to investments in any particular industry or company. This is a problem that financial ingenuity should surely be able to solve. The workers have already shown that they can become capitalists, but what is wanted is that more of them, and ultimately all of them, should be capitalists. Then, if the wealthy continue to perceive in a widening circle that it is not good for their younglings to bring them up to idleness, we shall begin to be within sight of a state of things in which every worker is a capitalist and every capitalist a worker.
In the meantime improvements in education should give to all a better chance of material success in life, and open the chance of a career to all who have the necessary gifts of courage, honesty, initiative and readiness to take responsibility. Though, owing to the weaknesses of Capitalism, baser qualities too often earn big rewards, these are the gifts that most surely ​bring success under it, and they are also the qualities that makea great nation. With these qualities fully developed and given free play, we might produce a country in which all would be competing vigorously in order to supply the needs of the consumer, and, wealth being well distributed, great profits would only be earned by those who served the whole community best. Great profits when earned would be spent sparingly on personal enjoyment, lavishly on worthy public objects, or put back into industry, thereby quickening production and increasing the demand for labour, and material success would be the prize of energy, initiative and courage, wherever found, and so would stimulate the best powers of active, bold and enterprising men and women. Such a system is surely more attractive to those who love freedom than that of State Socialism under bureaucratic control, or Guild Socialism based on monopoly and a society grouped according to function. It would stimulate output to a degree that we can hardly now conceive, and having solved the problem of the supply and distribution of material goods would enable those who lived under it to address themselves to the task of building up a real civilization, ​and producing a world that should be not only rich, but also beautiful and noble, full of wise and beautiful and noble men and women, competing and co-operating for the common good.
The end
* ↑ Page 114.
* ↑ This platitude I have worked out in detail in a book called Poverty and Waste.—H. W.
Printed in Great Britain by Richard Clay & Sons, Limited, Brunswick St., Stamford St., S. E. 1, and Bungay Suffolk