Chapter Eleven

CHAPTER ELEVEN

Man, Nature, and

Productive Organization

For a century the dynamics of modern society was governed by a double movement: the market expanded continuously but this movement was met by a countermovement checking the expansion in definite directions. Vital though such a countermovement was for the protection of society, in the last analysis it was incompatible with the self-regulation of the market, and thus with the market system itself.

The system developed in leaps and bounds; it engulfed apace and time, and by creating bank money it produced a dynamic hitherto unknown. By the time it reached its maximum extent, around 1914, every part of the globe, all inhabitans and yet unborn generations, physical persons as well as huge fictitious bodies called corporations, were comprised in it. A new way of life spread over the planet with a claim to universality unparalleled since the age when Christianity started out its career, only this time the movement was on a purely material level.

Yet simultaneously a countermovement was on foot. This was more than the usual defensive behavior of a society faced with change; it was a reaction against a dislocation which attacked the fabric of society, and would have destroyed the very organization of production that the market had called into being.

Robert Owen's was a true insight: market economy if left to evolve according to its own laws would create great and permanent evils.

Production is interaction of man and nature; if this process is to be organized through a self-regulating mechanism of barter and exchange, then man and nature must be brought into its orbit; they must be subject to supply and demand, that is, be dealt with as commodities, as goods produced for sale.

Such precisely was the arrangement under the market system. Man under the name of labor, nature under the name of land, were made available for sale; the labor power could be universally bought and sold at a price called wages, and the use of land could be negotiated for a price called rent. There was a market in labor as well as in land, and supply and demand in either was regulated by the height of wages and rent, respectively; the fiction that labor and land were produced for sale was consistently upheld. Capital invested in the various combinations of labor and land could thus flow from one branch of production to another, as was required for an automatic leveling of earnings in the various brances.

But, while production could theoretically be organized in this way, the commodity fiction disregarded the fact that leaving the fate of soil and people to the market would be tantamount to annihilating them. Accordingly, the countermove consisted in checking the action of the market in respect to the factors of production, labor, and land. This was the main function of interventionism.

Productive organization also was threatened from the same quarter. The danger was to the single enterprise—industrial, agricultural, or commercial insofar as it was affected by changes in the price level. For under a market system, if prices fell, business was impaired; unlessall elements of cost fell proportionally, "going concerns" were forced to liquidate, while the fall in prices might have been due not to a general fall in costs, but merely to the manner in which the monetary system was organized. Actually, as we shall see, such was often the case under a self-regulating market.

Purchasing power is, in principle, here supplied and regulated by the action of the market itself; this is meant when we say that money is a commodity the amount of which is controlled by the supply and demand of the goods which happens to function as money—the well-known classical theory of money. According to this doctrine, money is just another name for a commodity used in exchange more often than another, and which is therefore acquired mainly in order to facilitate exchange. Whether hides, oxen, shells, or gold are used to this end is immaterial; the value of the objects functioning as money is determined as if they were sought only for their usefulness in regard to be used as money, its value, amount and movements are govered by exactly the same laws that apply to other commodities. Any other means of exchange would involve the creating of currency outside the market, the act of creation—whether by banks or by government—constituting an interference with the self-regulation of the market. The crucial point is that goods used as money are not different from other commodities; and that consequently all notions investing money with any other character than that of a commodity are inherently false. It follows also that if gold is used as money, banknotes, if such exist, must represent gold. It was in accordance with this doctrine that the Ricardian school wished to organize the supply of currency by the Bank of England. Indeed, no other method was conceivable which would keep the monetary system from being "interfered" by the state, and thus safeguard the self-regulation of the market.

Let us return to what we have called the double movement. It can be personified as the actionof two organizing principles in society, each of them setting itself specific institutional aims, having the support of definite social forces and using its own distinctive methods. The one was the principle of of economic liberalism, aiming at the establishment of a self-regulating market, relying on the support of the trading classes, and using largely laissez-faire and free trade as its methods; the other was the principle of social protection aiming at the conservation of man and nature as well as productive organization, relying on the support of those most immediately affected by the deterious action of the market—primarily, but not exclusively, the working and landed classes—and using protective legislation, restrictive associations, and other instruments of intervention as its methods.

The emphasis on class is important. the services to society performed by the landed, the middle, and the working classes shaped the whole social history of the nineteenth century. Their part was cut out for themby their availability for the discharge of various functions that derived from the total situation of society. The middel classes were the bearers of the nascent economy; their business interestsran, on the whole, parallel to the market economy in regard to production and employment; if business was flourishing, there was a chance of jobs for all and rents for the owners; if markets were expanding, investments could be freely and readily made; if the trading community competed successfully with the foreigner, the currency was safe.On the other hand, the trading classes had no organ to sense the danger involved in the exploitation of the physical strength of the worker, the destruction of family life, the devastation of neighborhoods, the denudation of forests, the pollution of rivers, the deterioration of craft standards, the disruption of folkways, and the degradation of existence including housing and arts, as well as innumerable forms ofprivate and public life that do not affect profits. The middle classes fulfilled their function by developing an all but sacramental belief in the universal benefdicence of profits, although this disqualified them as keepers of other interests as vital to a good life as the furtherance of production. Here lay the chance of those casses which were not engaged in applying expensive, complicated, or specific machines to production. Rougfhly, to the landed aristocracy and the peasntry fell the task of safeguarding the martial qualities of the nation which continued to depend largely on men and soil, while the laboring people to a smaller or greater extent became representatives of the common human interests that had become homeless. But at one time or another, each social class stood, even if unconsciously, for interests wider than its own.

By the turn of the century—universal suffrage was now fairly general—the working class was an influential factor in the state; the trading classes, on the other hand, whose sway over the legislature went no longer unchallenged , became conscious of the political power involved in their leadership in industry. This peculiar localization of influence and power caused no trouble as long as the market system continued to function without great stress and strain; but when, for inherent reasons, this was no longer the case, and tensions between the social classes developed, society itself was endangered by the fact that the contending parties were making government and business, state and industry, respectively, their strongholds. Two vital functions of society—the political and the economic—were being used and abused as weapons for sectiuonal interests. It was out of such a perilous deadlock that in the twentieth century the fascist crisis sprang.

From these two angles, then, we intend to outline the movement which shaped the social history of the nineteenth century. The one was given by the clash of the organizing principles of economic liberalism and social protection which lead to deep-seated institutional strain; the other by the conflict of classes which, interacting with the first, turned crises into catastrophy.