Freeland - A Social Anticipation
by Theodor Hertzka
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We were all convinced, but Lord E—— could not refrain from remarking that the Freelanders did nevertheless estimate the value of many things in labour-equivalents. He at once received from my father the pertinent answer that, according to all they had yet heard, this happened only in cases in which an increase of payment had to run parallel with a rise in the value of labour. Salaries and maintenance-allowances ought to rise in proportion as the proceeds of labour and therewith the general consumption rose; and it was only when this relation had to be kept in view that the value of things could be estimated in labour-equivalents.

Mr. Clark now drew our attention to the comprehensive, transparent, and detailed publicity which marked all the pecuniary affairs of Freeland, in consequence of the entry in the bank books of all commercial and industrial relations. No one can deceive either himself or others as to his circumstances; and one of the most important social consequences of this is that no one has any desire to shine by extravagant spending. Extravagance is only too often prompted by a desire to make oneself appear in the eyes of the world richer than one really is; such an attempt in this country would only provoke a smile. And if anyone wished to spend in luxuries more than he earned, the bank would naturally refuse him credit for such a purpose; and without this credit the spendthrift would have to appeal to the liberality of his fellow-citizens before he could indulge in his extravagance. The amounts of all incomes and of all outgoings lie open to the day; all the world knows what everybody has and whence he gets it. And as everyone is free to engage in any branch of industry whatever, the difference of income can excite no one's envy.

But Lord E—— here asked whether the degree of authoritative arbitrariness inevitable in fixing salaries of different kinds—e.g. of officials—did not present some contradiction to the otherwise operative principle of unconditional freedom of choice of calling, and to the equilibrium in the proceeds of different kinds of labour which resulted from this freedom. 'When the profits of the woollen industry are higher than those of agriculture, fresh labour will be transferred to the former until an equilibrium has been established between the two profits; if a permanent excess of profit shows itself in one of these branches of production, it is evident under your institutions that this can be due solely to the fact that the labour in this more profitable industry is less agreeable, more exhausting, or demands a higher or rarer knowledge or skill. No one has the slightest ground to complain of injury; and so far the harmony produced by freedom is worthy of all admiration. But when it comes to appointments and salaries, this absolute freedom must cease. You, as the head of a department of the government, receive 1,400L, your neighbour the hand-worker earns merely 600L; how do you know that the latter does not feel that he is wronged thereby?'

'My lord,' said Mr. Clark, smiling, 'if you mean, how do I know whether my neighbour does not feel himself wronged by nature because he is not able, like me, to earn 1,400L a year, I must answer that I can speak only from conjecture, and that I really possess no certain knowledge as to his feelings. But if you think that my neighbour, or anyone else in Freeland, could find in my higher salary an advantage conferred on me by an arbitrary exercise of authoritative power, or by the favour of the electors, or for any inadequate reason, I can certainly show that you are mistaken. For my salary is, in the last resort, as much the result of free competition as is the labour-profit of my neighbour. Whether I am the right man for my post is a question which is decided by the corporations by whom my election is made, and whose choice is controlled or superseded by no automatically working contrivance; with what salary my office must be endowed, in order that qualified men, or let us say men who are held to be qualified, may be obtained, this is regulated by exactly the same automatic laws as is the labour-profit of a weaver or an agriculturist. And this holds good of the salary of the youngest official up to that of the heads of the departments of the Freeland government. The fixing of the salaries in every case depends upon the free judgment of the presidents or of the electoral colleges; but these presidents or electoral colleges must fix the salaries at such sums as will at any time attract a sufficient number of qualified candidates. Of course, a pound more or less a year would make no difficulty—it is a recognised principle that the salaries should be high enough to attract rather a superfluity than a lack of candidates; but when the number of candidates is greater than a certain ratio, the salaries are reduced, whilst a threatened lack of candidates is met by an increase of salaries. I will add, that it is to be taken as a matter of course that in Freeland the unsuccessful candidates are not breadless aspirants. Success or failure is never therefore a question of a livelihood, but of the gratification of inclination and sometimes of vanity. A man gives up his office when more profitable or more agreeable occupation attracts him elsewhere. The public officials are not paid the same salaries in all the branches of the public service. Specially trying work, or work demanding special knowledge, obtains here higher profits, just as in the various industries. And whilst the labour-earnings of ordinary manual labour are the measure of the salaries of the lower officials, so do the salaries of the various association-managers exercise a regulative influence upon the salaries of the higher public officials. You, also, have often experienced that the attractions of positions connected with public activity have in no small degree brought down the salaries of government officials, professors, &c., below the level of the incomes of those who hold the chief posts in associations. As a rule, it is found that with a rise in the general level of intelligence there is a relative—by no means an absolute—sinking of the higher salaries. While the directors of several large associations receive as much as 5,000 hour-equivalents a year, the highest officials in the Freeland central government at the present time receive only 3,600 more, and that because our persistent assertion of the relative depreciation of the higher salaries is met by the parliaments with an equally persistent resistance, and the parliaments yield to our importunities only very slowly and very reluctantly. To be just, it should be added that the same game is repeated in the associations. The directors would often be satisfied with much lower salaries, for they often really do not know what to do with their incomes, which, in comparison with prices in Freeland, are in some cases exorbitant, and increase with every increase in the value of labour. Particularly during the last decade, since the value of the hour-equivalent has increased so much, proposals from above to reduce salaries have become a standing rule. I repeat, this reduction must be understood to be merely relative—that is, to refer merely to the number of hour-equivalents. The value of a labour-hour has quadrupled within the last twenty years; those of us, therefore—we public officials, for example—who receive twenty-eight per cent. fewer hour-equivalents than we did originally, still have incomes which, when reckoned in money, have been nearly tripled. As a rule, however, the associations will not hear of even such a reduction. Though their directors openly avow their willingness to accept lower salaries, the associations are afraid of offending some one or other of the competing societies which pay higher salaries; and as a few hundred pounds are not worth considering in view of the enormous sums which a great association annually turns over, the reduction of the salaries goes on but slowly. Nevertheless there is a gradual lessening of the difference between the maximum and the minimum earnings, plainly proving that even in this matter of salaries the law of supply and demand is in full operation.'

Lord E—— thanked him for this explanation. But now Sir B—— proposed a far weightier question. 'What struck me most,' said he, 'when I was examining the enormous operations of your central bank, and what I am not yet able to understand, is how it is possible, without arbitrary exercise of authority and communistic consequences, to accumulate the immense capital which you require, and yet neither pay nor reckon any interest. That interest is the necessary and just reward of the capitalist's self-denial I do not indeed believe; but I hold it to be the tribute which has to be paid to the saver for sparing the community, by his voluntary thrift, the necessity of making thrift compulsory. What I now wish to know is, what were your reasons for forbidding the payment of interest? Or are you in Freeland of opinion that it is unjust to give to the saver a share of the fruits of his saving?'

'We are not of that opinion,' answered the director. 'But first I must assure you that you have started from an erroneous assumption. We forbid the payment of interest as little as we "forbid" the undertaker's profit or the landlord's ground-rent. These three items of income do not exist here, simply because no one is under the necessity of paying them. If our workers needed an "undertaker" to organise and discipline them for highly productive activity, no power could prevent them from giving up to him what belonged to him—namely, the profit of the undertaking—and remaining satisfied themselves with a bare subsistence. Nothing in our constitution, and no one among us, would interfere with such an undertaker in the peaceable enjoyment of his share of the produce. If the land needed—'

'Pardon my interruption,' said Sir B——. '"If our workers needed an undertaker to organise and discipline them, no power could prevent them from giving up to him the whole of the produce"—these were your words. In the name of heaven, do not your workers need such a man? Do they need none over them to organise, discipline, guide, and overlook the process of production? And when I hear you so coolly and distinctly assert that such a man has a right to the produce, and that neither for God's sake nor in the name of justice need he leave to the worker more than a bare subsistence, I am compelled to ask myself whether you, an authority in Freeland, are pleased to jest, or whether what we have hitherto seen and heard here rests upon a mere delusion?'

'Forgive me for not having expressed myself more plainly,' answered the director to Sir B—— and to the rest of us who, like him, had shown our consternation at the apparent contradiction between the last words of our informant and the spirit of Freeland institutions. 'I said, "If our workers needed an undertaker": I beg you to lay emphasis upon the word "undertaker." A man or several men to arrange, organise, guide the work, they certainly need; but such a man is not an undertaker. The difference between our workers and others consists in the fact that the former allow themselves to be organised and disciplined by persons who are dependent upon them, instead of being their masters. The conductors of our associations are not the masters, but the officials—as well as shareholders—of the working fellowship, and have therefore as little right to the whole produce as their colleagues abroad. The latter are appointed and paid by the "owner" of what is produced; and in this country this owner is the whole body of workers as such. An undertaker in the sense of the old industrial system, on the other hand, is a something whose function consists in nothing but in being master of the process of production; he is by no means the actual organiser and manager, but simply the owner, who, as such, need not trouble himself about the process of production further than to condescend to pocket the profits. That the undertaker at the same time bears the risks attendant upon production has to be taken into account when we consider the individual undertaker, but not when we consider the institution as such, for we cannot speak of the risk of the body of undertakers as a whole, I called the undertaker, not a man, but a something, because in truth it need not be a man with flesh and blood. It may just as well be a scheme, a mere idea; if it does but appropriate the profits of production it admirably fulfils its duty as undertaker, for as such it is nothing more than the shibboleth of mastership. Let us not be misled by the fact that frequently—we will say, as a rule—the undertaker is at the same time the actual manager of the work of production; when he is, he unites two economic functions in one person, that of the—mental or physical—labour and that of the undertakership. Other functions can just as well be associated together in him: the undertaker can be also capitalist or landlord; nevertheless, the undertaker, as economic subject, has no other function than that of being master of other men's labour and of appropriating to himself the fruits of the process of production after subtracting the portions due to the other factors in production.

'And this master, whose function consists simply of an abstract mastership, is an inexorable necessity so long as the workers are servants who can be disciplined, not by their enlightened self-interest, but only by force. To throw the blame of this exclusively or only mainly upon "capital" was a fatal error, which for a long time prevented the clear perception of the real cause—the servile habits and opinions that had grown stronger and stronger during thousands of years of bondage. Capital is indispensable to a highly developed production, and the working masses of the outside world are mostly without capital; but they are without it only because they are powerless servants, and even when in exceptional cases they possess capital they do not know how to do anything with it without the aid of masters. Yet it is frequently the capital of the servants themselves by means of which—through the intervention of the savings-banks—the undertaker carries on the work of production; it none the less follows that he pockets the proceeds and leaves to the servants nothing but a bare subsistence over and above the interest. Or the servants club their savings together for the purpose of engaging in productive work on their own account; but as they are not able to conceive of discipline without servitude, cannot even understand how it is possible to work without a master who must be obeyed, because he can hire and discharge, pay and punish—in brief, because he is master; and as they would be unable to dispose of the produce, or to agree over the division of it, though this might be expected from them as possessors of the living labour-power,—they therefore set themselves in the character of a corporate capitalist as master over themselves in the character of workmen. In these productive associations, which the workers carry on with money they have saved by much self-denial or have involved themselves in worry and anxiety by borrowing, they remain as workers under a painful obligation to obey, and the slaves of wages; though certainly in their character of small capitalists they transform themselves into masters who have a right to command and to whom the proceeds of production belong—that is, into undertakers. The example of these productive associations shows, more plainly than anything else can, that it was nothing but the incapacity of the working masses to produce without masters that made the undertaker a necessity. We in Freeland have for the first time solved the problem of uniting ourselves for purposes of common production, of disciplining and organising ourselves, though the proceeds of production belonged to us in our character of workers and not of capitalists. And as the experiment succeeded, and when undertaken by intelligent men possessing some means must succeed, we have no further need of the undertaker.

'But undertakership is not forbidden in Freeland. No one would hinder you from opening a factory here and attempting to hire workers to carry it on for wages. But in the first place you would have to offer the workers at least as much as the average earnings of labour in Freeland; and in the second place it is questionable if you would find any who would place themselves under your orders. That, as a matter of fact, no such case has occurred for the past eighteen years—that even our greatest technical reformers, in possession of the most valuable inventions, have without exception preferred to act not as undertakers, but as organisers of free associations—this is due simply to the superiority of free over servile labour. It has been found that the same inventors are able to accomplish a great deal more with free workers who are stimulated by self-interest, than with wage-earners who, in spite of constant oversight, can only be induced to give a mechanical attention to their tasks. Moreover, the system of authoritative mastership was as repugnant to the feelings of the masters as to those of the men under them, and both parties found themselves uncomfortable in their unfamiliar roles—as uncomfortable as formerly in the roles of absolutely co-equal associates in production. So considerable was this mutual feeling of discomfort, and so evident was the inferiority of the servile form of organisation, that all such attempts were quickly given up, though no external obstacle of any kind had been placed in their way. Certainly it must not be overlooked that every undertaker who needs land for his business is in constant danger of having claims made by others upon the joint use of the land occupied by him, for, of course, we do not grant him a privilege in this respect; neither he nor anyone else in Freeland can exclude others from a co-enjoyment of the ground. Nevertheless, as we have plenty of space, it would have been long before the undertaker would have had to strike his sail on this account. That the few who in the early years of our history made such attempts quickly transformed themselves into directors of associations, was due to the fact that, in spite of any advantages which they might possess, they could not successfully compete with free labour. Three of these undertakers failed utterly; they could fulfil their obligations neither to their creditors nor to their workmen, and must have had to submit to the disgrace of bankruptcy if their workmen, distinctly perceiving the one defect from which the undertakings suffered, had not taken the matter in hand. Since the inventions and improvements for the introduction of which these three undertakers had founded their businesses, were valuable and genuine, and the masters had during their short time of mastership shown themselves to be energetic and—apart from their fancy for mastership—sensible men, the workers stepped into the breach, constituted themselves in each case an association, took upon themselves all the liabilities, and then, under the superintendence of the very men who had been on the brink of ruin, carried on the businesses so successfully that these three associations are now among the largest in Freeland. Four other several individuals—also notable industrial inventors—avoided a threatened catastrophe only by a timely change from the position of undertakers to that of superintendents of associations; and they stand at present at the head of works whose workers are numbered by thousands, and have since realised continuously increasing profits, high enough to satisfy all their reasonable expectations. Thus, as I have said, undertakership is not forbidden in Freeland; but it cannot successfully compete with free association.'

Sir B—— and the others declared themselves perfectly satisfied with this explanation, and begged the bank director to proceed with his account which they had interrupted. 'You were saying,' intimated my father, 'that in Freeland interest was no more forbidden than undertaker's gains and ground-rent. As to undertaker's gains we now understand you; but before you proceed to the main point of your exposition—to interest—I would like to ask for fuller details upon the question of ground-rent. How are we to understand that this is not forbidden in Freeland?'

'How you are to understand that,' was the answer, 'will best be made plain to you if I take up my train of thought where I left off. If, in order to labour productively, we required the undertaker, no power in heaven or earth could save us from giving up to him what was due to him as master of the process of production, while we contented ourselves with a bare subsistence—that is what I said. I would add that we should also be compelled to pay the tribute due to the landlord for the use of the ground, if we could not till the ground without having a landlord. For property in land was always based upon the supposition that unowned land could not be cultivated. Men did not understand how to plough and sow and reap without having the right to prevent others from ploughing and sowing and reaping upon the same land. Whether it was an individual, a community, a district, or a nation, that in this way acquired an exclusive right of ownership of the land, was immaterial: it was necessarily an exclusive right, otherwise no one would put any labour into the land. Hence it happened, in course of time, that the individual owner of land acquired very considerable advantages in production over the many-headed owner; and the result was that common property in land gradually passed into individual ownership. But this distinction is not an essential one, and has very little to do with our institutions. With us, the land—so far as it is used as a means of production and not as sites for dwelling-houses—is absolutely masterless, free as air; it belongs neither to one nor to many: everyone who wishes to cultivate the soil is at liberty to do so where he pleases, and to appropriate his part of the produce. There is, therefore, no ground-rent, which is nothing else than the owner's interest for the use of the land; but a prohibition of it will be sought for in vain. In the fact that I have no right to prohibit anything to others lies no prohibition. It cannot even be said that I am prohibited from prohibiting anything, for I may do it without hindrance from anyone; but everybody will laugh at me, as much as if I had forbidden people to breathe and had asserted that the atmospheric air was my own property. Where there is no power to enforce such pretensions, it is not necessary to prohibit them; if they are not artificially called forth and upheld, they simply remain non-existent. In Freeland no one possesses this power because here no one need sequestrate the land in order that it may be tilled. But the magic which enables us to cultivate ownerless land without giving rise to disputes is the same that enables us to produce without undertakers—free association.

'Just as little do we forbid interest. No one in Freeland will prevent you from asking as high a rate of interest as you please; only you will find no one willing to pay it you, because everyone can get as much capital as he needs without interest. But you will ask whether, in this placing of the savings of the community at the disposal of those who need capital, there does not lie an injustice? Whether it is not Communism? And I will admit that here the question is not so simple as in the cases of the undertaker's gains and of ground-rent. Interest is charged for a real and tangible service essentially different from the service rendered by the undertaker and the landowner. Whilst, namely, the economic service of the two latter consists in nothing but the exercise of a relation of mastership, which becomes superfluous as soon as the working masses have transformed themselves from servants working under compulsion into freely associated men, the capitalist offers the worker an instrument which gives productiveness to his labour under all circumstances. And whilst it is evident that, with the establishment of industrial freedom, both undertaker and landowner become, not merely superfluous, but altogether objectless—ipso facto cease to exist—with respect to the capitalist, the possessor of savings, it can even be asserted that society is dependent upon him in an infinitely higher degree when free than when enslaved, because it can and must employ much more capital in the former case than in the latter. Moreover, it is not true that service rendered by capital—the giving wings to production—is compensated for by the mere return of the capital. After a full repayment, there remains to the worker, in proportion as he has used the capital wisely—which is his affair and not the lender's—a profit which in certain circumstances may be very considerable, the increase of the proceeds of labour obtained by the aid of the capital. Why should it be considered unreasonable or unjust to hand over a part of this gain to the capitalist—to him, that is, to whose thrift the existence of the capital is due? The saver, so said the earlier Socialists, has no right to demand any return for the service which he has rendered the worker; it costs him nothing, since he receives back his property undiminished when and how he pleases (the premium for risk, which may have been charged as security against the possible bad faith or bankruptcy of the debtor, has nothing to do with the interest proper). Granted; but what right has the borrower, who at any rate derives advantage from the service rendered, to retain all the advantage himself? And what certainty has he of being able to obtain this service, even though it costs the saver nothing to render it, if he (the borrower) does not undertake to render any service in return? It is quite evident that the interest is paid in order to induce the saver to render such a friendly service. How could we, without communistic coercion, transfer capital from the hands of the saver into those of the capital-needing producer? For the community to save and to provide producers with capital from this source is a very simple way out of the difficulty, but the right to do this must be shown. No profound thinker will be satisfied with the communistic assertion that the capital drawn from the producers in one way is returned to them in another, for by this means there does not appear to be established any equilibrium between the burden and the gain of the individual producers. The tax for the accumulation of capital must be equally distributed among all the producers; the demand for capital, on the other hand, is a very unequal one. But how could we take the tax paid by persons who perhaps require but little capital, to endow the production of others who may happen to require much capital? What advantage do we offer to the former for their compulsory thrift?

'And yet the answer lies close at hand. It is true that in the exploiting system of society the creditor does not derive the slightest advantage from the increase in production which the debtor effects by means of the creditor's savings; on the other hand, in the system of society based upon social freedom and justice both creditor and debtor are equally advantaged. Where, as with us, every increase in production must be equably distributed among all, the problem as to how the saver profits from the employment of his capital solves itself. The machinist or the weaver, whose tax, for example, is applied to the purchase or improvement of agricultural machines, derives, with us, exactly the same advantage from this as does the agriculturist; for, thanks to our institutions, the increase of profit effected in any locality is immediately distributed over all localities and all kinds of production.

'If anyone would ask what right a community based upon the free self-control of the individual, and strongly antagonistic to Communism, has to coerce its members to exercise thrift, the answer is that such coercion is in reality not employed. The tax out of which the capitalisation is effected is paid by everyone only in proportion to the work he does. No one is coerced to labour, but in proportion as a man does labour he makes use of capital. What is required of him is merely an amount proportional to what he makes use of. Thus both justice and the right of self-control are satisfied in every point.

'You see, it is exactly the same with interest as with the undertaker's gains and with ground-rent: the guaranteed right of association saves the worker from the necessity of handing over a part of the proceeds of his production to a third person under any plea whatever. Interest disappears of itself, just like profit and rent, for the sole but sufficient reason that the freely associated worker is his own capitalist, as well as his own undertaker and landlord. Or, if one will put it so, interest, profit, and rent remain, but they are not separated from wages, with which they combine to form a single and indivisible return for labour.'

And with this, good-night for the present.



Eden Vale: Aug. 11, ——

What we learnt from the director of the Freeland Central Bank occupied the thoughts of my father and myself for a long time. As this high functionary, who was a frequent visitor at the house of the Neys, dined with our hosts the next day, the table-talk ran mainly upon the Freeland institutions. My father began by asking whether the circumstance that the rest of the world, from which Freeland did not—and, in fact, in this matter could not—isolate itself, paid interest for loans, did not induce Freeland savers to seek foreign investments for their money; or whether at least some artificial means had not to be adopted to prevent this.

'There is nothing, absolutely nothing,' answered Mr. Clark, 'to prevent Freeland savers from investing their capital abroad; in fact, at present—I have quite recently been referring to the statistics upon this point regularly published by our central bank—some two and a-half milliards (2,500,000,000L) are invested partly in the large foreign banks, partly in European and American bonds. For example, a good half of your Italian national debt is in the hands of Freelanders. But what are such figures in comparison with the gigantic amounts of our savings and capital? We cannot prevent, and have no reason whatever to prevent, many Freelanders from being induced by foreign interest to accumulate more capital than is needed here at home on the one hand, and more than they consider necessary to insure themselves against old age on the other. For what is required for these two purposes cannot go abroad.'

'And is not this last-mentioned fact a disadvantage to the Freeland saver?' I asked.

'A Freelander who thought so,' said Mr. Ney, 'must have a very imperfect knowledge of what is to his own advantage. The interest paid by foreign debtors can in no respect compare with the advantages offered by employment of the money in Freeland, those advantages being, as you know, equably distributed among all the members of our commonwealth. At the end of last year we had altogether thirty-four milliards sterling invested. The calculated profit of these investments amounted to seven milliards; therefore, more than twenty per cent. Moreover, thanks to these same investments, every Freelander enjoys gratuitously the electric light, warming, the use of railways and steamships, &c., advantages the total value of which would very nearly equal the remunerative production effected by our investments. Anyone can now calculate how much more profitable Freeland investments of capital are than foreign ones. Moreover, the two and a-half milliards, of which friend Clark spoke, is a large sum in European and American financial operations, and it has actually contributed towards very considerably lowering from time to time the rate of interest in all the foreign money-markets; but when this amount is compared with Freeland finances, the investment of it abroad is seen to be simply an insignificant and harmless whim. This large sum brings in, at the present rate of interest—you will understand that Freeland savers invest merely in the very best European or American bonds—about thirty-four millions sterling; that is, not quite the two-hundredth part of the national revenue of Freeland. And there can be no doubt that this whim will—for us—lose much of even its present importance as Freeland continues to grow; for the competition of our capital has already reduced the rate of discount of the Bank of England to one and a-quarter per cent., and raised the price of the One and a-Half per cent. Consols to 118; hence there can be no doubt that a large flow of Freeland savings to Europe and America must, in a near future, reduce the rate of interest to a merely nominal figure. That this whim of investing capital abroad will altogether vanish as soon as foreign countries adopt our institutions is self-evident.'

I now addressed to Mr. Clark the question in what way the Freeland commonwealth guarded against the danger of crises, which, in my opinion, must here be much more disastrous than in any other country.

'Crises of any kind,' was the answer, 'would certainly dissolve the whole complex of the Freeland institutions; but here they are impossible, for lack of the source from which they elsewhere spring. The cause of all crises, whether called production-crises or capital-crises, lies simply in over-production—that is, in the disproportion between production and consumption; and this disproportion does not exist among us. In fact, the starting-point of the Freeland social reform is the correct perception of the essential character of over-production arrived at twenty-six years ago by the International Free Society. Until then—and in the rest of the world it is still the case—the science of political economy found in this phenomenon an embarrassing enigma, with which it did not know how better to deal than to deny its existence. There was no real over-production—that is, no general non-consumption of products—so taught the orthodox political economists; for, they contended, men labour only when induced to do so to supply a need, and it is therefore impossible in the nature of things that more goods should be produced than can be consumed. And, on our supposition, to which I will refer presently, this is perfectly correct. Everyone will use what he produces to meet a certain need; he will either use his product himself or will exchange it for what another has produced. It matters not what that other product is, it is at any rate something that has been produced; the question never need be what kind of product, but only whether some product is asked for. Let us assume that an improvement has taken place in the production of wheat: it is possible that the demand for wheat will not increase in proportion to the possibility of increasing its production, for it is not necessary that the producers of wheat should use their increased earnings in a larger consumption of wheat. But then the demand for something else would correspondingly increase—for example, for clothing, or for tools; and if this were only known in time, and production were turned in that direction, there would never be a disturbance in the exchange-relations of the several kinds of goods. Thus the orthodox doctrine explains crises as due not to a surplus of products in general, not to a mere disproportion between production and consumption, but to a transient disturbance of the right relation between the several kinds of production; and it adds that it is simply paradoxical to talk of a deficient demand in view of the misery prevailing all over the world.

'In this, in other respects perfectly unassailable reasoning, only one thing is forgotten—the fundamental constitution of the exploiting system of society. Certainly it is a cruel paradox to speak of a general lack of demand in view of boundless misery; but where an immense majority of men have no claim upon the fruits of their labour, this paradox becomes a horrible reality. What avails it to the suffering worker that he knows how to make right, good, and needful use of what he produces, if that which he produces does not belong to him? Let us confine ourselves to the example of the increased production of wheat by improved methods of cultivation. If the right of disposal of the increased quantity of grain belonged to the agricultural producers, they would certainly eat more or finer bread, and thus themselves consume a part of the increased production; with another part they would raise the demand for clothing, and with another the demand for implements, which would necessarily be required in order that more grain and clothing might be produced. In such a case it would really be merely a question of restoring the right relation between the production of wheat, of clothing, of implements, which had been disturbed by the increased production of one of these—wheat; and increased production, a condition of greater prosperity for all, would, after some transient disturbances, be the inevitable consequence. But since the increased proceeds of wheat-cultivation do not belong to the workers, since those workers receive in any case only a bare subsistence, the progress which has been made in their branch of production does not enable them to consume either more grain or more clothing, and therefore there can exist no increased demand for implements for the production of wheat and textile fabrics.'

'But,' I objected, 'though this increased product is withheld from the workers, it is not ownerless—it belongs to the undertakers; and these too are men who wish to use their gains to satisfy some want or other. The undertakers will now increase their consumption; and after all one might suppose it would be impossible that a general disproportion should exist between supply and demand. Certainly it would now be commodities of another kind, the production of which would be stimulated in order to restore an equilibrium between the several branches of labour. If the increase belonged to the workers, then would more grain, more ordinary clothing, and more implements be required; but since it belongs to a few undertakers there will be an increased demand only for luxuries—dainties, laces, equipages—and for the implements requisite to produce these luxuries.'

'Exactly!' said David, who here joined in the conversation. 'Only the undertakers are by no means inclined to apply, in any considerable degree, the surplus derived from increased production to an additional consumption of luxuries; but they capitalise most of it—that is, invest it in implements of production. Nay, in some circumstances—as we heard yesterday—the "undertaker" is no man at all possessing human wants, but a mere dummy that consumes nothing and capitalises everything.'

'So much the better,' I said, 'wealth will increase all the more rapidly; for rapidly growing capital means rapidly increasing production, and that is in itself identical with rapidly increasing wealth.'

'Splendid!' cried David. 'So, because the working masses cannot increase their consumption, and the undertakers will not correspondingly increase theirs, and consequently there can be no increased consumption of any commodity whatever, therefore the surplus power of production is utilised in multiplying the means of production. That is, in other words, no one needs more grain—so let us construct more ploughs; no one needs more textile material—so let us set up more spinning-mills and looms! Are you not yet able to measure the height of absurdity to which your doctrine leads?'

I think, Louis, you, like myself, will admit that there is simply no reply to reasoning so plain and convincing. An economic system which bars the products of human industry and invention from the only use to which they should finally be applied—namely, that of satisfying some human requirement—and which is then astonished that they cannot be consumed, narrowly escapes idiocy. But that such is the character of the system which prevails in Europe and America must in the end become clear to everyone.

'But, in heaven's name, what becomes of the productive power among us which thus remains unemployed?' I asked. 'We are, on the whole, as advanced in art, science, and technical skill as you are in Freeland; I must therefore suppose that we could become as rich, or nearly so, as you, if we could only find a use for all our production. But we do not actually possess a tenth of your wealth, and yet there is twice as much hard work done among us as there is here. For though among you everyone works, and among us there are several millions of persons of leisure who live simply upon the toil of others, yet this is counterbalanced by the circumstance that our working masses are kept at their toil ten hours or more daily, whilst here an average working day is only five hours. Certainly among us there are millions of unemployed workers; but that also is more than compensated for by the labour of women and children, which is unknown among you. Where then, I repeat, lies the immense difference between the utilisation of our powers of production and of yours?'

'In the equipment of labour,' was the answer. 'We Freelanders do not work so hard as you do, but we make full use of all the aids of science and technics, whilst you are able to do this only exceptionally, and in no case so completely as we do. All the inventions and discoveries of the greatest minds are as well known to you as to us; but as a rule they are taken advantage of only by us. Since your aristocratic institutions prevent you from enjoying the things the production of which is facilitated by those inventions, you are not able to take advantage of the inventions except in such small measure as your institutions permit.'

Even my father was profoundly moved by this crushing exposition of a system which he had always been accustomed to honour as the highest emanation of eternal wisdom. 'Incredible! shocking!' he murmured in a tone audible only to myself.

But Mr. Clark proceeded: 'Among us, on the contrary, the theorem of the so-called classical economics, that a general excess of production is impossible, has become a truth, for in Freeland consumption and production exactly tally. Here there can be over-production only temporarily and in isolated kinds of goods—that is, the equilibrium between different kinds of production may be temporarily disturbed. But we have no need to be afraid of even this trifling danger. The intimate connection of all productive interests springing from the nature of our institutions is an antecedent guarantee of equilibrium between all branches of production. A careful examination will show that the whole of Freeland is one great productive society, whose individual members are independent of one another, and yet are connected in one respect—namely, in respect of the proceeds of their labour. Just because everyone can labour where and how he pleases, but everyone's labour is alike in aiming at the highest possible utility, so—apart from any incidental errors—it is impossible but that an equal amount of labour should result in an equal amount of utility. All our institutions tend towards this one point. At first, as long as our commonwealth was in its initial stages, it sometimes happened that considerable inequalities had to be subsequently balanced; the producers did not always know until the year's accounts were closed what one and the other had earned. But that was a period of childhood long since outlived. At present, every Freelander knows, to within such trifling variations as may be due to little unforeseen accidents, exactly what he and others have earned, and also what they have every prospect of earning in the near future. He does not wait for inequalities to arise and then set about rectifying them; but he takes care that inequalities shall not arise. Since our statistics always show with unerring accuracy what at the time is being produced in every branch of industry, and since the demand as well as its influence upon prices can be exactly estimated from a careful observation of past years, therefore the revenue not only of every branch of industry, but of every separate establishment, can be beforehand so reliably calculated that nothing short of natural catastrophes can cause errors worth notice. If such occur, then comes in the assistance of the reciprocal insurance. In fact, in this country, not only are there no crises, but not even any considerable variations in the different productions. Our Statistical Department publishes an unbroken series of exact comparative statistics, from which can at any time be seen where either fresh demand or excess of labour is likely to arise; our supply of labour is controlled by these returns, and that is sufficient—with rare exceptions—to preserve a perfect equilibrium in production. It frequently occurs that here or there a newly started establishment comes to grief, particularly in the mining industry. Such a failure must not, however, be regarded as a bankruptcy—how can undertakers become bankrupt when they have neither ground-rent, nor interest, nor wages to pay, and who in any case still possess their highly priced labour-power?—but at the worst as a case of disappointed expectations. And should the very rare circumstance occur, that the community or an association loses the loaned capital through the premature death of the borrower, of what importance is that in the face of the gigantic sums safely employed in our business? And if a guaranty (del credere) were insisted upon to cover such a loss, it would amount to scarcely a thousandth part of one per cent., and would not be worth the ink used in writing it.'

'And do not foreign crises sometimes disturb the calm course of your Freeland production? Are not your markets flooded, through foreign over-production, with goods for which there is no corresponding demand?' I asked.

'It certainly cannot be denied that we are considerably inconvenienced by the frequent and sudden changes of price in the markets of the world caused by the anarchic character of the exploiting system of production. We are thereby often compelled to diminish our production in certain directions, and divert the labour thus set free to other branches of industry, though there is no actual change in the cost of production or in the relative demand. These foreign, sudden, and incalculable influences sometimes make a diversion of labour from one production to another necessary in order to preserve an equilibrium in the profits, though the regular and automatic migration of labour from one industry to another is sufficient to correct the disturbance in the relations between supply and demand due to natural causes. But these spasmodic foreign occurrences cannot produce a serious convulsion in our industrial relations. Just as it is impossible to throw out of equilibrium a liquid which yields to every pressure or blow, so our industry is able to preserve its equilibrium by means of its absolutely free mobility. It may be thrown into fruitless agitation, but its natural gravity at once restores the harmony of its relations. But, as I have said, such a disturbance is produced only by a partial over-production abroad. That this brings about a superabundance of all commodities, we care but little. Since foreign countries do not send us their goods for nothing, but demand other goods in return, what those other goods shall be is their business, not ours. We have no interest-bearing bonds or saleable property in land; hence our export goods must be the produce of our labour. The fact that in Freeland every product must find a purchaser is therefore by no means affected by external trade.'

'That is very clear,' I admitted.

'But,' interposed my father,' why do you not protect yourselves against disturbance due to foreign fluctuations in production, by a total exclusion of foreign imports?'

'Because that would be to cut off one's hand in order to prevent it from being injured,' was Mr. Clark's drastic answer. 'We import only those goods which we cannot produce so cheaply ourselves. But since, as I have already taken the liberty of saying, the imported goods are not presented to us, but must be paid for by goods produced by us, it is of importance that we should be able to produce the goods with which we make the payment more cheaply—that is, with less expenditure of labour-power—than we could the imported goods. For instance, we manufacture scarcely any cotton goods, but get nearly all such goods from England and America. We could, certainly, manufacture cotton goods ourselves, but it is plain that we should have to expend upon their manufacture more labour-power than upon the production of the corn, gold, machinery, and tools with which we pay for the cotton goods that we require. If it were not so, we should manufacture cotton goods also, for there is no conceivable reason for not doing so but the one just mentioned. If, therefore, our legislature prohibited the importation of cotton goods, we should have to divert labour from other branches of industry for the sake of producing less than we do now. We should have either to put up with fewer goods, or to work more, to meet the same demand. Hence, in this country, to enact a protective duty would be held to be pure madness.'

'Then you hold,' said my father, 'that our European and American economists and statesmen who still in part adhere to the system of protection, are simply Bedlamites; and you believe that the only rational commercial policy is that of absolute free trade?'

'Allow me to say,' answered Mr. Clark,' that Europe and America are not Freeland. I certainly cannot regard protection even abroad as rational, for the assumptions from which it starts are under all circumstances false. But neither do I think the foreign free trader is essentially wiser than the protectionist, for he also starts from assumptions which are baseless in an exploiting country. The prohibitionists think they are encouraging production: they are doing the opposite, they are hindering and hampering production; and the free traders, in so far as they insist upon this fact, are perfectly correct. Both parties, however, fail to see that in an exploiting society, which is never able to utilise more than a small part of its power to produce, the influence of legislative interference with trade upon the good or the bad utilisation of productive power is a matter of very little importance. Of what advantage is it to the free traders that a nation under the domination of their commercial system is able to make the most prolific use of their industrial capacities, so long as the continuance of industrial servitude prevents this nation from enjoying more than enough to satisfy the barest necessities of life? More than is consumed cannot, under any circumstances, be produced; and consumption among you abroad is so infinitely small, that it is verily ridiculous to dispute over the question whether this or that commodity can be produced better at home or abroad.

'What alone interests us in this controversy among the foreign commercial politicians is that neither party has the slightest suspicion that what the free traders rightly reproach the protectionists with, and what the latter wrongly defend, is the very thing that gains so many adherents to protection—namely, the hindering and hampering of production. The protectionists have a right to boast that they compel their people to apply two day's labour or a double amount of capital to the production at home of a thing which, by means of external trade, might have been exchanged for things that are the product of merely half as much expenditure of home labour. We, who work in order to enjoy, would have a good right to treat as insane any persons among us who proposed such a course as an "encouragement of home labour"; but among you, where labour and enjoyment are completely dissevered, where millions cry for work as a favour—among you, the hampering of labour is felt to be a benefit because it makes more toil necessary in order to procure an equal amount of enjoyment. Among you it is also a somewhat dangerous narcotic, for protection has a Janus head: it not merely increases the toil, it at the same time still more diminishes the consumption by raising the price of the articles in demand, the rise in price never being followed immediately by a rise in wages; so that, in the end, in spite of the increased difficulty in production, no more labour and capital are employed than before. But the intimate relation between these things is as a book sealed with seven seals to both protectionists and free traders. Had it been otherwise, they must long since have seen that the cure for industrial evils must be looked for not in the domain of commercial politics, but in that of social politics.'

'Now I begin to understand,' I cried out, 'the widespread growth of economic reaction against which we Western Liberals are waging a ridiculous Quixotic war with all our apparently irrefutable arguments. We present to the people as an argument against protection exactly that after which they are—unconsciously, it is true—eagerly longing. Protective tariffs, trade guilds, and whatever else the ingenious devices of the last decades may be called, I now understand and recognise as desperate attempts made by men whose very existence is threatened by the ever growing disproportion between the power to produce and consumption—attempts to restore to some extent the true proportion by curbing and checking the power to produce. Whilst the protectionist is eager to put fetters upon the international division of labour, to keep at a distance the foreigner who might otherwise save him some of his toil, the advocate of trade-guilds fights for hand-labour against machine-labour and commerce. And when I look into the matter, I find all these people are in a certain sense wiser than we Liberals of the old school, who know no better cure for the malady of the time than that of shutting our eyes as firmly as possible. It is true, our intentions have been of the best; but since we have at length discovered how to attain what we wished for, we should at once throw off the fatal self-deception that political freedom would suffice to make men truly free and happy. Political freedom is an indispensable, but not the sole, condition of progress; whoever refuses to recognise this condemns mankind afresh to the night of reaction. For if, as our Liberal economics has taught, it were really contrary to the laws of nature to guarantee to all men a full participation in the benefits of progress, then not only would progress be the most superfluous thing imaginable, but we should have to agree with those who assert that the eternally disinherited masses can find happiness only in ignorant indifference. Now I realise that the material and mental reaction is the logically inevitable outcome of economic orthodoxy. If wealth and leisure are impossible for all, then it is strictly logical to promote material and mental reaction; whilst it is absurd to believe that men will perpetually promote a growth of culture without ever taking advantage of it. I now see with appalling distinctness that if our toiling masses had not been saved by their social hopes from sharing our economic pessimism, we Liberals would long since have found ourselves in the midst of a reaction of a fearful kind: it is not through us that modern civilisation has been spared the destruction which overwhelmed its predecessors.'

After dinner, Mr. Ney invited us to accompany him to the National Palace, where the Parliament for Public Works was about to hold an evening session in order to vote upon a great canal project. He thought the subject would interest us. We accepted the invitation with thanks.

The Parliament for Public Works consists of 120 members, most of whom, as David—who was one of the party—told me, are directors of large associations, particularly of associations connected with building; but among the members are also professors of technical universities, and other specialists. The body contains no laymen who are ignorant of public works; and the parliament may be said to contain the flower and quintessence of the technical science and skill of all Freeland.

The project before the house was one which had been advocated for above a year by the directors of the Water and Mountain-Cultivation Associations of Eden Vale, North Baringo, Ripon, and Strahl City, in connection with two professors of the technical university of Ripon. The project was nothing less than the construction of a canal navigable by ships of 2,000 tons burden, from Lake Tanganika, across the Mutanzige and Albert Nyanza, whence the Nile could be followed to the Mediterranean Sea; and from the mouth of the Congo, along the course of that river, across the Aruwhimi to the Albert lake; thence following several smaller streams to the Baringo lake, along the upper course of the Dana, and thence to the Indian Ocean. The project thus included two water-ways, one of which would connect the great lakes of Central Africa with the Mediterranean Sea, and the other, crossing the whole of the continent, would connect the Atlantic with the Indian Ocean. Since a part of the immense works involved in this project would have to be carried through foreign territories—those of the Congo State and of Egypt—negotiations had been opened with those States, and all the necessary powers had been obtained. The readiness of the foreign governments to accede to the wishes of the Eden Vale executive is explained by the fact that Freeland did not propose to exact any toll for the use of its canals, thus making its neighbours a free gift of these colossal works. In connection with this project, there was also another for the acquisition of the Suez Canal, which was to be doubled in breadth and depth and likewise thrown open gratuitously to the world. The English government, which owned the greater part of the Suez Canal shares, had met the Freelanders most liberally, transferring to them its shares at a very low price, so that the Freelanders had further to deal with only holders of a small number of shares, who certainly knew how to take advantage of the situation. The British government stipulated for the inalienable neutrality of the canal, and urged the Freelanders to prosecute the work with vigour.

The following were the preliminary expenses:

L South-North Canal (total length 3,900 miles) 385,000,000 East-West Canal (total length 3,400 miles) 412,000,000 Suez Canal (purchase and enlargement) 280,000,000 Total 1,077,000,000L

It was estimated that the whole would be completed in six years, and that therefore a round sum of 180,000,000L would be required yearly during the progress of the work. The Freeland government believed that they were justified by their past experience in expecting that the national income would in the course of the coming six years increase from seven milliards—the income of the past year—to at least ten and a-half milliards, giving a yearly average of eight and a-half milliards for the six years. The cost of construction of the projected works would therefore absorb only two and one-eighth per cent. of the estimated national income, and would be covered without raising the tax upon this income above its normal proportion. The estimated cost was accompanied by detailed plans, and also by an estimate of the profits, according to which it was calculated that in the first year of use the canals would save the country 32,000,000L in cost of transport; and therefore, taking into account the presumptive growth of traffic, the canals would, in about thirty years, pay for themselves in the mere saving of transport expenses. Moreover, these future waterways were to serve in places as draining and irrigating canals; and it was calculated that the advantage thus conferred upon the country would be worth on an average 45,000,000L a year. Thus the whole project would pay for itself in fourteen years at the longest, without taking into account the advantages conferred upon foreign nations.

As the whole of the proposals and plans had been in the hands of the members for several weeks, and had been carefully studied by them, the discussion began at once. No one offered any opposition to the principle of the project. The debate was confined chiefly to two questions: first, whether it was not possible to hasten the construction; and secondly, whether an alternative plan, the details of which were before the house, was not preferable. With reference to the first question, it was shown that, by adopting a new system of dredging devised by certain experienced specialists, quite six months could be saved; and it was therefore resolved to adopt that system. As to the second question, after hearing the arguments of Mr. Ney, it was unanimously decided to adhere to the plan of the central executive. After a debate of less than three hours, the government found itself empowered to spend 1,077,000,000L, something more than the cost of all the canals in the rest of the civilised world. This amount was to be spent in five and a-half years, in constructing works which would make it possible for ocean steamers to cross the African continent from east to west, to pass from the Mediterranean as far as the tenth degree of south latitude, and to remove every obstacle and every toll from the passage of the Suez Canal.

I was absolutely dumfounded by all this. 'If I had not already resolved to strike the word "impossible" out of my vocabulary, I should do it now,' I remarked to Mr. Ney on our way home. I must add that in the Freeland parliaments all the proceedings take place in the presence of the public, so that I had an opportunity of making a hasty examination of the details of the project which had just been adopted. You know that I understand such things a little, and I was therefore able to gather from the plans that the two central ship canals crossed several watersheds. One of these watersheds I accidentally knew something of, as we had passed a part of it on our journey hither, and a part of it we had seen in some of our excursions. It rises, as I reckon, at least 1,650 feet above the level of the canal. I asked Mr. Ney whether it was really proposed to carry a waterway for ships of 2,000 tons burden some 1,650 feet up and down—was it not impossible either to construct or to work such a canal?

'Certainly!' he replied, with a smile. 'But if you look at the plan more carefully, you will see that we do not go over such watersheds by means of locks, but under them by means of tunnels.'

I looked at him incredulously, and my father's face expressed no little astonishment.

'What do you find remarkable in that, my worthy guests? Why should it be impracticable to do on canals what has so long and extensively been done on railways, which could be much more easily carried over hills and valleys?' asked Mr. Ney. 'I admit that our canal tunnels are very costly; but as, in working, they spare us what is the most expensive of all things, human labour-time, they are the most practical for our circumstances. Besides, in several cases we had no alternative except to dispense with the canals or to construct tunnels. The watershed you speak of is not the most considerable one: our greatest boring—connecting the river system of the Victoria Nyanza with the Indian Ocean—is carried, in one stretch of ten and a-half miles, 4,000 feet below the watershed; and altogether, in our new project, we have not less than eighty-two miles of tunnelling. Such tunnels are, however, not quite novelties. There are in France, as you know, several short water-tunnels; we possess, in our old canal system, several very respectable ones, though certainly they cannot compare either in length or in size with the new ones, by means of which large ocean vessels—with lowered masts, of course—will be able to steam through the bowels of whole ranges of mountains. The cost is enormous; but you must remember that every hour saved to a Freeland sailor is already worth eight shillings, and increases in value year by year.'

'But,' said my father, 'what, after all, is inconceivable to me is the haste, I might almost say the nonchalance, with which milliards were voted to you, as if it was merely a question of the veriest trifle. I would not for a moment question the integrity of the members of your Parliament for Public Buildings; but I cannot refrain from saying that the whole assembly gave me the impression of expecting the greatest personal advantage from getting the work done as speedily and on as large a scale as possible.'

'And that impression was a correct one,' replied Mr. Ney. 'But I must add that every inhabitant of Freeland will necessarily derive the same personal profit from the realisation of this canal project. Just because it is so, just because among us there truly exists that solidarity of interests which among other peoples exists only in name, are we able to expend such immense sums upon works which can be shown to promise a utility above their cost. If, among you, a canal is constructed which increases the profitableness of large tracts of land, your recognised economics teaches you that it adds to the prosperity of all. But this is correct only for the owners of the ground affected by the canal, whilst the great mass of the population is not benefited in the least by such a canal, and perhaps the owners of other competing tracts of land are actually injured. The lowering of the price of corn—so your statesmen assert—benefits the non-possessing classes; they forget the little fact that the rate of wages cannot be permanently maintained if the price of corn sinks. Against this there is certainly to be placed as a consolation the fact that the non-possessing masses will not be permanently injured by the increased taxes necessitated by such public works; for he who earns only enough to furnish a bare subsistence cannot long be made to pay much in taxes. Therefore, in your countries, the controversy over such investments is a conflict of interests between different landowners and undertakers, some of whom gain, whilst others gain nothing, or actually lose. Among us, on the contrary, everyone is alike interested in the gains of profitable investments in proportion to the amount of work he does; and everyone is also called upon to contribute to the defraying of the cost in proportion to the amount of work he does: hence, a conflict of interests, or even a mere disproportion in reaping the advantage, is among us absolutely excluded. The new canals will convert 17,000,000 acres of bog into fertile agricultural land. Who will be benefited, when this virgin soil traversed by such magnificent waterways annually produces so many more pounds sterling per acre than is produced by other land? Plainly everyone in Freeland, and everyone alike, whether he be agriculturist, artisan, professor, or official. Who gains by the lowering of freights? Merely the associations and workers who actually make use of the new waterways for transport? By no means; for, thanks to the unlimited mobility of our labour, they necessarily share with everyone in Freeland whatever advantage they reap. Therefore, with perfect confidence, we commit the decision of such questions to those who are most immediately interested in them. They know best what will be of advantage to them, and as their advantage is everybody's advantage, so everybody's—that is, the commonwealth's—treasury stands as open and free to them as their own. If they wish to put their hands into it, the deeper the better! We have not to inquire whom the investment will benefit, but merely if it is profitable—that is, if it saves labour.'

'Marvellous, but true!' my father was compelled to admit. 'But since in this country there exists the completest solidarity of interests, I cannot understand why you require the repayment of the capital which the commonwealth supplies to the different associations.'

'Because not to do so would be Communism with all its inevitable consequences,' was the answer. 'The ultimate benefit of such gratuitously given capital would certainly be reaped by all alike; but, in that case, who could guarantee that the investment of the capital should be advantageous and not injurious? For an investment of capital is advantageous only when by its help more labour is saved than the creation of the capital has cost. A machine that absorbs more labour than it takes the place of is injurious. But we are now secured against such wasteful expenditure, at least against any known waste of capital. The commonwealth, as well as individuals, may be mistaken in its calculations; both may consider an investment profitable which is afterwards proved to be unprofitable—that is, which does not pay for the labour which it costs. Nevertheless, the intention in all investments can only be to save the expenditure of energy, for both the commonwealth and individuals must bear the cost of their own investments. If, however, the commonwealth had to be responsible for the investments of individuals—that is, of the associations—then the several associations would have no motive to avoid employing such mechanical aids as would save less labour than they cost. The necessary consequence of this liberality on the part of the commonwealth would therefore be that the commonwealth would assume a right of supervision and control over those who required capital; and this would be incompatible with freedom and progress. All sense of personal responsibility would be lost, the commonwealth would be compelled to busy itself with matters which did not belong to it, and loss would be inevitable in spite of all arbitrary restraints from above.'

'That, again,' said my father, 'is as plain and simple as possible. But I must ask for an explanation of one other point. In virtue of the solidarity of interests which prevails among you, everyone participates in all improvements, wherever they may occur; this takes place in such a manner that everyone has the right to exchange a less profitable branch of production, or a less profitable locality, for a more profitable one. Then what interest has the individual producer—that is, the individual association—to introduce improvements, since it must seem to be much simpler, less troublesome, and less risky, to allow others to take the initiative and to attach oneself to them when success is certain? But I perceive that your associations are by no means lacking in push and enterprise: how is this? What prompts your producers to run risks—small though they may be—when the profit to be gained thereby must so quickly be shared by everybody?'

'In the first place,' replied Mr. Ney, 'you overlook the fact that the amount of the expected profit is not the only inducement by which working-men, and particularly our Freeland workers, are influenced. The ambition of seeing the establishment to which one belongs in the van and not in the rear of all others, is not to be undervalued as a motive actuating intelligent men possessing a strong esprit de corps. But, apart from that, you must reflect that the members of the associations have also a very considerable material interest in the prosperity of their own particular undertaking. Freeland workers without exception have very comfortable, nay, luxurious homes, naturally for the most part in the neighbourhood of their respective work-places; they run a risk of having to leave these homes if their undertaking is not kept up to a level with others. In the second place, the elder workmen—that is, those that have been engaged a longer time in an undertaking—enjoy a constantly increasing premium; their work-time has a higher value by several units per cent. than that of the later comers. Hence, notwithstanding the solidarity of interest, the members of each association have to take care that their establishment is not excelled; and since the risk attending new improvements is very small indeed, the spirit of invention and enterprise is more keenly active among us than anywhere else in the world. The associations zealously compete with each other for pre-eminence, only it is a friendly rivalry and not a competitive struggle for bread.'

By this time it had grown late. My father and I would gladly have listened longer to the very interesting explanations of our kind host, but we could not abuse the courtesy of our friends, and so we parted; and I will take occasion also to bid you, Louis, farewell for to-day.



Eden Vale: Aug. 16, ——

In your last letter you give expression to your astonishment that our host, with only a salary of 1,440L as a member of the government of Freeland, is able to keep up such an establishment as I have described, to occupy an elegant villa with twelve dwelling-rooms, to furnish his table, to indulge in horses and carriages—in a word, to live as luxuriously as only the richest are able to do among us at home. In fact, David was right when he promised us that we should not have to forego any real comfort, any genuine enjoyment to which we had been accustomed in our aristocratic palace at home. Our host does not possess capital the interest of which he can use; nor is Mrs. Ney a 'blue-stocking'—as you surmise—who writes highly paid romances for Freeland journals; nor does the elder Ney draw upon his son's income as artist. It is true that Mrs. Ney once possessed a large fortune which she inherited from her father, one of the leading speculators of America; but she lost this to the last farthing in the great American crisis of 18—, soon after her marriage. The domestic habits of the Neys were not, however, affected in the least by this loss; for since her migration to Freeland she had never made any private use of her fortune, but had always applied its income to public purposes. This does not prevent Mr. Ney from spending—over and above the outlay you mention—very considerable sums upon art and science and in benevolence: the last of course only abroad, for here no one is in need of charity. As it is not considered indiscreet in Freeland to talk of such matters, I am in a position to tell you that last year the Neys spent 92L for objects of art, 75L for books, journals, and music, 120L in travelling, and 108L—the amount that remained to their credit after defraying all the other expenses—in foreign charities and public institutions. Thanks to the marvellous organisation of industry and trade, everything here is fabulously cheap—in fact, many things which consume a great deal of money in Europe and America do not add in the least to the expenses of a Freeland household, as they are furnished gratuitously by the commonwealth, and paid for out of the tax which has been subtracted in advance from the net income of each individual. For example, in the cost of travelling, not a farthing has to be reckoned for railway or steamship, since—as you have already learnt from my former letters—the Freeland commonwealth provides free means of personal transport. The same holds, as I think I have already told you, of the telegraphs, the telephones, the post, electric lighting, mechanical motive-power, &c. On the other hand, the Freeland government charges the cost of the transport of goods by land and water to the owners of the goods. I will take this opportunity of remarking that almost every Freeland family spends on an average two months in the year in travelling, mostly in the many wonderfully beautiful districts of their own land, and more rarely in foreign countries. Every Freelander takes a holiday of at least six, and sometimes as much as ten weeks, and seeks recreation, pleasure, and instruction, as a tourist. The highlands of the Kilimanjaro, the Kenia, and the Elgon, of the Aberdare range and the Mountains of the Moon, as well as the shores of all the great lakes, swarm at all seasons—except the two rainy seasons—with driving, riding, walking, rowing, and sailing men, women, and children, in full enjoyment of all the delights of travel.

An intelligent and hearty love of nature and natural beauty is a general characteristic of the Freelanders. They are proprietors in common of the whole of their country, and their loving care for this precious possession is everywhere conspicuous. It is significant that nowhere in Freeland are the streams and rivers poisoned by refuse-water; nowhere are picturesque mountain-declivities disfigured by quarries opened in badly selected localities. No such offences against the beauty of the landscape are anywhere to be met with. For why should these self-governing workers rob themselves of the real pleasure afforded by healthy and beautiful natural scenes, for the sake of a small saving which must be shared by everybody? Naturally, this intelligent regard for rural attractions benefits tourists also. Everywhere both the roads and the railways are bordered by avenues of fine palms, whose slender branchless trunks do not obscure the view, whilst their heavy crowns afford refreshing shade. In consequence of this simple and effective arrangement, one suffers far less from heat and dust here under the equator than in temperate Europe, where in the summer months a several hours' journey by rail or road is frequently a torture. At all the beautiful and romantic spots, the Hotel and Recreation Associations have employed their immense resources in providing enormous boarding-houses, as well as many small villas, in which the tourists may find every comfort, either in the company of hundreds or thousands of others, or in rural isolation, for hours, days, weeks, or months.

If you are astonished at the luxury in the house of the Neys, what will you say when I tell you that in this country every simple worker lives essentially as our hosts do? The villas merely have fewer rooms, the furniture is plainer; instead of keeping saddle-horses of their own, the simple workers hire those belonging to the Transport Association; less money is spent upon objects of art, books, and for benevolent purposes: these are the only differences. Take, for instance, our neighbour Moro. Though an ordinary overseer in the Eden Vale Paint-making Association, he and his charming wife are among the intimate friends of our host, and we have already several times dined in his neat and comfortable seven-roomed house. Even 'pupil-daughters' are not lacking in his house, for his wife enjoys—and justly, as I can testify—the reputation of possessing a special amount of mental and moral culture; and, as you know, pupil-daughters choose not the great house, but the superior housewife. And if it should strike you as remarkable that such a Phoenix of a woman should be the wife of a simple factory-hand, you must remember that the workers of Freeland are different from those of Europe. Here everybody enjoys sound secondary education; and that a young man becomes an artisan and not a teacher, or a physician, or engineer, or such like, is due to the fact that he does not possess, or thinks he does not possess, any exceptional intellectual capacity. For in this country the intellectual professions can be successfully carried on only by those who possess exceptional natural qualifications, since the competition of all who are really qualified makes it impossible for the imperfectly qualified to succeed. Among ourselves, where only an infinitely small proportion of the population has the opportunity of studying, the lack of means among the immense majority secures a privilege even to the blockheads among the fortunate possessors of means. The rich cannot all be persons of talent any more than all the poor can. Since we, however, notwithstanding this, supply our demand for intellectual workers—apart, of course, from those exceptional cases which occur everywhere—solely from the small number of sons of rich families, we are fortunate if we find one capable student among ten incapables; of which ten—since the one capable student cannot supply all our demand—at most only two or three of the greatest blockheads suffer shipwreck. Here, on the contrary, where everyone has the opportunity of studying, there are, of course, very many more capable students; consequently the Freelanders do not need to go nearly so low down as we do in the scale of capacity to cover their demand for intellectual workers. It does not necessarily follow that their cleverest men are cleverer than ours; but our incapables—among the graduates—are much, much more incapable than the least capable of theirs can possibly be. What would be of medium quality among us is here far below consideration at all. Friend Moro, for instance, would probably, in Europe or America, not have been one of the 'lights of science,' nor 'an ornament to the bar'; but he would at least have been a very acceptable average teacher, advocate, or official. Here, however, after leaving the intermediate school, it was necessary for him to take a conscientious valuation of his mental capacity; and he arrived at the conclusion that it would be better to become a first-rate factory-overseer than a mediocre teacher or official. And he could carry out this—perhaps too severe—resolve without socially degrading himself, for in Freeland manual labour does not degrade as it does in Europe and America, where the assertion that it does not degrade is one of the many conventional lies with which we seek to impose upon ourselves. Despite all our democratic talk, work is among us in general a disgrace, for the labourer is a dependent, an exploited servant—he has a master over him who can order him, and can use him for his own purpose as he can a beast of burden. No ethical theory in the world will make master and servant equally honourable. But here it is different. To discover how great the difference is, one need merely attend a social reunion in Freeland. It is natural, of course, that persons belonging to the same circle of interests should most readily associate together; but this must not be supposed to imply the existence of anything even remotely like a breaking up of society into different professional strata. The common level of culture is so high, interest in the most exalted problems of humanity so general, even among the manual labourers, that savants, artists, heads of the government, find innumerable points of contact, both intellectual and aesthetic, even with factory-hands and agricultural labourers.

This is all the more the case since a definite line of demarcation between head-workers and hand-workers cannot here be drawn. The manual labourer of to-day may to-morrow, by the choice of his fellow-labourers, become a director of labour, therefore a head-worker; and, on the other hand, there are among the manual labourers untold thousands who were originally elected to different callings, and who have gone through the studies required for such callings, but have exchanged the pen for the tool, either because they found themselves not perfectly qualified intellectually, or because their tastes have changed. Thus, for instance, another visiting friend of the Neys successfully practised as a physician for several years; but he now devotes himself to gardening, because this quiet calling withdraws him less than his work as physician from his favourite study, astronomy. His knowledge and capacity as astronomer were not sufficient to provide him with a livelihood, and as he was frequently called in the night from some interesting observation reluctantly to attend upon sick children, he determined to earn his livelihood by gardening, so that he might devote his nights to an undisturbed observation of the stars. Another man with whom I have here become acquainted exchanged the career of a bank official for that of a machine-smith, simply because he did not like a sedentary occupation; several times he might have been elected by the members of his association on the board of directors, but he always declined on the plea of an invincible objection to office work. But there is a still larger number of persons who combine some kind of manual labour with intellectual work. So general in Freeland is the disinclination to confine oneself exclusively to head-work, that in all the higher callings, and even in the public offices, arrangements have to be made which will allow those engaged in such offices to spend some time in manual occupations. The bookkeepers and correspondents of the associations, as well as of the central bank, the teachers, officials, and other holders of appointments of all kinds, have the right to demand, besides the regular two months' holiday, leave of absence for a longer or a shorter time, which time is to be spent in some other occupation. Naturally no wages are paid for the time consumed by these special periods of absence; but this does not prevent the greater part of all those officials from seeking a temporary change of occupation for several months once in every two or three years, as factory-hands, miners, agriculturists, gardeners, &c. An acquaintance of mine, a head of a department of the central executive, spends two months in every second year at one or other of the mines in the Aberdare or the Baringo district. He tells me he has already gone practically through the work of the coal, the iron, the tin, the copper, and the sulphur mines; and he is now pleasantly anticipating a course of labour in the salt-works of Elmeteita.

In view of this general and thorough inter-blending of the most ordinary physical with the highest mental activity, it is impossible to speak of any distinction of class or social status. The agriculturists here are as highly respected, as cultured gentlemen, as the learned, the artists, or the higher officials; and there is nothing to prevent those who harmonise with them in character and sentiment from treating them as friends and equals in society.

But the women—elsewhere the staunchest upholders of aristocratic exclusiveness—in this country are the most zealous advocates of a complete amalgamation of all the different sections of the population. The Freeland woman, almost without exception, has attained to a very high degree of ethical and intellectual culture. Relieved of all material anxiety and toil, her sole vocation is to ennoble herself, to quicken her understanding for all that is good and lofty. As she is delivered from the degrading necessity of finding in her husband one upon whom she is dependent for her livelihood, as she does not derive her social position from the occupation of her husband, but from her own personal worth, she is consequently free from that haughty exclusiveness which is to be found wherever real excellences are wanting. The women of the so-called better classes among us at home treat their less fortunate sisters with such repellent arrogance simply because they cannot get rid of the instinctive feeling that these poorer sisters would have very well occupied their own places, and vice versa, had their husbands been changed. And even when it is not so, when the European 'lady' actually does possess a higher ethical and intellectual character, she is obliged to confess that her position in the opinion of the world depends less upon her own qualities than upon the rank and position of her husband—that is, upon another, who could just as well have placed any other woman upon the borrowed throne. Schopenhauer is not altogether wrong: women are mostly engaged in one and the same pursuit—man-hunting—and it is the envy of competition that lies at the bottom of their pride. Only he forgets to add, or rather he does not know, that this pursuit, which is common to all women, and which he lashes so unmercifully, is, with all its hateful evil consequences, the inevitable result of their lack of legal rights, and is in no way indissolubly bound up with their nature.

The women here, who are free and endowed with equal legal rights with the men in the highest sense of the words, exhibit none of this pride in the external relations of life. Even when the calling or the wealth of the husband might give rise to a certain social distinction, they would never recognise it, but allow themselves to be guided in their social intercourse simply by personal characteristics. It is the most talented, the most amiable woman whose friendship they most eagerly seek, whatever may be the position of the woman's husband. Hence you can understand that Mrs. Moro could select her husband without having to make the slightest sacrifice in her relation to Freeland 'society.'

Whilst we are upon this subject, let me say a few words as to the character of society here. Social life here is very bright and animated. Families that are intimate with each other meet together without ceremony almost every evening; and there is conversation, music, and, among the young people, not a little dancing. There is nothing particular in all this; but the very peculiar, and to the stranger at first altogether inexplicable, attraction of Freeland society is due to the prevailing tone of the most perfect freedom in combination with the loftiest nobility and the most exquisite delicacy. When I had enjoyed it a few times, I began to long for the pleasure of these reunions, without at first being able to account for the charm which they exercised upon me. At last I arrived at the conviction that what made social intercourse here so richly enjoyable must be mainly the genuine human affection which characterises life in Freeland.

Social reunions in Europe are essentially nothing more than masquerades in which those present indulge in reciprocal lying—meetings of foes, who attempt to hide under courtly grimaces the ill-will they bear each other, but who nevertheless utterly fail to deceive each other. And under an exploiting system of society this cannot be prevented, for antagonism of interests is there the rule, and true solidarity of interests a very rare and purely accidental exception. To cherish a genuine affection for our fellow-men is with us a virtue, the exercise of which demands more than an ordinary amount of self-denial; and everyone knows that nine-tenths of the wearers of those politely grinning masks would fall upon each other in bitter hatred if the inherited and acquired restraints of conventional good manners were for a moment to be laid aside. At such reunions one feels very much as those miscellaneous beasts may be supposed to feel who are confined together in a common cage for the delectation of the spectacle-loving public. The only difference is that our two-legged tigers, panthers, lynxes, wolves, bears, and hyenas are better trained than their four-legged types; the latter glide about fiercely snarling at each other, with difficulty restraining their murderous passions as they cast side-glances at the lash of their tamer, whilst the ill-will lurking in the hearts of the former is to be detected only by the closest observer through some malicious glance of the eye, or some other scarcely perceptible movement. In fact, so complete is the training of the two-legged carnivora that they themselves are sometimes deceived by it; there are moments when the hyenas seriously believe that their polite grinning at the tiger is honestly meant, and when the tiger fancies that his subdued growls conceal a genial affection and friendship towards his fellow-beasts. But these are only fleeting moments of fond self-deception; and in general one cannot get rid of the sensation of being among natural enemies, who, but for the external restraints, would fly at our throats. The Freelanders, on the contrary, feel that they are among true and honourable friends when they find themselves in the company of other men. They have nothing to hide from one another, they have no wish either to take advantage of or to injure one another. It is true that there is emulation between them; but this cannot destroy the sentiment of friendly comradeship, since the success of the victor profits the conquered as well. Genial candour, an almost childlike ingenuousness, are therefore in all circumstances natural to them; and it is this, together with their joyous view of life and their intellectual many-sidedness, which lends such a marvellous charm to Freeland society.

But let me go on with the story of my experiences here. Yesterday we saw for the first time in Freeland a drunken man! We—my father and I—had, after dinner, been with David for a short walk on the shore of the lake, where most of the Eden Vale hotels are situated. As we were returning home we met a drunken man, who staggered up to us and stutteringly asked the way to his inn. He was evidently a new-comer. David asked us to go the remaining few steps homewards without him, and he took the man by the arm and led him towards his inn. I joined David in this kindly act, whilst my father went home. When we had also got home we found my father engaged in a very lively conversation with Mrs. Key over this little adventure. 'Only think,' cried he to me, 'Mrs. Ney says we should think ourselves fortunate in having seen what is one of the rarest of sights in this country! She has lived in Freeland twenty-five years, and has seen only three cases of drunkenness; and she is convinced that at this moment there is not another man in Eden Vale who has ever drunk to intoxication! You Freelanders'—he turned now to David—'are certainly no teetotallers; your beer and palm-wine are excellent; your wines leave nothing to be desired; and you do not seem to me to be people who merely keep these good things ready to offer to an occasional guest. Does it really never happen that some of you drink a little more than enough to quench your thirst?'

'It is as my mother says. We like to drink a good drop, and that not seldom; and I will not deny that on festive occasions the inspiration begotten of wine here and there makes itself pretty evident; nevertheless, a Freelander incapably drunk is one of the rarest phenomena. If you are so much surprised at this, ask yourself whether well-bred and cultured men are accustomed to get drunk in Europe and America. I know that happens even among you only very rarely, although public opinion there is less strict upon this point than it is here. But in Freeland there are no persons who are compelled to seek forgetfulness of their misery in intoxication, and the examples of such persons cannot therefore serve to accustom the public to the sight of this most degrading of all vices. Many, I know, think that the disgusting picture afforded by drunken persons is the best means of exciting a feeling of repugnance towards this vice—a view which is probably derived from Plutarch's statement that the Lacedemonians used to make their helots drunk in order to serve as deterring examples to the Spartan youth. This account may be true or false, but an argument in favour of the theory that example deters by its disgusting character can be based upon it only by the most thoughtless; for it is a well-attested fact that the Spartans—the rudest of all the Greeks—were more addicted to drunkenness than any other Hellenic tribe. The "deterring" example of the helots had therefore very little effect. It is because in this country drunkenness is so extremely rare that it excites such special disgust; and as, moreover, the principal source of this vice—misery—is removed, the vice itself may be regarded as absolutely extinct among us. This result has been not a little assisted by the circumstance that merrymakings and festivities in Freeland are always largely participated in by women. Since we honour woman as the embodiment and representative of human enjoyment, as the loftiest custodian of all that ennobles and adorns our earthly existence, we are unable to conceive of genuine mirth without the participation of women. You have seen enough of our Freeland women to understand that indecorous excesses of any kind in their presence are wellnigh inconceivable.'

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