Your pay envelope

My dear Smith,

Having seen that the Marxian theories of value are not the sanely “scientific” laws that Socialists declare them to be, but are utter absurdities that run counter to all laws of logic and even contradict human experience, we shall now get down to your own individual pay envelope, for that is the thing which most interests you. But, please don’t imagine that, because we have stopped talking about Marx’s theories for the moment, we have reached the end of our list of Socialist fallacies. To tell the truth, we have just begun to enumerate them. Silly as these ideas are in theory, they do not begin to attain the full limit of their absurdity until we attempt to apply them to the practical affairs of life.

Last night I stood at the street corner and heard the soap-box orator “educate” the crowd. He told them that the average earnings of every worker in America was $2,500 a year—a trifle more than $48 a week—and he asked the men if they had found any such sum of money in their pay-envelope recently.

You can imagine the answer he received to this question, John. Yet, the soap-boxer still asserted that this was the amount each worker had earned, and insisted that the difference between $48 and the sum he had received represented the amount of which his employer was “robbing” him. From the look on the faces of some of the men, I felt that the agitator had made an impression upon them. He reeled off his statistics so glibly that you really couldn’t blame them for believing him.

Of course, he also told them that, under Socialism, nothing of this kind could happen—that they would get their $2,500 a year, and more, too, and that they would have to work only half as long a time each day in order to earn this amount of money. “We must change the ‘system,’” he cried. “We must stop the making of goods for profit! Then, and then only, will you put an end to the exploitation that is the cause of all your poverty and misery. It is the only way you can throw the parasite-capitalist off your back. You are being robbed of four-fifths of your wages, and you’re not allowed to keep even the little you get, because capitalism, after robbing you by taking four-fifths of the money you earn, puts the prices of everything you buy higher and higher until there isn’t a penny of your earnings left for yourself, and you don’t get a chance to live decently, at that.”

You have heard this kind of talk. You may have thought that there was some truth in it. You—like all the rest of us—are confronted with the problem of the cost of living, and—like most of us—you wish that you could earn more money. “Is it possible,” you ask, “that I am earning four times as much as I get, and that I am being ‘robbed’ of the greater part of it?”

If you listen to the Socialists you will come to believe that this is just what is happening. A Socialist paper published in Kansas has spent a lot of money to advertise the fact that, when Socialism triumphs and you get what you actually earn, you will be paid $2,000 a year for six hours a day.

This is a very conservative estimate—for a Socialist. As you may have learned by this time, the writers and speakers who undertake to tell the worker what is to happen to him under Socialism do not agree about the amount of money he will get and the length of time he will have to work in the Co-operative Commonwealth, any more than they do when they try to estimate the extent of the “robbery” from which he is suffering.

Usually, the rate of payment is fixed at $2,500 for four hours’ work a day. A writer in a popular magazine fixes the sum the worker will be paid at $5,000. Suthers, the English Socialist, promises the equivalent of $10,000 a year, and there is a band of “comrades” on the Pacific Coast who can demonstrate “scientifically” that a 3-hour day affords sufficient time in which to earn a decent living and even the luxuries of life.

Well, do you believe any of these statements? I hope you are not such a simpleton as to be fooled by the bald assertion of any speaker or writer when you have, within your reach, the facts from which you can learn the truth for yourself.

Let us pursue this more rational method. Certainly, the Socialists cannot object if we check off their calculations and find out if they have made any mistakes in their figuring.

According to the last United States Census report—and that ought to be good enough authority for anybody—the total value of all the goods manufactured in this country during the year 1909 was $20,672,052,000 and the number of persons employed in making these goods was 7,405,513. If we divide one by the other, we find an earning capacity of more than $2,700 per man; but, unfortunately, that is not the way things work out. There are certain expenses of manufacture that have to be deducted from the “gross value” before we can even begin to calculate the earning capacity of the worker. One little item we mustn’t forget is called “Cost of Materials.” Another item is known as “Miscellaneous Expenses.” After you have received your wages, you are perfectly willing that your employer shall deduct these “expenses” before figuring his own profits, are you not?

In 1909, the “cost of materials” alone represented the tremendous sum of $12,141,291,000 and the “cost of miscellaneous expenses” was $1,945,676,000. When we subtract these two charges from the “gross value,” we have $6,585,085,000 left, and if we divide this sum by the number of workers, we find that the average product of the worker was but $889.23.

What did the worker actually get? The “cost of labor and salaries,” in 1909, was $4,365,613,000, and, if we divide this by the number of workers, we learn that the average is $589.52.

This is quite different from the story the Socialists tell us. Had all the industries in America been owned and operated collectively, in 1909, the worker, at the best, could have received but $299.71 more than he did, for, as you must admit, such factors as “cost of materials” and “miscellaneous expenses” must needs be considered, even under the collective system of industry. Certainly, the worker in the textile mills could not produce the cotton and wool and silk, and the shoe-worker could not raise the animals and prepare the leather, even were Socialism to bring about all the marvelous changes it has promised.

Yet, this is precisely what the Socialists do when they commence to quote “facts.” It is useless for them to deny the charge, for there is no other method by which they can figure an average earning capacity of $2,500 for each worker. To do this it would be necessary for the employer to get his cotton for nothing, his leather for nothing, and everything he uses in making his product, for nothing. Moreover, it presupposes that he can procure free fuel, free light, and, what is still more improbable, that he has to pay nothing for new machinery or for repairing the old. Do you think that the Socialist is showing himself the “friend” of the worker when he fills his mind with such “dope” as this?

And, even, the figures we have worked out are not fair—to the employer. He does not make a profit of more than $299 upon the labor of each of his workers—not by any means! Out of the $299 must come the cost of selling and transportation, bad debts, taxes, interest, etc., so that, when we have deducted all these charges, we can scarcely question Willey’s justification for the assertion (“Laborer and the Capitalist,” p. 22) that capital actually receives no more than 6 per cent net profits on its product. Moreover, as The American Federationist points out (July, 1905), the census figures fall short of giving us the actual cost of manufactures, as the original “gross value” upon which our calculations are based is itself “arrived at by a constant duplication of value, owing to the fact that the finished products of one plant become the material of some other factory, in which they are changed into some higher form and again included in the value of products.”

I will admit that it is practically impossible to compile statistics that will take such facts as these into consideration, and the Socialists do not act fairly when they lead us to assume that all these conditions have been considered in their figures. How many times do you suppose the value of the same piece of leather is computed from the time it becomes a hide until it is turned out, a finished product, from the shoe factory. Yet, as we have seen, every time the value of this material is included in the value of products it gives the manufacturer credit for a sum of money that never reached him.

Let us suppose that we were running all our industries under just such a collective form of government as the Socialists propose to establish, and that, as a result, we were bound to see that every worker got the $5,000 a year he has been promised. Do you see what that would mean? Figure it out for yourself—multiply the 7,405,513 workers in the industrial plants by the $5,000 that each would have to be paid, and then remember that the seven millions of workers represent only a small proportion of the workers to whom this sum of money must be given by the Co-operative Commonwealth. Even counting the seven millions alone, we have a total of $37,027,505,000—almost twice as much as the “gross value” of all manufactured products in this country to-day.

It is true that we do not know just how many men, women and children of working age there are who would have to be given a place in the collective pay-roll. In view of the total population of the United States, I do not think that any Socialist will accuse me of overstating the case if I assert that there would be 30,000,000 people to be provided for.

What would this mean? Merely an annual pay-roll of $150,000,000,000—that’s all.

Easy, isn’t it! At present, we manufacture less than $21,000,000,000 worth of goods—the consumable wealth produced in the United States is estimated by Socialists to be but $30,000,000,000 (Appeal to Reason, October 5, 1912); yet they ask us to get busy and undertake to meet a pay-roll that is at least fully five times greater than the total product to-day. And, if you want to be as conservative as the most conservative Socialist statistician who is dreaming these dreams, and allow that labor under Socialism will be rewarded with a meagre $2,000 a year, you will still have a pay-roll of $60,000,000,000 to provide for, or twice as much as we make. How are you going to meet it? As a practical man, John, I ask you: How? Certainly not from the $21,000,000,000 produced each year in manufactures. If we add to this the total wealth represented by the agricultural, mining and fishing interests of this country, we shall still fall far short of the sum we require. How is it to be done?

Absurd as all these promises are, we have not yet reached the limit—far from it! For example, we are told that in the Co-operative Commonwealth we shall have to work only half as long as we do now. In other words, the man who works eight hours a day now, will get along swimmingly by working four hours, and still receive the income promised—from $2,000 to $5,000 a year—for his effort.

Are we to understand from this that, though the worker, with the best machinery and the most scientific management now possible, succeeds only in turning out less than $900 worth of goods in a year, he will be able, under collective management, to turn out from two and one-half to five times as great a product, while working just half as many hours?

You know that this couldn’t be done. You know that, if you worked half as many hours as you do now, some other man would have to put in the other half of the day or only about half the usual product would be manufactured. If, therefore, we entirely disregard the fact that Socialists are promising to pay the individual worker more money every year than several workers are now able to produce, we are still confronted by a problem that defies solution. A certain amount of work must be done to keep the needs of Society supplied. To do this work, a certain amount of effort must be exerted, and, to exert this effort, a certain amount of time is necessary. Yet, the Socialists want us to assume that all of these appeals to common sense are absurd—that once the making of goods for profit has ceased, there will be no difficulty in meeting the industrial pay-roll, no matter how enormously its proportions may have increased.

And this leads up to still another very interesting phase of the situation. We are told by the Socialists that the making of goods for profit is to end, and that, in the Co-operative Commonwealth, such problems as the high cost of living will trouble us no longer. Once let the Socialists get control of our industries and we shall be compelled to pay no more than a commodity is actually worth.

Do you see into what a maze of absurdities the Socialists have led you? They tell us that we are to get anywhere from $2,000 to $5,000 a year. An English Socialist promises the workers $10,000 a year, for what does a few paltry thousands matter when a great army of voters are to be fooled into casting their ballots for the Socialist ticket! In addition, you are assured that your work-day is to be cut in half, and you are further informed that, with the culmination of the profit system, you will be able to purchase everything you want at materially lower prices than are charged for such commodities to-day.

Will you tell me, John, where the Socialists are going to get the money to meet this enormous pay-roll, if they stop making goods for profit? Wages are to be increased out of all proportion to the present schedule; hours of labor are to be reduced to a minimum, and yet, despite all this, the prices of all commodities are to be cheapened, too.

You don’t see how they are going to do it? No more do I! Suppose you ask that wise little man on the street-corner. Maybe he can tell you!