1. The human values present in each economic unit must be maintained at a high level through an appeal to the finest qualities of the individual human being.
That appeal must be strong enough and constant enough, when coupled with the economic appeal, to provide a reason or incentive for continued activity.
2. The integrity and permanence of the unit must be preserved.
The economic unit is one of the tools with which society does its work, and is the means relied upon for the production of livelihood. Like the axe of the woodsman or the lathe of the mechanic, the social tools and machinery must be kept in effective working order if society is to receive a return for its outlay of labor and materials. Three items enter into the maintenance of this efficiency: (a) current repairs, (b) periodic rebuilding, and (c) ultimate replacement. This is as true of any part of the social structure as it is of mechanical devices. The more complicated the structure the more necessary are rebuilding and replacement.
3. The productivity of the unit must be kept up to a high level of efficiency.
This is the purpose for which the unit exists. Efficiency is the product of the individual activity of the group members, and of the working effectiveness of the mechanism with which they accomplish their tasks. Thus both are essential to efficiency in production.
4. Self-motivation and co-operation are the two fundamentally important requirements in the working of all economic units.
The former is the best guarantee of the continuous functioning of the unit. The latter links together the different units, making them working parts of the whole economic system.
Here are four indispensable requirements—the maintenance of human values, the preservation of group integrity and permanence, productive efficiency and self-generated activity—for the building and successful continuance of economically sound unit groups. If society is to secure maximum returns, if the economic mechanism is to yield its largest quota of goods and services to mankind, the units out of which society is built must meet these requirements which constitute four of the essential pre-requisites to the success of any economic experiment.
Granted the desirability of efficiency in economic organization, the question at once arises as to how this efficiency is to be guaranteed. Up to this point the means adopted to secure such an end have consisted in concentrating economic authority in the hands of a small owning and managing class, and in leaving with the members of this class the determination of policy and of methods of procedure.
The concentration of administrative authority at one point has proved impracticable, first because of the great amount of red tape involved in the handling of the endless detail, and second because of the resulting destruction of initiative and enterprise. Such a centralization of social function would be just as cumbersome as a like centralization of all bodily functions in the higher brain centres. If men were compelled to reason about and to direct each step, each movement of eyes or hands, each breath, each heart-beat, the attention would never pass beyond the boundaries of such pressing and never-ending routine. Many bodily organs, like the stomach, function involuntarily. Walking becomes habitual. It is only when the stomach and the legs fail to work properly that they become the objects of attention. The same thing should be true of a well-directed economic system. Each local unit should function locally and autonomously, and the problems of local function should never come to the attention of a more central authority until there is some failure to work on the part of the local unit.
Those who despair of the future of society, and who feel that effective co-operation between social groups is impossible, should remember that the organs of the human body have been gaming experience in co-operative and harmonious function for hundreds of thousands or for millions of years, while the organization of society is an art that is still in its extreme infancy. The astonishing thing about the various social groups is not that they work so badly together, but that they work so well.
As the centralization of authority increases, the amount of red-tape piles up until more social energy is consumed in overcoming social inertia and the friction that is the result of social function, than is produced by the function in question. When this point is reached, the social machinery operates at a constant loss, and it is only a question of time when it will cease to operate altogether, and the social machinery will begin to disintegrate into its constituent elements. The greater the degree, therefore, of localization, provided the mechanism can be held together and kept in working order, the less the loss in social energy.
The social group thus faces two problems: One is the development of sufficient energy to keep the social machinery going. This problem is tied up with the stimulation of human wants, as it is only from the aroused energies of men and women that the social energy is derived. The other is the reduction of social friction and other forms of social waste to a minimum, in order that the largest possible amount of social energy may be devoted to the work of driving society.
The present social order relies, in part, for its driving power on man's desire for personal economic advantage. Where the rewards have been considerable, large amounts of energy and ingenuity have been developed as the result of this stimulus. The worker, the manager, the whole producing unit strove to excel, both because failure carried with it the penalty of destruction (bankruptcy or unemployment) and because success carried with it the probability of large economic rewards (profits). The result was an outpouring of social energy in the various independent local groups.
The real difficulty inherent in the earlier stages of the present order was not its failure to secure abundant human exertion, but its failure to provide any means of co-operation between individuals and between groups. The same set of social principles which decreed local rewards and local punishments for initiative and enterprise, or for the lack of them, was built upon the theory that "competition is the life of trade." Thus, while the present economic system, in its earlier stages tended to stimulate initiative, its form made co-operation difficult or impossible.
The ideal economic unit would be one capable of generating its own driving power, and given a legitimate exchange of commodities and services with other units, one that could maintain its own energy and efficiency. A society composed of such units would have great vitality because its energy would be generated in a large number of more or less independent localities. A study of the agricultural village of Central Europe or of the Mexican Indians shows how workable and how stable such a form of society really is.
The only practicable method of maintaining efficiency and of reducing the friction incident to social function is to erect a form of local self-government that will make possible both the stimulation of initiative and effective co-operation between groups.
The issue of economic self-government resolves itself into two questions, which the average human being will sooner or later ask:
1. What do I get out of it?
2. Who is to be the boss?
The intelligent man or woman cannot be expected to exert himself freely for the building of a palace at Versailles, on whose grounds he can never set foot, or for the maintenance of a Palm Beach that he sees only on the screen. The economic necessities are too immediate and the economic urge is too strong.
Before the individual will expend his maximum energy upon the economic process, he must see tangible results such as bread, shoes, schools, and holidays. One of the strongest arguments that the present economic system advances in favor of its continuance is the showing of large tangible returns in the form of economic goods. To be sure these results have not been secured by everyone, but there is neighbor Pitt who started as a stable boy, and who now owns the largest garage in the city; there is neighbor Wallace who began life as a grocery clerk and to-day is master of many acres of coal and timber. Besides, yonder store is filled with the good things of life, ready for anyone who has the money to buy them. Many persons, under the present system, make enough to buy all of them and others beside. So the argument runs, and those who advance it can give a wealth of instances to prove the point.
The huge rewards of the present system even though they have gone to the very few, have been turned over to those who could survive in the struggle. Everyone knows that the winners in a lottery are few and the losers many, yet each buys a ticket because he hopes and expects to be one of the winners.
Society, as reconstructed, must be less of a gambling venture and more of an established certainty, with the material rewards going to those who are responsible for producing them. And each person who thus shares in the economic rewards of society must see the connection between the energy expended and the share received. Only while such a connection apparently exists will economic effort be expended by the normal individual.
6. The Ownership of the Economic Machinery
The individual cannot be expected to exert himself where there is no apparent connection between the effort expended and the return for his effort. Neither can he be expected to exert himself in the interest of economic machinery that belongs to someone else. His interest can be maintained only by the hope of a return for the effort that he expends, and by a sense of control over the job on which he works. Among the various experiments that society has tried, in an effort to attain these ends, none has been more successful than self-government.
The application of the principle of self-government to the economic world involves the control of economic machinery and economic policy in each unit by those who compose the unit. The members of each economic group must be supreme in their own field, except in so far as their decisions affect the welfare of other units. In such cases the decision must rest with that larger economic group to which the involved economic units belong. Thus the aim of economic self-government is to keep the responsibility centered upon those who would normally be the most concerned in getting results.
All matters of policy will therefore be decided by those individuals or groups that are directly involved. Where possible such decisions should be reached in open meetings corresponding to the tribal council or the town meeting. Such meetings may always be held in local economic units, such as collieries, departments of factories and the like. Where it proves impossible to get the members of an economic group all into one meeting place, their affairs must necessarily be transacted by representatives, chosen as directly as possible.
The decisions having been made with regard to matters of policy, the next and equally important question arises: "Who shall be entrusted with the duty of seeing that policies once decided upon are carried out? Who shall be entrusted with leadership in economic affairs?"
Those who are entrusted with the carrying out of economic policy in a producers' society may be divided, roughly, into two classes: the executive and the expert. The executive is the director of general policy. The expert is the specialist, selected to do a particular piece of work. For example, the representatives of District 2, United Mine Workers of America decide that, as a matter of general policy, they will advocate the nationalization of the coal mines, and they instruct their president and their executive board accordingly. The executives of District 2 are therefore charged with the duty of organizing a propaganda, which, to be effective, must consist of a well-ordered summary of facts about the coal mining industry, put in a form that can be easily understood by the average man, and distributed in such a manner that it will reach the people responsible for coal mine nationalization. Here, then, are three distinct tasks: (1) an investigation of the facts; (2) a plan for nationalization; and (3) an advertising campaign. The first two of these tasks, to be well done, must be placed in the hands of engineers, statisticians and mine experts. The third will fall to the lot of an advertising or publicity man. The president of District 2 is an executive, charged with the duty of seeing that a program of mine nationalization is carried forward. The engineers, statisticians and advertising men that he secures to do the work in their respective fields are experts. These distinctions have been well established in the world of government and of business, and they are rapidly finding their way into the world of labor.
There can be no great difference of opinion about the expert. He is a technically trained man, and as a chemist, an electrician, or as an auditor of accounts he has a special field in which he is supposed to be a master craftsman. The selection of such an expert, therefore, is a question of finding men with the knowledge and experience necessary for the doing of a certain piece of work.
The situation is far more complicated when it comes to the selection, of the executive. He is the keystone of the social arch—the binding force that holds the various parts of the group apart and together. Upon his decisions may depend the success or the failure of an entire enterprise, because, tie him with red tape as you will, he still has a margin of free choice in which he registers his success or failure as an executive.
The executive is put in office to do the will of a constituency and to carry out a certain policy. But what is the will of the constituency, and which one of a half dozen lines of action will most completely and effectively carry out the policy in question? The executive must find an answer to those questions, and he must find it hour after hour and day after day.
Society has striven for ages to devise a successful method of picking executives, and of keeping a watchful eye on them after they assume the reins of government. There are three general ways in which the selection may be made:
1. Through heredity—the leadership descending from one generation to the next in the line of blood relationship.
This is the method practiced in all countries that have kings, aristocrats, plutocrats or others who automatically inherit power from their ancestors.
2. Through self-selection—the leadership being assumed by those who are the quickest to seize it.
Primitive, disorganized or unorganized societies or associations pick their leaders in this way. The strongest, the most courageous, the most cunning, press to the front in an emergency, and their leadership is accepted as a matter of course by those who are less strong or courageous or cunning. The leaders of a miscellaneous mob are apt to be thus self-selected. The leaders of new activities, like the organized business of the United States and Canada, have been, for the most part, self-selected. Seeing opportunities for economic advantage, they have grasped them before their fellows realized what was happening. The great accumulations of economic power that were made in this way during the past generation are now being passed from father to son, and the leadership in American economic life is therefore tending to fall into an hereditary caste or class. There is still, however, a considerable margin of self-selection of American economic leadership.
3. Through social selection—the right and duty of leadership being assigned by the group, after some form of deliberation to a designated individual.
This is the method common to all highly organized and self-conscious societies that are not dominated by a system of hereditary caste rule. Public officials in most of the countries of the world, officials of trade unions and other voluntary associations are usually selected in this manner.
The selection of executive leadership in any organized society must be through heredity or through group choice. Self-selection is necessarily confined to new or temporary or loosely organized groups.
9. The Details of Organization
These general principles of economic self-government may be applied to local, district, divisional and to world economic groupings. To be sure the application, in each instance, will be varied in accordance with the peculiar needs in question, but a general scheme of procedure may be suggested somewhat as follows:
1. Suggestions for the organization of a local economic unit in a given industry—a mine, factory, store—
a. The entire working force would meet at regular intervals, in a shop meeting, or colliery meeting, or store meeting, to transact general business.
b. At such a meeting a shop committee selected by those present, would be charged with the responsibility of directing affairs in the shop that had selected it. The shop committee would consist of a small group, varying in size with the size of shop, under the chairmanship of a person selected by the workers at the same time they elected the committee.
c. This chairman of the shop committee would be called the shop chairman. His duties would correspond roughly with those of the present-day foreman, or with those of the shop-steward or shop chairman in some of the more advanced of the British industries. In reality this shop chairman would be the shop executive, holding office while he could retain the good will of his shop-mates, and while he could give a satisfactory account of his shop in the way of production and discipline.
d. Where there were a number of departments in a large factory, store or other establishment, there would be a plant committee made up of the chairmen of all shop committees in the plant.
e. Where plant committees were organized, it would be their duty to designate one of their members as chairman. This plant committee chairman would therefore be what, under present conditions, is the general manager of the plant, with his fellow committeemen as his executive committee or board of managers.
f. Each economic unit, whether shop or plant, would have its engineers or experts, picked, like other workers, by the shop committee or the plant committee, and responsible to that committee for the particular tasks assigned to them.
All participation in the activities of this basic economic unit—hiring and firing as it is called—would be determined by the shop committees and by the plant committee, each with final local jurisdiction, subject, of course, to a referendum of the workers in the department or the plant concerned. By this means, the members of each basic economic group would be made the sole judges as to those with whom they should work. Each group would therefore have an opportunity to set its own group standards and to build up its own group spirit.
The individual worker, in order to secure a job, or work place, must therefore subject himself to the scrutiny of his prospective shop-mates, perhaps even to work for a time on probation, and this to prove his fitness to join the group and thus to participate in its activities.
Such a plan would provide a self-governing and self-directing economic unit, capable of adaptation to the various phases of economic life, and at the same time capable of generating its own social steam, and thus driving itself forward on the path of its own activities.
Farming, hand-craft industries, and other occupations in which the worker owns his own tools, and is worker, manager and business-man combined, would be forced to organize a local unit more nearly approximating the medieval guild or some of the modern organizations for producers' co-operation. The general principles of organization would be the same in the one case as in the other, power and control being held locally by self-directing, autonomous groups.
This plan for the organization of a local self-governing economic unit represents an attempt to apply the best principles of economic and political science to the working out of an intelligently directed society.
2. Suggestions for the organization of an economic district in a given industry.
a. The district would consist of a number of economic units in the same or in an immediately related field of industry. For example, it might be formed of steel mills alone, or of machine shops and steel mills, or of machine shops, steel mills, and foundries. The decision on the matter of membership in the district would rest, first with the local economic units that united to form the district, and second, with the industries immediately concerned. The purpose of the organization would be to link together those economic units that were most dependent upon one another, and that therefore had the most interests in common.
b. When formed, the organization would apply for recognition to the divisional organization of its particular industry. If the district comprised manufacturing industries, it would apply to the divisional organization of the manufacturing industries; if the district comprised coal mines, it would apply to the divisional organization of the extractive industries. It would be to the interest of the divisional organization to recognize only such district organizations as did not involve the divisional organization in jurisdictional disputes.
c. After securing recognition from the divisional organization, the district organization would be the judge of its own membership, and would be in a position to add such local economic units as were to its advantage in pursuit of its general policy.
d. The control over the affairs of the district would be in the hands of a district committee, elected directly by the workers of the district, each group of workers voting by ballot in its own shop.
A. When the elections for membership of the district committee were held, the members of the plant committees, or of the shop committees where there were no plant committees, would be the candidates. By this means, only those of recognized standing in a local group could become candidates for the higher offices. At the same time, the local group, when it elected to local office would be nominating for higher office.
B. When a plant committeeman was elected to the district committee, his position in the plant committee would be filled by special election.
e. The district committee would be a large body, consisting of at least one representative from each of the plants or shops in the district.
f. The routine work of the district committee would be handled by the district executive committee, picked by the district committee from its own membership, and responsible to it as a board of managers.
g. Each district would have its staff of engineers, experts or inspectors, whose duty it would be to check up on the technical side of the activities in the district, very much as a county agricultural agent or a district sales manager checks up on the work of those who come within his jurisdiction. These experts would be selected by the district executive committee, subject to the approval of the district committee.
h. Where possible, important issues confronting the district would be brought to the attention of the workers in the district through one or a series of mass meetings. Where this proved to be impossible, newspapers, leaflets, and other forms of printed information must suffice.
i. The district would therefore be a self-governing group of economic units, engaged in activities that fell within one of the main divisions of industry. It would be the judge of its own economic affairs and would be autonomous in all matters affecting only the district.
3. Suggestions for the organization of a geographic division within a given industrial or occupational group.
a. The division would consist of a convenient geographic area, in so far as possible contiguous and closely bound together by transport facilities, related economic interests, etc. North America, South America, South Africa, and Mediterranean Basin, Northern Europe, Northern Asia, Eastern Asia, Southern Asia, and Australia might be agreed upon as such divisions.
b. The organization of the division is, in the main, a replica of the organization of the district, with two exceptions:
A. The scope of the organization is limited geographically to the division in question, and covers all of this division, whereas the district organization includes a group of local economic units, which are not necessarily contiguous, and are in no particular geographic relation to one another. While the district organization is strictly industrial, the divisional organization is industrial and geographic.
B. The organization is definitely limited to the major occupational groups, each of the groups covering the whole of the division. Hence there would be, in each division, a division organization of transport workers, a division organization of agricultural workers, a division organization of those engaged in manufacturing and so on, making a divisional organization for each of the major industrial groups. A district might comprise only one branch of an industry such as textile manufacturing or electric transport. All of these districts would be included, however, in the particular divisional organization with which they would logically affiliate. Thus there might be a district organization for the textile workers of Lyons and vicinity, and another district organization for the metal workers of St. Etienne and vicinity. Both districts would be included in the divisional organization of the manufacturing industries of the Mediterranean Basin.
c. The control of each industry within a division would be vested in a divisional congress, elected directly by all of the workers in the division who were engaged in that industry.
A. The members of this congress would be elected by districts, with a minimum of at least one member from each district, and an additional member from each district for each additional quota of workers over a specified minimum. The details would necessarily vary with the division, but if there were 100 districts in a division, with a million workers in all of the districts, each district might be allowed a minimum of two members in the divisional congress, with one additional member for each 5,000 workers in excess of 10,000. Under such an arrangement, a district with 25,000 workers would have five representatives in the congress, and so on.
B. The members of the district committees are the candidates for election to the divisional congresses.
d. The divisional congress meets at least once in each year, and within thirty days of its election.
e. The divisional congress picks from its own membership a divisional executive committee, which meets at intervals through the year, and is responsible for the affairs of the division when the divisional congress is not in session.
f. The divisional congress selects from its membership a divisional executive board which sits constantly. Its members are members of the division executive committee, and it is responsible to the division executive committee when the division congress is not in session.
g. Each divisional executive board picks a staff of experts or engineers, who are approved by the divisional executive committee, and who constitute the technical general staff of the division.
4. Suggestions for the organization of a general industrial group on a world basis.
a. The general industrial group, or general occupational group, would be a major subdivision of the world's industrial life. All of those producers who were engaged in like activities would be classed together, and the number of these world industrial groups would be determined as a matter of administrative convenience. The producers of the world might, for example, be divided into the following major industrial groups: agriculture, the extractive industries, manufacturing, transport, trade, housekeeping, and general (miscellaneous) workers. Some such economic grouping of producers would include all who are employed in producing goods and services and would provide the basis for an alignment of the world's population in terms of what the producers did rather than in terms of where they lived.
b. Thus far, in the detailed statement of local, district and divisional organization, only the barest outline has been given, first because it was the intention to discuss the world economic problem rather than the local problem, and second because the internal structure of each industry would be determined largely by that industry, and would, of necessity, vary considerably with the varying industrial conditions. The organized world industries, however, are the economic framework of the producers' society, and their organization becomes a matter of the most supreme concern to producers everywhere.
c. The control of affairs in each of the major industrial groups would be vested in a congress of from 500 to 1000 members, meeting at least as often as once in each January.
A. The members of the divisional congresses, within these same industrial groups, are the candidates for election to the world congress. They are voted for directly by the workers in each division, and if they are elected to the industrial congress, the places thus made vacant in the divisional congress are filled by special election.
B. Each division would send a minimum of twenty members to the industrial congress, and an additional member for each specified quota of workers.
d. The industrial congress would pick an executive committee from its own membership. This committee would meet at regular intervals, and would be responsible for the conduct of the industry when the industrial congress was not in session.
e. The congress would pick a number of additional committees to deal with the various problems arising within each industry. These committees might be called policy committees. In practice, and for the sake of greater effectiveness, it might be desirable for the industrial congress to select a chairman, permit him to pick his committee from the membership of the congress, and then endorse the whole committee, very much as a minister in a responsible government picks his cabinet. Since these committees would be concerned with problems of policy on one side and with problems of administration on the other, such a method would develop a far more harmonious working group.
f. The chairmen of these various policy committees together with the chairman of the executive committee would constitute the board of managers of the industry, which would be the responsible directing authority for the world industrial group.
g. Connected with each of these committees, and selected by them, there would be a board of engineers and experts, responsible for the technical side of the industry.
A diagram may help to visualize the relations existing between the various parts of the world organization. (p. 98.)
10. The Progress of Self-government
This outline of the organization of one of the major world economic units is tentative and suggestive rather than arbitrary or final. The details of the plan would necessarily vary from one industry to another and from one district and one division to another. All such matters of detail would be subject to the decisions made by the district committees, by the divisional congresses and by the world congress of each industrial group.
The aim of the plan is to build up an economic structure that will be efficient and at the same time sufficiently elastic to meet the changing needs of the times. Production is always necessary, but the methods vary from one age to another. The changes which occur in the economic activities of a population must find their counterpart in the changing economic structure of that community, otherwise disorganization and chaos will inevitably result.
The means best calculated to preserve the efficiency and to guarantee the mobility of the economic life of the world is self-government. No other known means of directing and controlling social affairs will secure permanent results, either of efficiency or of mobility.
PLAN FOR THE WORLD ORGANIZATION OF ONE INDUSTRIAL OR OCCUPATIONAL GROUP
organisation
Self-government is present to some degree in every form of society of which there is a record. Under some circumstances it is confined to one caste or class. Again it is the right of the whole society. In one place it is confined to political affairs alone. In others it is present in all public activities. Everywhere, however, there is self-government of some kind.
Recent generations have devoted their attention to the fostering of political self-government, and to the organization of a multitude of voluntary associations based on the self-governing principle. Generation by generation the peoples have been prepared to assume an ever-increasing authority over the complicated mechanism of public affairs. Self-government in the clan or in the agricultural village was a simple matter compared with the management of public affairs in a modern economic society. It is this task, however, that confronts the present generation. The principle of self-direction, extended into the complex field of economic relationships, must be relied upon to pull together the scattering threads of economic activities. That this task involves an immense amount of propaganda and educational activity, goes without saying. That it is the only sound basis for social procedure seems to be the conclusion inevitably arising out of a careful examination of the premises.
The organization of sound economic groups is a problem in the field of social engineering. The preparation of the industrial populations for economic self-government is a problem in the field of education. Both of these problems lie at the root of any effective reorganization of the world's economic affairs.
An organization of producers into groups corresponding with their occupations lays the basis for world thinking and world federation. Each active member of society would then be directly associated with a group that was world wide in its scope, so that transport workers, miners, farmers and other producers would be in constant touch with similarly occupied men and women on every continent.
One of the principal disadvantages of the present organization of society is the sectionalism arising out of the political divisions established by national boundary lines. In a world where all of the producers were organized along lines corresponding with their occupations, sectionalism would have much less chance to play a rôle in the lives of the people. To be sure issues would arise between the various economic groups, but each individual would be affiliated with a world organization, and the scope of his interests and of his thinking would therefore be much broader than it is under the present system of political divisions. World thoughts and world views on a hitherto unknown scale would be the logical outcome of world economic affiliations in producer groups.
The organization of society along the lines of production will therefore necessarily broaden the outlook of those whose visions are now limited by the confines of a political state, and the present ties of loyalty which bind the individual within a geographic area would then attach him to a world organization and would compel him to think in world terms. That there are limitations imposed by the affiliation of the individual with an economic group cannot be denied, but such limitations are far less drastic than those prescribed by restricted geographic areas.
The organization of society in terms of economic activity, building up through intimate local units, through district and divisional units to world organization within the major industrial groups does not provide any basis for effective co-operation between the individual groups. The metal workers of the world might produce machinery and the farmers wheat, but by what means are they to exchange their product and regulate their output in a way to secure the maximum of advantage on both sides?
There are two outstanding characteristics of present-day economic life. One is its world scope. The other is the intimate and constant inter-working of the various parts of the economic machine so well described by J.A. Hobson in his book on "The Industrial System." Agriculture, mining, transportation, manufacturing and so on are all linked into one functioning mechanism. To be sure there are times when the machine does not work very well—as after a great economic depression, but the purpose is there, the intermittent working harmony of the mechanism is unquestioned, the experience in world economic activity is a permanent part of the heritage of the race, and there remains only the task of making world economic relations more effective and more permanent than they have been in the past. The ice has been broken in the sea of world economic life and the human race has already taken many a plunge in its waters.
Under any form of society that can be foreseen in the immediate future, the need of close co-operation between the various parts of the world economic mechanism will tend to increase rather than to diminish, and it is therefore of great importance to have at hand a means of maintaining and facilitating the contacts between the different economic groups.
The present system has given economic life an exceptional opportunity to grow within the boundaries of single nations, and to co-operate within those areas that are not sacred to competition. Meanwhile the need for world co-operative organization has grown steadily with the evolution of economic life on a world plane, fostered by some of the clearest visioned among the men who are responsible for the direction of the economic world.
3. Present-day Economic Authority
Under the present system of society the linking together of the various parts of the economic world is a private matter. Mines, factories and mills use the railroads as a means of transporting their products. The intermediary in this as in other transactions between the various branches of the economic world is the bank. Thus the banker, who provides the credit, and through whose private institution financial transactions take place, becomes the arbiter of economic destiny, rendering decisions upon which the well-being of the masses or producers depends, yet wholly irresponsible for the results that follow on these decisions. Using the people's money, possessed of vast authority over the jobs and the property of the producers, the banker is answerable only to other financiers who have a similar power and who enjoy a similar freedom from social restraint. Within the scope of the law prohibiting fraud and theft, and subject to the limitations of conscience the bankers and their confreres follow the dictates of their own inclinations. Quite naturally, under the circumstances, they have grown rich, and powerful far beyond the extent of their riches, since their control of the credit—upon which the whole business community depends—and their easy access to other people's money in the form of insurance premiums and savings bank deposits, place them in a strategic position which permits them to dominate and to dictate outside the boundaries of their ownership.
The power now exercised by the bankers will, in a producers' society, be under the control of public servants whose business it will be to link up the various lines of activity within the economic machine.
At one stage in the development of the world's economic life it was necessary to take out of the hands of private individuals the right to issue money, and to make of money issue a public function. To-day no one questions the desirability of having money issued by public authority, and the right to issue money is recognized as one of the important attributes of sovereignty.
Meanwhile there has been a change in the character of the medium of exchange. Credit and not money is employed to adjust most of the relations between economic groups. In 1920, for example, the total amount of money in circulation in the United States, including gold, silver, and all forms of paper money was only 6,088 millions of dollars, while the bank-clearings—that is, the exchange of checks between banks—totaled 462,920 millions of dollars. If to these figures are added the volume of checks drawn and accepted on the same bank, the amount of commercial paper discounted, etc., some idea may be obtained of the importance of credit transactions as compared with the use of cash under the present system. Nevertheless, while the right to issue money has become a public function, the right to issue credit remains in the hands of private bankers.
Under a producers' society, the relation between the various groups of producers will be maintained through a system of book-keeping that will charge against each economic group what it uses in the form of raw materials, machinery and the like, and will credit each group with the value of its product. Such a system is in vogue in any large industrial plant, where each department keeps its own accounts, charges the other departments with what they get from it and credits them with what they receive. The whole is handled through a central book-keeping system. The principle of social book-keeping is not new, therefore, but is an essential link in any large and complex economic organization. It merely remains to apply the principle to producers' groups instead of to the affairs of a private banker or to the book-keeping system of some great industrial trust.
How shall a joint control be exercised by all of the producers' groups over those economic activities, such as the handling of credit, or social book-keeping, that affect more than one of them? The obvious answer is that they can be transacted through some organization in which all of the groups participate on a footing of economic equality.
Common, interests will sooner or later compel common action, or action through a joint board. The point has been reached in the economic history of the world where some such common action of the producing groups is vitally essential to their continued well-being. The logic of economic development is compelling men to turn from the owners' society of the present day to a producers' society, organized by the producing groups and functioning in those cases where the single group of producers finds effective function impossible.
Experience has shown that the best way to secure co-operation among a number of groups having more or less divergent interests is through a federated or federal system of organization, under which each of the constituent groups retains control over those matters which relate exclusively to the affairs of that group, while all matters affecting the well-being of two or more groups are handled through the central organization or federation.
The United States of America is an association of sovereign states, each of which retains the right to decide those matters which are of importance to that state alone, while all questions of interstate concern are automatically referred to the Federal Government. At the same time, matters of common concern to all of the states such as the coinage of money, relations with foreign governments, the regulation of commerce with other nations and between the states, and the like, are also under exclusively federal jurisdiction. By this means, those questions which are of local moment may be settled within the state in which they arise, while all questions affecting the interests of more than one state, and those having to do with the common interests of all the states, fall within the jurisdiction of the Federal Government.
The organization of business has followed similar lines of federation. During the early years of capitalism there was a strong tendency to concentrate all of the power of a given business at one point, and in the hands of one man. With the growth of large enterprises, however, such centralization became unworkable. Instead of a single generalissimo, business organized the general staff. The corporation with its board of directors (executive committee) helped to make the transition, and when the United States Steel Corporation was formed, at the peak of the period of American trust organization, its constituent companies were given large scope for individual initiative and activity. The tendency toward departmental autonomy in large businesses is also very marked. Bitter experience with "one man" concerns and top-heavy organizations convinced business men that the road to success lay along the path of federated autonomous units rather than of highly centralized bureaucracies.
The labor movement has had the same experience in many of the more advanced countries of the world. There has been almost a century of local, independent groups, each one acting on its own initiative. The failure of such a divide-and-perish course was predicted from the beginning. Then there have been highly centralized organizations of considerable extent and power, like the American Knights of Labor, which flourished for a time and then dried up and blew away. But out of the hundred years experience, the labor movement, as at present organized in Germany, Britain, Belgium, the United States, etc., is an exponent of the social principle that local autonomy must be preserved in all local matters, while questions of general concern must be referred to some general body which represents the general interest.
One of the most insuperable difficulties before the world at the present time is the lack of any central authority to which may be referred those matters of general and vital concern that affect the peoples of more than one nation. The peoples feel this lack. They are aware of the fact that industry, science, commerce, art, literature have all leaped the national boundary fence. This is particularly true of Western Europe, whose economic life is closely interwoven, and dependent on certain centers of coal and iron production, and whose political boundaries were determined before the present economic system was dreamed of. The importing of food and of raw materials, the development of markets and of investment opportunities, the organization of means for the transport and the exchange of commodities are matters of common concern to all of the important countries of Western Europe. Before the outbreak of the world war, Europe was an economic net-work of transport, finance and trade, and as a matter of course, communication and travel were common between all of the industrial countries. But while there were so many matters of common concern to Britain, France, Germany, Russia, Austria, Belgium, there was no central authority to which these questions could be referred for decision when the threads of mutual interest became tangled. Instead, secret and competitive statecraft made the tangle worse. The mass of conflicting jurisdictions and of petty jealousies that have grown up among the two score of independent and sovereign states of Europe made a conflict almost inevitable.
Under a federated system of the European states, civil war would be possible, but the chances of a conflict would be greatly lessened by the presence of a central authority before whom questions of divergent interests could be publicly threshed out. For when issues arise between organizations of equal and parallel jurisdiction, a conflict can frequently be avoided if there is some commonly recognized and superior authority before whom the points in dispute may be laid, and whose decision will prove binding on both parties.
What is so obviously true of Europe is also true of the remainder of the Western world, though to a lesser degree. The economic, social and cultural life of civilization has passed beyond national boundaries. Until this fact is recognized, and until some organization is created with a jurisdiction as wide as the problems at issue, misunderstanding, conflict and catastrophe will continue to occur.
5. Building a Producers' Federation
The first step in economic reorganization is the recognition or establishment of local district, divisional and world groups of producers affiliated along the lines of their economic activities. This is a simple acceptance, in social terms, of the economic forms that have been evolving since the industrial revolution.
The second step in economic reorganization is the recognition or establishment of local, district, divisional and world federations of the local, district, divisional and world industrial groups. This second step must be taken in order that there may be some authority competent to deal with those problems which are common to two or more of the groups in question.
There are two general types of problems that the federations of industrial groups will be called upon to handle: