The Economics of Anarchy

A Study of the Industrial Type (1890)

by Dyer D. Lum (1839-1893)

V. Free Capital

EA-5.1 Imaginative sketches of men suddenly thrown upon an island where production has to be started anew, where co-operation is forced upon them by the self evident fact that no one possesses greater right than his fellow, can not be applied to existing society where differences have arisen and become established as “rights” to be acknowledged. Such illustrations, however, show that in the absence of all artificial privilege voluntary co-operation becomes a social necessity and is fully adequate for all demands; and which in the abolition of privilege here and now would be equally as operative and as imperative a necessity as in the island illustration. The specious argument that on such an island if one man said: “Give me the land and you may have the capital,” need not deter us, for it is a gratuitous assumption that a community beginning with equal rights and feeling the urgent need of co-operation would thus commit social shipwreck. Nor is it true that out of, for instance, one hundred persons, the ninety-nine with the capital would voluntarily become the tenants of the one without adequate object, nor that the impossible claim could be enforced. Necessity would prove the higher law.
EA-5.2 We have established the importance of free land as our first condition. We have also seen that land and labor conjoined leads to the production of capital. The industrial type demanding equitable relations in the realization of its ideal, no privilege can be artificially bestowed upon capital by which he who has it can command an economic advantage over him who lacks it. True, he who has it may keep it for his own ends, as he may the water in his well from thirsty applicants, but in neither case could he derive any advantage. In preventing increase of wealth he would be but robbing himself primarily. Land and labor giving rise to capital, under equitable conditions without chartered privileges, its possession could entail no exploitation.
EA-5.3 Capital being an imperative need, and land and muscle being free to combine, why should not co-operation bring supply as well as the demand for insurance produces its supply? Why is government necessary in the one case and unnecessary in the other? Are the requisite conditions more difficult in the former than in the latter? In any community, whether a group of one industry or of mixed occupations, mutuality of interests would lead to mutual arrangements by which capital could not only be utilized but obtainable. But how? Would it be contributed to a common stock for common needs? By no means; that would not only weaken individual responsibility, destroy incentive by making needs rather than deeds the condition of life and necessarily leaving each to determine his own needs, thus tending to the encouragement of mediocrity, violating the law of progress by seeking similarity or simplicity of structure to greater differentiation of parts and functions, [Online editor’s note: A standard Spencerian concern, taking the line of progress to run toward greater differentiation. By “to greater differentiation” Lum presumably means “in preference to greater differentiation.” – RTL] but it is as useless a contrivance as it is detrimental. More, it contains, if instituted, the fatal virus of the militant type, the organization of a system to follow rules to which development must conform. Under communistic distribution the survival of the unfittest becomes a regulative rather than voluntary consideration and plasticity is changed to rigidity. Far better for such unfortunate beings would it be to be left to the better promptings of nature for whom equality of opportunity secured more than needs required. Centralization, whether despotic as that of the czar, diffused as under representative government, the central direction of twilight-reformers, or the sentimental regulations of communistic system builders, are all alike tainted with militancy and do not conform to the requirements of the industrial type. “Direction” lies not in the path whither industrial evolution tends. In the language of Herbert Spencer:
“With the relative narrow range of public organizations, there goes, in the industrial type, a relative wide range of private organizations. The spheres left vacant by the one are filled by the other.” [Online editor’s note: The quotation is from Spencer’s 1876 Principles of Sociology V.18 §570. – RTL]
EA-5.5 Liberty, therefore, leaves full scope to all generous hearted persons to mitigate suffering far more effectually than regulating interference could ever accomplish. How private organizations will secure full supply of capital we will see shortly.
EA-5.6 Activity applied is ever personal, individual; muscles may co-operate and freedom would suggest a “thousand ways,” not for revenue expenditures, however, but in which co-operation would be of incalculable [sic] greater benefit than parcellaire labor; [Online editor’s note: This phrase often means “piecework,” but in the present context seems to mean labour done on one’s own without cooperation. – RTL] but common muscles have not yet been evolved whatever claims may be made for products muscles create. Equity demands that whatever one produces is private property, as pertaining to what is proper to him. Where two or a thousand co-operate in the production of wealth, not only wealth as had for consumption and distribution, but that portion reserved for use, or capital, should be equally theirs who produce it. Faith may firmly believe that it will be in this or that way, but when this or that way is instituted danger lurks in the path. Metaphysical reasoning concerning “social claims” by which the producers of one article are confounded with those of another, which claims for shoemakers a social claim either upon those of another factory, or upon the products of the tailors’ and hatters’ skill, is as unwarranted as it is absurd. I have my own “faith” in results, but in the application of fundamental economic principles there is no place for their presentation. When contract as the fundamental principle of social relations is recognized as applying to the product – capital, the distribution to each of the respective share due is a question of detail which will easily regulate itself without authoritarian direction. It is no more difficult for persons to agree to co-operate to produce than it is to agree to a given distribution of the results of their industry. Social benefit, that is, increased personal reward for each, prompting the first, would be equally operative in the second.
EA-5.7 Nor can we say that upon ownership of land lies the trouble. When land lay idle all around us within easy reach of him who desired to occupy it, the poor artisan whose skill was the result of his whole life’s application, and which constituted his entire industrial capital, was as effectually debarred from it to follow his special calling as to day. If a piece of ground be now offered to any one hundred shoemakers who will erect a co-operative factory upon it, what would the shoemakers first ask? Evidently, the amount of means necessary to secure the requisite plant. Even under free vacant land such means would not lie within the reach of all, for the possessors of capital, by establishing “bonanza farms,” would be enabled to both monopolize and use land to far better advantage. The wage and factory system would remain because of something impalpable lying behind capital and endowing it with privileged power. It being an economic truism that labor cannot become free while its product is artificially made its master, the true solution of industrial emancipation will be found in the liberation of capital, by which it becomes the tool rather than the master of our activities. Is rent always its cause? With opportunity to occupy site would the requisite plant for co-operative industry on a scale sufficiently large to compete at production be as easily within the reach of labor? Yet the emancipation of labor includes this, nor is its realization an utopian dream; for to assert the contrary is to deny progress, to maintain that the industrial type is a chimera, that militancy is the true social order, that every step which the world deems a progressive advance has been reactionary. Logically carried out it lands us in the most extreme ultramontanism and political Cæsarism. Between these and the fullest application of the law of equal freedom, there is no logical halting ground.
EA-5.8 Once grant the postulate that equity demands for the industrial type of social life not only free land but free labor, and you will have to admit that whatever results from the application of labor pertains to the reward of labor. If it be said that the interests of the whole body require that there shall be certain inequitable conditions governing distribution, or in other words that the methods of industrial activities must be artificially regulated, that the requirements of all are more easily met by endowing capital with legal privilege to exploit labor in order to increase, it may be said in reply that the assumption is not only an unproven one, but that it directly traverses the foundation principle of the industrial type – the law of equal freedom. That but for the driving whip of profits, that under the form of voluntary contract in which free competition brought cost as the mean of price, incentive would be wanting, is as unwarranted in logical deduction as it is in historical evolution. Capital is indeed the true Savior of man, but its saving grace is not hightened [sic] by restrictive bonds; as a spring to production it does not depend upon the gratification of man’s lower propensities; and we may well conceive a world in which, though shorn of special privilege to make it the means of economic subjection, free capital in the hands of free labor would tunnel mountains, bridge rivers, convert arid wastes into blooming gardens, as well as to alleviate sorrow and suffering in so far as lay in its power, and give such impetus to human thought that released from the chain and ball drag of drudgery, it would plume its wings for grander accomplishments to gratify higher aspirations and broader sentiments than in its present crippled form man has ever conceived. And here we are logically brought to the consideration of exchange.

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