. ffiatktna THE NEXT STEP A Plan for Economic World Federation By SCOTT NEARING Author of "The American Empire" Ridgcwood, New Jersey NELLIE SEEDS NEARING 1922 By the same author WAGES IN THE UNITED STATES. FINANCING THE WAGE EARNE? FAMILY. REDUCING THE COST OF LIVING. ANTHRACITE. POVERTY AND RICHES. SOCIAL ADJUSTMENT. SOCIAL RELIGION. WOMEN AND SOCIAL PROGRESS. (Collaboration with Nellie Nearing) THE SUPER RACE. ELEMENTS OF ECONOMICS. THE NEW EDUCATION. ECONOMICS. COMMUNITY Civics. (Collaboration with Jessie Field) SOLUTION OF THE CHILD LABOR PROBLEM. SOCIAL SANITY. THE AMERICAN EMPIRE. COPYRIGHT, 1922 AH Eights Reserved Printed in the United States of America This book is dedicated to the task of emancipating the human race from economic servitude "The community needs service first, regardless of who gets the profits, because its life depends on the service it gets." "Organizing for Work." H. L. GANTT. "It is not common language, literature and tradition alone, nor yet clearly defined or strategic frontiers, that will in the future give stability to the boundary lines of Europe, but rather such distribution of its supplies of coal and iron as will prevent any of the great nations of Europe becoming strong enough to dominate or absorb all the others. ' ' "The Economic Basis of an Enduring Peace." C. W. MACFARLANE. "Men cannot exist in their present numbers on the earth without world co-operation." "Our Social Heritage." GRAHAM WALLAS. "The real way, surely, in which to organize the interests of producers is by working out a delimitation of industry, and confiding the care of its problems to those most concerned with them. This is, in fact, a kind of federalism in which the powers represented are not areas but functions." "Foundations of Sovereignty." H. J. LASKI. SUMMARY OF THE ARGUMENT progress in proportion as they are able to fit them- selves for life, and to fit life to themselves. Both processes go on unceasingly. Recent economic changes have brought the remotest parts of the world into close contact with "civilization" at the same time that they have increased the dependence of one part of the world upon another part. Oddly enough, this interdependence has been intensified under a system of society that deified competition. The conflicts, inevitably resulting from such a contradiction, have taken a terrible toll in life and well-being, and have left Europe in chaos. The successful organization of the life of the w r orld is impossible without the organization of its economic affairs. For the present plan of competition between groups, classes and nations there must be substituted a means of co-operative living. The organization of a producers society will provide that means. Local initiative must be preserved ; self-govern- ment in economic affairs must be assured, and the economic activities of the world must be federated in such a way that all economic problems of world concern will be brought under some central authority which is representative of the various interests involved at the same time that it controls the disposition of economic life. A world parliament com- posed of representatives elected by the workers in the various producing groups would provide such a central authority, and would furnish the means of directing the economic experiments of the race. Economic emancipation is the objective. The moans for its attainment is a society organized in terms of producers groups, and living in accordance with the highest known standards of intelligent social direction. 7 TABLE OF CONTEXTS CHAPTER I LEADINGS CHAPTER CHAPTER IT. THE ECONOMIC MCDDLE '2. H'orld Economic Orr/auizution. II I. Et'OX'OMIC FOUXDATIOX.S .IV. ElOXOMIC SELF-GOVEKX.MKXT V. A WORLD PRODITKIIS' FEDERATION". VI. WOULD ADM ix ISTRATIOX 3. 'Economic Progress CHAPTER YIT. TRIAL AND ERROR ix ECONOMIC ORGANIZATION YJ.II. ECONOMIC I, ITERATION WHAT TO BEAD. . 13 28 51 76 100 119 151 16-i CHAPTER 13 ','>. Worlilizhij* !']cono;:iic Activity. 4. The Pusis of a Vx'orlil [*ro. Present-day Economic Authority. 4. Federation as a Way Out. f>. Building a Producers' Federation. 6. Four Groups of Federations. 7. The Form of Organization. 8. All Power to the Producers! CHAPTER VI. WORLD ADMINISTRATION 119 1. The Basis for World Administration. 2. The Field of World Administration. ?,. Five World Problems. 4. Work of the Administrative Boards. 5. The Resources am; Raw Materials Board, fi. The Transport and Communication Board. 7. The Exchange, Credit and Investment Board. S. The Budget Board. 9. The Adjudication of "Disputes Board, in. The Detail of World Administration. TABLE OF CONTENTS CHAPTER VII. TRIAL AND ERROR Ix ECONOMIC ORGANIZATION. 1. Trying Things Out. 2. The Capitalist Experiment. 3. The Cost of Experience. 4. Education. 5. Facing the Future. 6. Accumulating Social Knowledge. 7. Conscious Social Improvement. 8. The Barriers to Progress. 9. Next Steps. 10. The Success Qualities. 11 135 CHAPTER VIII. ECONOMIC LIBERATION 1. Why Organize? 2. Freedom from Primitive Struggle. 3. Freedom from Servility. 4. Wisdom in Consumption. 5. Leisure for Effective Expression. 6. Culture and Human Aspiration. 151 WHAT TO READ 164 THE NEXT STEP I. THE NEW ECONOMIC LIFE 1. The Historic Present THE knell of a dying order is tolling. Its keynote is despair. Gaunt hunger pulls at the bell-rope, while dazed humanity listens, bewildered and afraid. Uncertainty and a sense of futility have gripped the world. They are manifesting themselves in unrest, disillusionment, the abandonment of ideals, opportunism, and a tragic con- centration on the life of the moment, which alone seems sure. The future promises so little that even the most hopeful pause on its threshold, hesitant, and scarce daring to penetrate its mystery. The war showed the impotence of the present order to assure even a reasonable measure of human happiness and well-being. Of what profit the material benefits of a civiliza- tion that takes a toll of thirty-five millions of lives and that wrecks the economic machinery of a continent in four short years? Yet the failure of the revolutionary forces to avail themselves of the opportunity presented by the war proved the unreadiness of the masses to throw off the yoke of the old regime and to lay the foundations of a new order. The world rulers painted a picture of liberated humanity that led tens of millions to fight with the assurance that victory would make that hope a reality. The workers yearned for the social revolution and for the establishment of the co- operative commonwealth with its promise of equality and fraternity. But the events that staggered the world between 1914 and 1920 shattered both ideals. 13 14 THE NEXT STEP Now that the terrible conflict has ceased, we pause and reflect. Millions are weary, millions are old, millions are broken, millions are disappointed, and the weary ones, the old ones, the broken ones and the disappointed ones have lost their vision and have abandoned their faith. Yet life sweeps on its unity unimpaired, its continuity unbroken, its force unchecked, its vigor unabated. Multitudes have been born since the end of the Great War, and other multi- tudes, who were babes in arms when the Great War began, are growing into young manhood and womanhood. The war, with its hardships and its fearful losses, is history. The present, merging endlessly with the future, makes of each day a tomorrow in which hundreds of millions of those who now inhabit the earth will live. How? That is the question which the world to-day faces. The answer is in our hands. 2. Economic Needs Humanity has always been face to face with the bread and butter problem because people must have food and cloth- ing and a roof over their heads or pay the penalty in physical suffering. Under the present world order, for lack of these simple economic requirements, millions of poverty-stricken workers perish each year, of slow starvation and exposure in Paris, London, Chicago, Tokyo ; of famine in China, Egypt and India. Some issues present themselves for consideration only occasionally. The demand for economic necessaries each day recurs with tireless insistence in the life of every individual. Men have learned this fact through frightful experiences, and they look forward with hope or with dread to the comfort of plenty or to the disaster of want. So effectually have these forces entered into everyday life that they color all aspects of human existence, and people continually think and act THE NEW ECONOMIC LIFE 15 in terms of economic hardship or of economic well-being. This simple fact of economic determinism the influence of the livelihood struggle upon the conduct of individuals and of societies plays a fateful part in shaping both biography and history. The economic issues before primitive society were com- paratively simple ones. The producer the hunter, herder, farmer snared his game and cooked it, tended his goats and lived on their milk and flesh, planted and reaped his crops, and used them to sustain life. Later, the baker, the saddler, the tailor and the carpenter spent their energies in producing the articles of their trade and in disposing of them. The herdsman could live on his hills, the farmer in his valleys and the artisans in their towns, content and at peace with the remainder of the world, neither knowing nor caring what was happening to their fellow dwellers on the planet. Con- fined within its narrow bounds, primitive thought was as local as primitive life. But such isolation is no longer possible. The currents of economic life, like most other phases of human activity, have swept beyond the local forests, the grass lands, the tilled fields, the oven and the carpenter's bench, and gaining momentum in their ever-widening course, they have circled the world. 3. Worldizing Economic Activity The past hundred years have witnessed a speedy world- izing of human affairs built upon a transformation in the ways of making a living. These changes have been effected by the industrial revolution, which, toward the end of the eighteenth century began to make itself felt in Great Britain. Its influence spread over Europe, America and Australia during the last three-quarters of the nineteenth century, but it did not reach Japan until I860. Almost within the memory of the present generation, therefore, the scope of trade, 16 THE NEXT STEP manufacture and finance, the search for markets, the organi- zation and unification of labor and of popular thinking about economic problems, have passed from a local into a world field. The inventions and discoveries which were the immediate cause of the industrial revolution succeeded one another with a bewildering rapidity that is well illustrated in the case of communication. The steamboat, first made practicable in 1807, and the locomotive, invented about 1815, provided the means of rapid transportation of goods, people and messages. The power press (1814) and the manufacture of paper from wood-pulp (begun in 1854) made possible cheap and abundant reading matter. The telegraph, invented about 1837, laid the basis for instantaneous communication. The first trans- Atlantic cable (1858) annihilated the water barrier to thought. The telephone (187G) and the wireless (1896) brought the more remote parts of each country and of the world within easy reach of the centers of civilization, while the radio-phone (1921) enables millions to sit around a common table for thought, instruction or enjoyment. The camera (1802) supplemented by the moving picture process (1890) has enabled those who do not read to secure informa- tion that was formerly reserved for the learned and the cultured. Thus steam, electricity, and a number of other discoveries and inventions in the realm of natural science have brought the minds of the world in as close touch as were the inhabitants of a fifteenth century Italian city. The effects of industrialism date only from history's yes- terday, yet its results have already been momentous and far-reaching. This is particularly true of the close dependence of industries upon supplies of raw materials and fuels, of the volume and the variety of the goods produced and transported, of the speed with which communications are sent, of the widened opportunities for travel, and of the immense amount of information on the printed page and the film that goes, each day, from one part of the world to another. THE NEW ECONOMIC LIFE 17 Nature has not scattered coal, iron, copper and sugar- land over the earth in the same lavish way that she has distributed air and sunshine. On the contrary, the important resources from which industry derives its raw materials and its fuels are found within very limited areas to which the remainder of the world must go for the commodities that supply its basic industries. Within each country raw materials are produced at one point and shipped elsewhere. Ore, coal, grain and meat- animals make up the bulk of the freight tonnage in Europe, in America and in Australia. A similar economic relation exists between the various countries, some of which produce far more than their proportionate share of minerals and fuels. Thus, in 1913, the United States, with but 7 per cent of the world's population, produced 36 per cent and con- sumed 37 per cent of the world's iron ore supply. The figures for the other important nations were: ("World Atlas of Commercial Geology," Dept. of the Interior, Washington, 1921, p. 27) Per Cent Per Cent Produced Consumed Germany 20 27 Britain 9 14 France 12 7 llussia ;1 5 Belgium 4 Spain , 6 1 Only in France and Spain did production exceed con- sumption. Four of the remaining countries used more iron ore than they produced, which meant that they were forced to depend upon some other country for their supply. Belgium, with her many industries, imported practically all of the iron ore that she used. Coal furnishes an even more striking illustration of the economic dependence of one part of the world upon another. The production and consumption of coal, for 1913, in millions of tons, were as follows : 18 THE NEXT STEP Tons Tons Produced Consumed United States 517 495 Britain 292 217 Germany 191 167 France 40 60 Italy 1 10 Austria-Hungary It 30 The United States, Britain and Germany produced, in this one year, 121 millions of tons of coal that were either stored or exported. France, Italy and Austria, together with many of the smaller industrial countries of Europe were forced to depend upon their neighbors for coal. In the case of Italy, practically all of the coal used was imported. Again, the United States and Spain are alone among the principal countries producing a. surplus of copper. Out of a consumption (1913) of 127,000 tons, Britain imported 126,- 572; France imported 91.437 of the 91.486 tons consumed, and Germany, out of 259.300 tons consumed, imported 234,- 000 tons. These figures of the production and consumption of iron, coal and copper tell the story of an economic interdependence that makes isolated industrial life virtually impossible. Manufacturing and transport depend for their maintenance upon minerals and fuels, and those countries that propose to manufacture and to transport must either produce minerals themselves or depend upon some other country that does produce them. In practice, a few countries are enabled to produce more of the minerals and fuels than they themselves use, and to sell the surplus to their needy neighbors. "\Vilh the spread of the industrial system, this dependence will increase rather than diminish because of the way in which the reserve supplies of minerals and fuels are dis- tributed. The principal deposits of iron, coal, copper and petroleum are apparently in the "Western Hemisphere, and particularly in North America. In so far as this is THE NEW ECONOMIC LIFE 19 true, the remainder of the world will be compelled to look to the Americas for these basic commodities. Out of a total world product of iron ore (1913) of 177 millions of tons, the United States produced 63 millions (over a third) because that country is far better supplied with available iron ore deposits than is any other country. Since the war, France holds the second largest deposits, but the third largest are in Newfoundland, the fourth largest in Cuba, and the fifth largest in Brazil, whose "enormous deposits are almost untouched" ("Atlas," p. 20). As for coal, about three- fourths of the world's known reserves are in North America. The largest known reserves of copper are in North and South America those of Canada and Mexico are comparatively important ; those of Chili probably greater than any other country except the United States. Petroleum is also highly localized. Between 1857 and 3918 the world's production of petroleum was 1,005 millions of tons. Of this total, three- fifths came from the United States, while seventeen-twentieths came from the United States and Russia. Indeed, resources are limited and localized to such a point that the economic survival of many parts of the industrial world depends upon the continued importation of raw materials from other coun- tries or from other continents. This localization of resources has resulted in a corre- sponding localization of many of the basic industries. Ger- many thus became a manufacturing 1 center and Argentina a producer of food. Necessarily these two countries exchange their products, the Germans eating Argentinian wheat reaped by German machinery. So complete has 1his specialization become, that industrial communities, and even industrial countries, like Britain and Germany, have ceased to produce sufficient food for their maintenance, and have relied, instead, on the American, African and Australian trrain fields.* * Before tho war Hivat "Britain imported about half nf her food. "By 1020 she wnp importing 1 about thrc-p-quarters nf it. On the basis of the lOli'-IOL'O harvests. British wheat sufficed for less than a third of tho British population. See "The Fruits of Victory," Norman Angcll, Glasgow. Collins, 1021, p. 0. 20 THE NEXT STEP In order to buy wheat, these countries must sell manu- factured goods. In order to manufacture, they are compelled to import the raw materials and fuels cotton, copper, rubber, petroleum, coal, iron. The countries with highly developed industries have therefore ceased to be self-sufficient. Their whole economic life has become a part and parcel of the life of the world. This world interdependence is reflected in the growth of world commerce from a total value of 1.6-19 millions of dollars in 1820, 4,049 millions in 1850, and 20,105 millions in 1900, to 75,311 millions in 1919. Meanwhile, the nominal tonnage of steam and sailing vessels increased from 5.8 millions of tons in 1820 to 12.3 millions of tons in 1850, to 20.5 millions in 1900, and to 32.2 millions in 1919. Resources are sought after, raw materials are transported and manufactured into usable products, manufactured prod- ucts are exchanged for food and raw materials, and the cycle is thus completed. In its course, all of the principal countries and all of the continents are drawn upon for the means of maintaining economic life. While the industrial revolution broke the spell of isolation that lay so heavily upon the remote parts of the world, the driving power of the economic forces that followed in its wake, has battered down the geographic barriers that separate men, almost to the vanishing point. Peoples work together, exchange the products of their labor, travel, accumulate and spread news, broadcast ideas and organize and co-ordinate business ventures and labor unions, without any great con- sideration for geography, and despite the political boundary lines that separate nations. A century of rapid economic development, has brought the world into a physical unity the like of which it lias never before experienced. Tli rough the ages, human brotherhood has been the theme of philosophers and poets. "Recent economic changes have established a world fellowship, not, to be sure, of the kind THE NEW ECONOMIC LIFE 21 about which utopists had dreamed, but one growing out of the exigencies of world interdependence. Tens of millions are to-day co-operating in production and exchange, not because of any sweet reasonableness but because the pre-emptory demands of existence leave them no choice. Of necessity, therefore, since tin 1 }' are in constant touch with one another, they begin to learn one another's little ways; to inquire into the personalities of the "foreigners" that pass them on the street, work with them elbow to elbow in the shops, and eat with them at the same restaurant tables. This new brotherhood is an outgrowth of day-to-day relations in an industrial community. Old time questions were of a kind that divided men. "Are you a Christian?" "Where were you born.'" "Can you speak Spanish?" Xo malt IT how a man answered these questions he got himself into difficulty. If he was a Christian, lie found two-thirds of the world confronting him with different religious beliefs. If hi 1 was born in France, he was compelled to assume all of the enmities, 1ml reds and antago- nisms felt by Frenchmen for Iheir rivals. If lie spoke any- thing except Spanish, he was a "foreigner" in Spain. The old world was a separatist world, lined with walls, fences, boundary stakes and frontiers. Modern questions bring men into touch with one another. "Can yon repair a locomotive?" "Do yon understand coal mining?" "Can. you carry us safely to .Japan?" "Will you lake shoes in exchange for petroleum?" "Arc yon able to get along with people?" "Have you any surplus wheat?" "How do yon suppose we can get rid of the boll-weevil?" "Let us show you a new style tractor." If a man can repair an engine, he is wanted in an engine shop. If he can dig coal, lie is needed in a coal mine. If he has shoes to exchange for fuel, lie find 22 THE NEXT STEP working together, living together, thinking together; and a test of man's capacity to take part in its activities lies in his ability to be an effective, co-operating member of a world group. 4. The Basis of a World Program "With economic life established on a world scale, it is inevitable that the range of men's thoughts and the lines of their social groupings should assume the same general scope. The late war made it quite apparent that war means world war, and that a real peace is impossible unless it is a world peace. The post-war experience has shown with equal clear- ness, that prosperity means world prosperity, and that it is impossible to destroy the economic well-being of an integral part of the world without destroying the well-being of the whole world. These things were suspected before the war, when they formed the themes of moral dissertations and scholarly essays, of syndicalist pamphlets, socialist programs and revolutionary appeals. But it required the hard knocks of the past eight years to lift them so far out of the realm of theory into that of reality, that an 3- thinking human being who faces the facts must admit their truth.* The economics of the modern world make it inevitable that thinkers on public questions, particularly on economic questions, should frame their thoughts in world terms, and that the practical plans for the organization and direction of human affairs should be built around an idea which includes these three elements : * The Manchester Guardian Commercial, Supplement for April 20, 1922, pape TV. carries an advertisement signed by Sir Charles W. M.acara, Chairman and Manapinp Director of Henry Bannerman and Sons, T-itd., Chairman of the Manchester Cotton Employers Association, etc., which contains a very forceful presentation of this point. "It is Impossible for any country to expect to win economic success at tho expense- or in total indifference to the success of others The pood of one country is bound up with the pood of another, and it is only by studying, what will bo mutually advantageous that we shall find the key to our pood fortune. .... The whole world is inter- dependent, and you cannot in.iure one member of the international body without injuring all the rest." THE NEW ECONOMIC LIFE 23 1. Any workable plan for the organization of the world must have an economic foundation. 2. Such a plan must include all of the economically essen- tial portions of the world. It will be ineffective if it is confined to any one nation, to any one group of nations, or to any one continent. 3. Such a plan must rely, for its fulfillment, on world thinking and world organization. These propositions do not imply that economic forces and world organization must become the centers of exclusive attention. There are potent forces, other than economic ones, and there are forms of local organization that must be developed or perpetuated as a matter of course. But for the moment the economic forces and the world phases of organiza- tion have assumed a position of primary importance. 5. The League of Nations Failure The principal scheme recently advanced as a means of co-ordinating the life of the world the League of Nations Covenant violates all three of these essential principles. In the first place, the League Covenant, with certain minor exceptions, is a political and not an economic document, devoting its attention to territorial integrity and the preserva- tion of sovereignty, and passing over such economic problems as resource control, and the competition for raw materials, markets and investment opportunities as though they were non-existent. In the second place instead of concerning itself with all of the integral parts of the world, it treats nations other than the "big five" ("Britain, France. Italy, Japan and the United States) as though they were of second or of third rate importance. China, India, Germany, Russia and Latin America, with considerably more than half of the world's population, and with at least half of the world's essential 24 THE NEXT STEP resources, were slighted or ignored. In the third place, the League Covenant is not based on world thinking. On the contrary, it was designed to set up one part of the world, the victorious Allies, against four other parts of the world : the enemy countries. Soviet Russia, the undeveloped (unex- ploited) countries,, and the small and powerless countries. Political, sectional and provincial in its point of view, the League, as a means of world organization, was destined, from its inception, to pathetic failure. "World economic life is an established fact of such moment that it must be reckoned with in any scheme for social rebuilding. A capacity for organization and for conscious improve- ment distinguishes man from most of the animals. In the past, men have organized the army, the church, the city, the nation, the school. The events surrounding the industrial revolution have- placed a new ta.--k on their shoulders the task of organizing world economic life. "Without doubt this is the largest and the most intricate problem in organization that the human race has ever faced. On the oilier hand, the interdependence of economic life invites co-ordination, while the advances in organization methods, particularly among the masses of the. people, render the transition from local to world organization quite logical and relatively easy far easier, certainly, than the first hesi- tating steps that the race took in the direction of co-operative activities. Even though the task were far more difficult than it is. the race mu-t perform ii or pay an immense price in hardship, suffering and decimation. The work is already begun. Private capitalists have built world systems of trade, transport and banking. Soviet Russia, has made an heroic attempt, to organize one portion of the earth's surface along economic lines. For the most part, however, the task of co-ordinating the world's economic life awaits the courage and the irenius of a generation that shall add this triumph to the achievements of the race. THE NEW ECONOMIC LIFE 25 6. Axioms of Economic. Reorganization Certain well-defined and widely understood principles, that might almost be called axioms of social procedure, are to be reckoned with in any effort at world economic reorgani- zation. For convenience of discussion, they may be summar- ized thus : 1. The u'hccls of industry must be kepi turning smoothly, regularly and efficiently. A country like Russia, consisting 1 , for the most part of agri- cultural villages, can survive, even though machine industries practically cease to function, while such countries as Germany and Britain, built of; Bremens, Hamburg's, Essens, Glasgows and Manchester^ a:e dependent for then' food supply as well as for their supply of raw materials upon the continued pro- duction and transport of commodities. The State of Uhodo Island, with its 07..") per cent of city and town dv.-elh-rs, typifies this dependence. Given such concent rated popula- tions encragecl in specialized industries, and the cessation of production means speedy starvation for those that cannot migrate. The increase of population and the normal advances in science and industry both demand a volume of product adequate to cover the necessary increases in equipment. 3. Tlii' pioplc, u'Jio rl'j /!' u'o'i'l: must dispose of ///<' prod- ucts lh i ;/ turn oui. They may consume- them all, or they may reserve a portion of them for new roads, for additional rollum- stock, for the advancement of art and 1 earning. "Whatever the character of. the decision, the riu'ht and power to make it rests with those who produce the goods of which a disposition is being made. 26 THE NEXT STEP 4. Justice and fair dealing must be embodied in the scheme of production and distribution. This does not mean absolute justice, but as much justice as the collective intelligence and will of the community are able to put into force. For the attainment of such a result, the forms of social life must be constantly altered to keep pace with economic change. 5. The foregoing principles must apply, not to one man, or class, or people, but to all men, all classes and all peoples. Recent events have shown that an injury to one is an injury to all. Reasoning, foresight and experience will convince the people of the world that a benefit to one is a benefit to all. While men continue to live together, their livelihood prob- lems must be thought about collectively, and the solutions that are determined upon must be applied to all, without discrimination. How shall such results be obtained ? By what means is it possible to lead men to a world vision? Who can persuade them to work toward the building of a sounder society than that with which the world is now laboring ? Of all the issues that confront the teachers of men, this is one of the most pressing and most insistent. Those who have taken upon themselves the task of seeking out and of expounding ideas have seldom faced a graver responsibility than that with which they are at the moment confronted. World facts demand world thoughts and world acts, before the human race can adopt saner, wiser and more enlightened economic policies. World thoughts and acts are impossible without world understanding. Therefore it is world under- standing that is most imperatively needed in this critical hour. The people of the world have many things in common economic interests, science, art. ideas, ideals. Ranged against these common interests there are the traditions, prejudices, THE NEW ECONOMIC LIFE 27 hatreds, national barriers, sectarian differences, language obstacles and racial conflicts that have proved so effective in keeping the peoples separated. The common interests are the vital means of social advancement, and it is upon them that the emphasis of constructive thinking must be laid in an effort to promote world understanding. There is no need to apologize, then, for adding to groaning library shelves a book dealing with world economics, the pur- pose of which is to propose a plan that will pull together the scattered threads of world economic life. The time is so ripe for an examination of these problems that no man may con- sider himself informed who has not pondered them deeply, and no man may consider that he has done his duty as a member of this generation, who has not helped, at least in some degree, to unify the world's economic activities. Most particularly does this apply both to the statesmen and other public men who are striving to rejuvenate a dying order, and to the organizers and leaders of the new order that is even now pressing across the threshold of the western world. II. THE ECONOMIC MUDDLE 1. Bankruptcy and Chaos economic affairs are in a muddle. Famine has gripped Central Europe since 1918 ; unemployment is rife in Japan, Argentina, Britain, and the United States ; business depression is felt in all of the principal industrial countries ; producer and consumer alike find the world's economic machinery sadly out of gear. There have been innumerable predictions of "better times ahead/' but among those who are closely connected with industry, there is serious concern over the future of the present economic system, while a formidable array of students and investigators agree with Bass and Moulton that: "It is not at all beyond the bounds of possibility that all of con- tinental Europe might in the course of the next twenty-five years, or even sooner, go the way that Russia has already gone. It would not necessarily be through the instrumental- ity of Bolshevism; it might easily go in the Austrian way." ("America and the Balance Sheet of Europe." Xew York. Ronald Press. 1921. p. 138-9.) The cause for such gloomy utterances may be found in those superficial indications of chaos such as the break-down, of exchange and of international trade; the severe business depression; the waste and inefficiency of industry; the prev- alence of unrest and sabotage, and the preparations for future wars. Traditionally, the old institutions still exist and are cher- ished by those who believe that they will be rehabilitated and re-established. But as the mouths succeed one another and lengthen into years, without any evidence that "things will 28 THE ECONOMIC MUDDLE 29 right themselves as soon as the war is over," it becomes increasingly apparent, even to the conservative that the situ- ation is far from what they had promised themselves it would be. Europe's day-to-day experience between 1919 and 1922 has convinced millions that some disaster impends. For the most part, however, they fail to realize that the "disaster" is already upon them. The disorganization of the world's financial structure, following 011 the drains of the war and the debauches and exactions of the peace, has been the object of much comment, with the emphasis laid on the aspects rather than on the essential characteristics of the breakdown. One of the basic assumptions of the present economic order is that promises to pay must be redeemed at par. Failing in this redemption, the promisor is declared bank- rupt, and beyond the pale of reputable business society. During the past eight years, most of the leading countries of Europe have become bankrupt. Before the "World War, the sixteen principal belligerents had total debts of 28,660 millions of dollars, with a total note circulation of 5,000 millions, making a total of promises to pay amounting to something more than 33 billions of dollars. When the Treaty of Paris was signed, these sixteen countries reported debts of 171,633 millions of dollars and paper money issues of 77,954 millions, making a total of promises to pay about eight times the volume of 1913. Since the signing of the Treaty, most of the European countries, belligerents and neutrals alike, have continued to pile up obligations. Accord- ing to the estimates of 0. P. Austin, of the National City Bank of New York, world indebtedness was vS billions of dollars in 1913, 205 billions in 19] 8 and 400 billions in 1921. ("Our Eleven Billions," R. Mountsior. Seltzer. 1922. p. 43. } A point has now been reached where the French, Rus- sian, Italian, German, Austrian and Hungarian debts are equal to at least half of the total estimated national wealth. 30 THE NEXT STEP TThen it is remembered that most of this wealth is in private hands, and heavily encumbered with private mortgages ; that the cities have issued enormous numbers of bonds against the same wealth, and that even though the wealth were in public hands it could not be liquidated for anything like its estimated value, it must be apparent that the capitalist world particu- larly that part lying in Central Europe has put itself into a position where its governments cannot meet their promises to pay. Xor is this the worst. The war experience taught Euro- pean government officials that it was possible to make money and pay debts with the aid of printing presses. The rapid increase in prices, and the unwillingness of the owning classes to pay for the war by means of a capital levy, placed the governments in a position where the ordinary expenses, plus the costs of the war, the interest on the war bonds, the costs of reparations and other extraordinary expenses amounted to far more than the total government revenue. As lately as 1920, all of the European belligerents, with the exception of Great Britain, all of the European neutrals, except Sweden, and all of the other principal countries of the world except Peru and the Tnited States, reported expenditures in excess of receipts. The deficit for Austria amounted to 38 per cent of its expenditures. In other principal countries the ratio of deficit to expenditure was: Belgium 60 per cent France "t Germany 46 ' Italy .'. 21 " " Japan 17 " " ("Our Eleven Billions." p. 40-41). Those events led inevitably to a demoralization of the foreign exchange market, which reflects the measure of con- fidence felt bv the business men of one community in the THE ECONOMIC MUDDLE 31 promises to pay made by the government of another commu- nity. The exchange values of the non-warring countries remained generally near to par during the entire war and post war period. Japanese exchange fluctuated very little; British pounds, which up to the time of the war were recog- nized the world over as the standard of value, fell to about three fifths of their par value as expressed in dollars; the French franc and the Italian lira fell to a quarter of their par values, while the Russian ruble, the German mark, the Austrian and the Polish crowns fell to less than one-tenth of one per cent of par. In addition to the serious depreciation of these various currencies, their values fluctuated from day to day and hour to hour, making business transactions difficult or impossible. Coupled with the disorganization of exchange has been the economic depression which, beginning in March, 1920, spread like a tidal wave, bringing disaster and hardship to workers, farmers and business men. With abundant crops, Avith industries united into great combinations, with the banks more efficiently organized than ever before in modern times, there should have been no crisis according to the accepted economic philosophy, or, if there was a temporary set-back following the strain of the war, it should have been a regu- lated panic. But despite the predictions the depression came, and proved to be one of the most severe that the modern world has experienced. The thoughtful man noting these facts, and then learning that, beginning with the hard times of 1^14, there have been seventeen of therinns withholding of efficiency. In accordance with this ireneral policy the control of industry is shifting from the hands of engineers in to the hands of financial experts "who are unre- 34 THE NEXT STEP and yet they continue to be entrusted with the community industrial welfare, which calls for maximum production.'' (''The Engineers and the Price System," Thorstein Veblen. Huebsch. 1921. p. 40-41.) The recent cry of the American farmer: "Produce only what you need for your own keep." is a crude effort to imitate the successful tactics of the busi- ness world in limiting production to the volume that will yield the greatest possible profit to the owner. "War-menace constitutes another indication of the chaos existing in modern economic society. The purpose of eco- nomic activity is to produce wealth. The purpose of war is to destroy it. The two are therefore in direct antagonism ; yet the greatest war machines are maintained by the greatest industrial nations. To reply that they have the big war machines because they can afford to pay for them, is no con- clusive answer. The organizing of nations for war came into present-day society with the present industrial system. Indus- trial leaders have engaged in a great competitive struggle from which the final appeal was always the appeal to arms. Furthermore, one of the most profitable businesses has been that of making the munitions and supplies required for the prosecution of war. Xor is there wanting evidence that mod- ern wai's have been made for profits that they have been "commercial wars," as President "Wilson put it. There is no longer any question but that the forces behind the -world war were in the main economic. The war was fonirht by capitalist empires, for the furtherance of capitalist enterprises. The publication of the secret treaties entered into by the Allies in IfUfi eives conclusive proof of the land grabbing eharaeter of the Allies' intentions. There can scarcely lie any question of the existence of similar intentions on the side of the fVntral Empires. The forces that con- stituted the war menace in 1014 were the economic 1 forces arising out of the competitive economic regime that domi- nated the European world at that time. THE ECONOMIC MUDDLE 35 Since the ending of the Avar, these forces have been aug- mented rather than abated. To them there must be added the other element of danger that threatens to throw Europe again into turmoil. Soviet Russia is and for a time must remain a source of international bitterness among the great capitalist nations, while the struggle for the control of the Xear East is fraught with consequences as momentous as was the pre-war German dream of a railroad from Berlin to Baghdad. Unrest in Egypt, India, Korea, and the other countries held in subjection by the power of the bayonet; the contest between Japan. Britain and the United States for the control of the Pacific and the exploitation of China ; the unrest and revolution that are stirring in China; the keen intensity of the struggle for foreign markets and for such strategic resources as the supply of petroleum, are all sug- gestive of a situation resembling an open gasoline can sur- rounded by lighted matches. And to add the last, and the most realistic touch to the picture, there are a million more men Tinder anus in Europe than there were in 101.'}, while the military and naval authorities in all of the leading coun- tries are busy planning how and where the next war is to be fought. (See "The Next War," Will Envin. Dutton, 1021 ; ''The Coming "War with America," John MacLean. British Socialist Party, 1020; "War in the Future." F. von Bern- hardi. Berlin. 1020; ''The Inevitable Wai: between Japan and America." F. Wencker. Stuttgart, 1021; "Coal, Iron and War," E. C. Eckel. Xew York, Holt, 1020. etc.) Before the grass was green over the graves where, lies the flower of Europe's manhood, leaders of the present order were busy with the blueprints of another carnage. The fads speak for themselves. The existence of such chaos is a maiter of every day comment and experience. Though its nature and its causes are little understood, there is uo issue of more immediate concern to the western world than the intelligent solution of the vexing questions ari^incr out of the production and distribution of wealth. 36 THE NEXT STEP Until the Prussian Piovolution of 1917, the entire western world was so organized that one group or class owned the land, the machines and the productive devices with which other groups or classes worked in order to live. The estab- lishment of this "capitalist'' system between 1750 when it had its start in England, and 18(30, when it secured a foothold in Japan, has raised certain questions of economic procedure which lie at the background of the economic problems which men are seeking to understand and to solve. There is no necessity for an elaborate discussion of these problems, since they are at the moment quite generally under the dissecting knife of social students, reformers and revolu- tionaries. They may be divided into two main groups : those which are localized In character and those which are world- wide in character. Perhaps the latter group might be called "worldized." 2. Local izrrl Prolilfm* There are a number of outstanding economic problems that affect locally, each community that has adopted the capitalist system. Among the most important of them are: 1. The relations between the job owner and the job taker. These relations involve the question as to whether job control shall be vested in those who hold the property or in those vrho do the work. The issue is an old one, intensified to-day bv the absentee ownership which stocks and bonds make possible, and aggravated by the presence of vast indus- trial establishments in which there are employed thousands of workers without the possibility of any direct contact between jo], owners and job takers. _'. The di ion of wealth and income. Another old issue has returned to plague a society that THE ECONOMIC MUDDLE 37 yet there has been no general effort to see that tin; advantages of this wealth production go to those who are in need of food, clothing and shelter. Indeed, under the present order, mil- lions of those who work are called upon to accept a .standard of living which represents less than physical health and social decency, while those who own the land and the machinery with which the wealth is produced are able to exact a rent or unearned income that keeps them permanently on easy street. This embittering contrast between, the house of have and the house of want is leading to-day, as it has in any historical society, to division and conflict, for, as Madison wisely observed in the Federalist, "The most common and durable source of factions has been the various and unequal distribu- tion of property." 3. The inter-relation of industries. So long as there was a direct connection between a worker and the product which he turned out, economic life was simple. AVhen, however, the coal dug in eastern Pennsylvania was used to heat houses in Minneapolis while wheat grown in Dakota was milled in Duluth, mad- 1 into crackers in Boston and sold all over Xew England, there arose the problem, of the relation between mining, wheat raising, transport, manu- facturing, and merchandising. Thus far the banker has acted as the go-between in holding this machinery together, but he labors under two important disqualification:-,: first, he does not represent anyone except himself and his fellow owners and 's therefore- not socially responsible for what h>' does; in the second place, like every other business man. h- 1 is out to make a profit rather than In render the community a service. TTence the structure of hidii trial - if'y rests in chaotic dependence upon the ambitions and foibles of self-s : financiers. 4. Attempts a1 government control of industry. The iri'iiaicd people, incensed by repeated acts of eco- nomic tyranny, have turned to the political state, which has 38 THE NEXT STEP been thought of as the guardian of popular rights in a democ- racy, and through regulatory legislation the appointment of commissions, and even through state competition they have sought to bring obstreperous business interests under the wing of state control. These efforts have generally failed : the busi- ness interests, through their control of the economic surplus, have dominated the commissions and have used the machinery of the political state as the instrument for further exploiting ventures ; the police, the courts, the executive power, the military all have been employed by the owners and exploiters against the workers. The issue between the empires of indus- try and the political state still remains one of the most vexing in the field of public life. These problems of job control, of wealth and income dis- tribution, of industrial inter-relations and of the relation between the state and industry are pressing for solution in every important centre of modern economic life. Each con- stitutes a disturbing element and contributes its mite to the aggregate of social instability and unrest that are racking the economic world. 3. World Problems Aside from these problems, localized in character, though world-wide in their distribution, there are a number of other problems of a world character which also are factors in the disorganization of economic life. One of these world problems is the competitive struggle between economic groups for trade, markets, resources and investment opportunities; another is, the excessive concentration of the world's wealth in a few centres. 4. Competition for Economic, Advantage The issue of non-redeemable promises to pay has crippled the world's credit machinery. The competition for economic advantage has played havoc with the world's social stability. TITE ECONOMIC MFDDLE 39 Theoretically the coffee grower of Brazil and the agricul- tural machine manufacturer of Illinois produce and exchange those things that they can turn out most advantageously. Practically the resources of the world are monopolized by powerful financial interests each striving to destroy its rivals, each seeking its own enrichment, and each busy reinvesting the surplus wealth which piles up as the result of exploitation at home and abroad. Competition for economic advantage has followed the line of greatest profit. The present age inherited from the mediaeval economic world certain time-honored trade rivalries such as those which had existed between l\ome, Carthage and Corinth in classic times, or between Holland, France and England in more modern days. These trade rivalries concern themselves with : 1. The transport of goods and people. 2. The financing of such transactions through bills of exchange, and the like. 3. The insuring of trading ventures. The people which succeeded in obtaining the carrying trade quite generally secured the banking and insurance business, both of which until recent years, have been principally con- cerned with trading. The trade of the middle ages was small in volume, and was carried on, for the most part, in valuable commodities, since the cost of transporting bulky, cheap articles was generally prohibitive. AVilli the emergence of modern industry, and its production of large amounts of surplus commodities, important industrial groups like Britain and Germany which depended for their prosperity on their ability to find foreign markets for their surplus commodities, have been driven to a fierce struirirle for these markets. Latterly the effort to dispose of surplus has taken a new form the investment of capital in foreign enterprises. In- stead of trying to sell an electrical plant to the city of Buenos 40 THE NEXT STEP Aires, a German business adventurer (enterpriser) secures a contract to build the plant, buys the equipment from the German General Electric Company, takes the bonds of the City of Bnenos Aires in payment for the plant, and finances the transaction by selling the bonds to a German banking syndicate. Through this process, the German (or Belgian, or British) business world invests its funds in "undeveloped" countries. At the outbreak of the "World "War, foreign investment had become a science, with the British leading all of the investing nations. C. K. Hobson, in his book, "The Export of Capital," and in a later article in the "Annals of 1he American Academy" for November, 1916, throws some impor- 1ant side-lights on British foreign investments. He notes that for some years preceding the war, Britain had never invested less than 500 millions of dollars per year in foreign countries and that just before the outbreak of the war, the annual export, of capital had reached a total of a billion dollars per year. Tn 1913 the British foreign investments were approximately 20 billions of dollars, distributed geographically in a most sig- nificant fashion. The largest investment (3,750 millions of dollars) was in the United States; then came Canada wiih 2.500 millions; following were India, l.SOO millions. South Africa, the same amount, Australia, 3.500 millions, and Argentina a like sum. The British investments in Belgir.;-i, I'Yance, Germany and Austria were negligible. Thus it was in the new nnd undeveloped countries, not: in tho old and developed ones lhat Britain sought her investment opportuni- ties. In their efforts to play at this great game of imperial- ism, and to win their share of profitable business, Germany, France. Japan, Belgium and the United States were clogging the British beds. Eaeh of ill" important producing countries must provid- 1 cotton, rubber, wheat, etc., upon which the continuance of its THE ECONOMIC MUDDLE 41 industrial life depends. Consequently each of these countries busies itself to secure the control of the largest possible re- serves of the raw materials most needed by its own industries. The case of petroleum is peculiarly instructive. When it became apparent, in the early years of the present century that oil burning ships, motor vehicles and air craft were bound to play a determining part in the economic life of the immediate future, various interests such as the Shell Trans- port, Royal Dutch and the Standard Oil, with the open or tacit backing of their respective state departments, entered on a campaign to secure the world's supply of petroleum. In Mexico. Central America, the Near East, Russia and the United States this struggle has been waged, and it still con- tinues to be one of the most active contests for economic power that lias been fought in recent times. Petroleum-hunger is only one of the many economic factor.-; that drive modern nations. The efforts to control the coal and iron of Alsace and Lorraine, the Saar and the Ruhr undoubt- edly played a leading role in making the "War of 1014 and the Peace of 1010. The partition of Upper Silesia was based on the same contest for iron and coal. Wherever the co;il veins or iron deposits are. there, likewise, are gathered together the representatives of industrial enterprise, which depends for its life upon iron and coal. As the resources of the earth become better known, and their extent more definitely established, there is every reason to believe that, with the continuance of the present economic system, the necessity for exploiting ih in Aviii become greater, and the attempts to dominate them will become more aggres- sive. 42 THE NEXT STEP to continue the economic desolation and chaos under which the world is suffering. 5. Distribution of the World's Wealth There is another problem of world scope the concentra- tion of wealth in a very few countries. At the present moment the wealth of the world is distributed roughly as follows : Great Britain 120 billions of dollars France 100 " United States . ..330 Total 550 " Germany 20 billions of dollars Russia 40 " Italy 25 " " " Japan 40 " Belgium 15 " " " Argentina 25 " " " Canada . . 25 " " " Total 190 Probably all of the other nations combined could not show a wealth total of more than 100 billions. Great Britain, France and the United States have just about 12 per cent of the population of the world, yet they probably hold somewhere in the neighborhood of two-thirds of the world's wealth. The United States alone, at the moment, has nearly half of the world's gold supply and more 1 than a third of the world's wealth. Of course these wealth estimates are not to be accepted in detail, particularly in view of the wide fluctua- tions in the exchange rate. They serve, however, to give an idea of the relative wealth positions of the leading countries. THE ECONOMIC MUDDLE 43 The present economic position of the United States in particular, is a perilous one. The estimated wealth of the United States is greater than that of the four richest nations of the world combined. Within a decade, the country has become the world's chief money lender, the world's principal mortgage holder, the world's richest treasure house. The results are inevitable. The United States will be an object of envy, jealousy, suspicion, cajolery and hatred in the eyes of those peoples who concern themselves with the present system of competition for economic supremacy. She holds the wealth and power that they desire and they cannot rest content until they secure it. Past periods of civilization have witnessed the concentra- tion of wealth and power in some great city, like Carthage, or in some isolated region, like Italy. All around were the ''barbarians" those who had less of the good things of life than were at the disposal of the citizens of the metropolis. "Where two of these centres existed at the same time, they warred for supremacy until one or both were destroyed. Before the war the centre of the world's economic power was Great Britain. To-day the economic centre has shifted to the United States, while Britain is still the world's greatest political power. The struggle between these two empires for the political suzerainty of the planet must continue until one is victorious, or until both have been reduced to impo- tence. 6. Thf Livelihood Struggle Behind these struggles between various political and eco- nomic groups, there is a broader reality in the shape of a billion and three quarters of people, inhabiting the surface of the earth, people of various races, religions, nationalities, who. with all of their differences, have this in common : that they are seeking life, striving to improve the opportunities for its enjoyment, yearning for its enrichment, and, despite 44 THE NEXT STEP the innumerable disappointments which they have suffered in the past, willing to pay handsomely, in vast and patient effort for each tiny gain that they secure. One of the chief concerns of these human multitudes is the struggle for livelihood for the means of continuing phys- ical existence and of gaining the surplus and leisure out of which grow the higher life satisfactions. All men have certain simple economic needs for food and shelter. Denied these, they perish. Given them, they are able to devote their remaining energies to one of the many lines of activity that men have developed. "What are these other wants of men, aside from the primi- tive needs for food and shelter? Most prominent is the desire for human companionship, friendship, love. Again, mankind has accumulated a vast store of knowledge, of philosophy, of imagery, of artistic expression. Love, truth and beauty sound an appeal that finds some answering echo in. each life. The leisure and the culture of the world, in the immediate past, have been the heritage of a favored few : to-day they are the objectives of the many. Heretofore it has been the belief of the aristocrats that the best of life was none too good for them. To-day that idea has spread among the people. Dimly, inarticulately, they feel that the world's advantages are for them and for their children. Before the cultural advantages of life may be enjoyed by the many, wealth must be produced, in sufficient quantities to provide food and shelter. This provision of the economic necessaries is not a far goal. Livelihood, when secured, does not make of man eitli'T a saint or an artist, but it is a neces- sary step in the pursuit of cither goodness or beauty. The body must be fed before it will function, just as the engine must be fed with fuel before it will run. The provision of a supply of economic essentials is not the ultimate object of life. Lilt until some such provision is made, life in its fullest terms is impossible. THE ECONOMIC MUDDLE 45 7. Guaranteeing Livelihood The millions who inhabit the earth have a direct and immediate interest in organizing economic life in such a way that the supply of economic goods is made regular and certain. This is the premise on which all constructive thinking about economics is necessarily founded. How is this hope to be realized? What means are at hand to insure the ultimate success of these efforts to guaran- tee livelihood .' Xature has provided an ample supply of the resources out of which the economic necessaries may be produced. These resources fall mainly into three general classes: 1. Climate, including those conditions of light, air, rainfall and temperature that make possible the maintenance of life in its many forms. -. Fertility, including those qualities of the earth that are useful to man in the pursuit of his economic activities. 3. Power, including those forces of nature which man may harness and compel to do his bidding. Climate, fertility and power are variously distributed over the earth. The heat near the equator and the cold of the arctic regions make any highly organi/ed forms of economic life difficult. Consequently it is in the temperate zones that industrial civilizations have developed. The deposits of min- erals and fuels are quit'. 1 uneven. Take iron ns an example. Tin 1 available deposits of iron ore are concentrated mainly in lira/il, Cuba, the Appalachians and the flreat Lake r.a-iu, so that the Americas and particularly North America have far more than a proportionate share of the iron ore supply. Copper, coal and petroleum are distributed with even v:r>'ater irregularity. Equally uneven is soil fertility. Inside a gar- den spot, like the Mississippi Valley, lies a great Colorado- I tah desert. Nature has provided those requisites upon which man must depend for his economic life. They are 46 THE NEXT STEP scattered it is true, and with the present political barriers holding peoples apart, many of them are politically unavail- able but, economically, they are an open door to the future. Men have met with considerable success in availing them- selves of nature's bounty, and of converting it into useful and pleasing forms. All of the tools, weapons, textiles, metals, wheels, machines, have been the result of human effort and ingenuity, spread over long periods of time, and gradually accumulated and concentrated. At last a day seems to have dawned when machinery, applied to nature's bounty, could produce the wealth necessary to support the world's exist- ing population on a minimum standard of living. Cer- tainly the energy and wealth which went into the five war years would have fed and clothed the people for that period. 8. Distribution and the Social Revolution Men have succeeded in kindling fires, making wheels, sep- arating the metal from the ore, harnessing electrical power and communicating their thoughts to one another and to their descendants, but they have not made themselves masters of those forces which work through fire and wheels. Men have mot the immediate economic problem by devising methods for producing food, clothes and roof -trees, but they have been overwhelmed by the social implications of these productive forces. Before the problem of sharing the proceeds of their labor, they have stopped, and the whole economic progress of the race now stands like an engine stalled, awaiting some solution of the problems of distribution. Through the ages various methods of making a living were inaugurated successively. Mediaeval Europe had worked out a combination of herding, agriculture, craft industry and trade that made a stable life for an agricultural village a practical possibility. This period of economic stability this golden age was followed bv a series of events that threw the fat into the fire. THE ECONOMIC MUDDLE 47 First in England, and then in all of the important countries of Europe, the industrial revolution turned the simple graz- ing, farming, craft-industry life of the village topsy-turvy, by providing a new method of converting nature's bounty into goods and services calculated to meet the increasing needs and wants of mankind. So far-reaching was the change that it has compelled a reorganization of virtually all phases of social life, but for the present purpose, it has been felt chiefly in four fields : manufacturing, commerce, wealth- surplus and population. The efficiency of the new manufacturing processes has provided a large surplus of goods that must be taken some- where, exchanged for food and raw materials, which must, in turn, be brought to the producers of manufactured goods. In the course of these transactions, a generous share of the values produced goes, in the form of profit, to the owners of the industry, another considerable portion goes into reinvest- ment, thus swelling the volume of productive capital. The increased wealth, the larger capital and the greater amount of surplus all make possible the maintenance of a larger population. Thus it has come about during the past century, that the production of goods, the transport of goods, and the population, have all been increasing at a rate unheard of during the previous thousand years. The suddenness of these economic changes has swept the world away from its accustomed moorings, out upon an uncharted sea. Only yesterday the race was struggling to make a meagre living: to-day the centres of industry are glutted with bulging warehouses and equipped with idle machinery that will produce unheard of quantities of shoes and blankets and talking machine records, if the owners will but give the word to the workers who are eager to perform those services that yield them a living. Only yesterday the world was maintained by local production: to-day it depends upon transport and exchange. All of these changes in the 48 THE NEXT STEP accustomed ways and acts of men have been brought about in the course of an economic revolution. The tidal wave of the industrial revolution has not stopped with the economic world. No phase of life has been exempt from the power of its magic. The school, the church, the family, the home, the slate, have all felt its transforming might. The aggregate of these changes is the profound social revolution tluit has been for some time, and that is at present tearing the fabric of the old society to tatters, while beneath its surface-chaos is forming the nucleus of a new social order. 9. A New Order The results of profound changes such as those that are now occurring, must be chaos except in so far as the ingenuity and organizing capacity of man re-establishes order. The people in the world are in very much the position of a valley population suffering from a disastrous flood. Their houses and fruit-trees the product of generations of labor have been swept away. The valley is filled with debris. .As the water recedes, the wreckage must first be picked up, then the \vhole population must fall to with a will and rebuild the community put up houses, re-plant trees, re-make gardens, repair roads. The social revolution has not swept everything away, but it has modified the form of social institutions, and some of them, such as the old time farm home, the individual work- shop and the agricullural village have been obliterated in many localities. How shall the new society be rebuilt .' Only as the old was built by the expenditure of human effort and under ilic guidance of the best wisdom that the community can muster. There arc a number of points of view from which the present-da'" economic chaos may be regarded. The humani- tarian I'eels '>it^ for the suffering and hardship imposed upon multitudes oi tl:e world's population. The conservative THE ECONOMIC MUDDLE 49 laments the alterations which are being made in the estab- lished order. The liberal regrets that the changes are occur- ring so rapidly that construction cannot keep pace with de- struction. The radical sees, in these fundamental changes, the dawn of his millennium. The scientist and the engineer upon whose shoulders will rest the. burden of rebuilding the new society, tighten their belts and turn to the mightiest task that men have ever faced. The economic muddle in which the world now finds itself is one of many transition periods in the history of civili/a- tion, a phase of the great revolution. Like any period of chaos, it is the seed-ground of the new order the demolition which precedes construction. Some day men may be wise- enough and sufficiently well organized and equipped to demolish and construct at the same time. As yet no such stage has been reached. During the intervals of chaos which separate two periods of forward movement (the dark ages of the world, as they are sometimes called) the masses agonize and suffer, groping blindly and crying out for guidance. Such is the period in which the world now finds itself. Out of this chaos, men must br'nur order; and to do this they must discover the foundations upon which the new order can be successfully built. This is the work of the engineers, the constructors of the new society.*' 10. T!i' />Vs p /\ of IVai'id lit (V.'/'N 'rue linn Asintics, Ruropeans, Africans, Americans, Australians all people who follow the movement of events realize that the crisis confronting the capiialisi world is a serious one. Informed men !'': ;i '. M. Keynes and Fr:mk Vanderlip believe 50 THE NEXT STEP that the situation is perilous. While many persons see that something is wrong, and while some see what is wrong, there is a great diversity of opinion as to the remedies that should be adopted. What most of the writers fail to see, or at least to realize, is that economic organization is the basis the only possible basis for the reconstruction of the world. The time has passed when political readjustments w T ill meet the world situation. The events accompanying the industrial revolution have hammered the world into a closely knit economic whole, and until this fact is understood, and made the basis of world thought and world building, there can be no permanent solution of the world's problems. The present chaos in world relations cannot be met and settled by war, legislation, diplomacy or any similar means. All of the steps in these fields imply some adjustment of political relationships, and it i c ' the economic institutions rather than the political institutions of the world that are in need of constructive effort. If a town is suffering from a break in the water-main, there are two things that may be done ! The old pipe may be patched or a new pipe may be put in its place. It is .some- times possible for the engineers to patch the old main tem- porarily, while they are getting in a new one. The same situation confronts the people of the world. Their economic life is disorganized and chaotic. Shall it be reorganized along old lines, slightly modified in the light of experience, or shall it be built on fundamentally different lines? III. ECONOMIC FOUNDATIONS 1. The Social Structure "\ViiEX a town or a city decides to repair a water system or to replace an old system by a new one, the plans are made and the work is carried on in accordance with the soundest principles known to the engineering; profession. There are communities which neglect their water systems, and which suffer accordingly. But for the most part, the water supply is looked upon as so vital a factor in the common life that no pains are spared to have it reflect the last word in sanitation and efficiency. The same reasoning must apply to the economic machinery upon which a community depends for the supply of its neces- saries and comforts. Economic life touches every home. Xo human being who eats food, wears clothes, lives in a house, rides on street cars or reads papers and books can escape its ;ill pervasive influence. Therefore when changes are made in an established system of economic life, or when a new economic system is substituted for an old one. il behooves tin; people concerned to sec that the work of reorganization is done in accordance with the soundest known principles of .social science. The principles of social science, like ihe principles of engineering, are mallei's of profound concern lo those who are compelled to depend for health and livelihood on ihe outcome of a social experiment. The social scientist studies society as the natural scientist studies nature, by examining the social forms, the social forces, the ways of handling or of adminis- tering these forces, and the means of making social improve- ments. The social scientist, like the scientist working in any 51 52 THE NEXT STEP other field, is concerned with making those additions to knowl- edge which will prove of the greatest ultimate advantage to the human race. The principles of social activity arc not yet so well known as those of astronomy, physics, mechanics or biology, but they operate none the less surely. Until these principles are under- stood, and until men plan their activities in relation to them, there will be no possibility of a rationally organized and wisely managed society. The physicist who planned a pump on the supposition that water is always liquid in form would get no farther than the social scientist who advocated social changes on the theory that the only motive that animated mankind was the economic one. Mankind is not wholly ignorant of the principles under- lying social structure and social activities. Philosophers and statesmen worked over them in the ancient world. Within the past two centuries a flood of books and pamphlets has appeared dealing with social organization. To be sure, most of these publications have been of a political nature, but the effort was made none 1 the less to understand society and its workings. The investigations, analyses, comparisons and con- clusions are formulating themselves gradually into certain well-defined social laws, which men recognize as essential fac- tors it) social thinking. Some of the more important among these social laws or principles which have been determined by the painful proc- esses of trial and error are those relating to the manner in which tin 1 struct lire of society is built up. Society is not a collection of people, in the sense that a basket of eggs is a collection of eg<.rs. Quite the contrary, society is a structure forme;! through the association of individuals and of groups having some common interests and some co-operative func- tions or activities. A family, for example, consists of a num- ber of persons, usually connected by blood ties, living to- gether in a, common dwelling. A chamber of commerce con- ECONOMIC FOUNDATIONS 53 sists of individuals, firms and corporations, doing business in one locality, and all concerned with the maintenance of cer- tain property rights. The British Miners Federation is com- posed of local and of district organizations, which are built up around collieries, towns, and coal deposits. The local union is composed of individual mine workers. The district organization is composed of a number of locals in the same field. The federation is composed of these lesser organi- zations. No matter which one of the many forms of human association is examined, the same thing will be found true. Each social group is composed either of individuals or of lesser social groups which have certain common interests and certain co-operative activities, and which band themselves together in response to their interests and in pursuance of these activities. It is this organic structure, of society to which Ilohson applies the phrase "the federal units which society presents." ("Work and Wealth." J. A. Hohson. Maemillan. IfiU. p. vi.) Among primitive peoples who have simple forms of social organization, each individual is connected with some associa- tion like the clan or tribe which is state, church and family, all in one. The stories of the Jewish patriarchs arc good illustrations of this stage in social evolution. "In advanced and complex societies, however, each individual belongs to a number of groups to a town, a factory, a school, a home, a political party, a fraternal order, a church. TM complex soci- eties these groups are united to form the whole social struc- ture. The individual belongs to society, therefore, because he belongs to one or more of the groups composing society, and his membership in society is dependent" upon his i;i<-rnhei-ship in a social group. Without making too much, of the comparison between a living organism, like the human body, ami a society, the simi- larities between the two are striking. ' y con- sists of various systems, such as the circulatory system, the nervous svsiem, the digestive svstem. Each oi! these- svstem.s 54 THE NEXT STEP is composed of many parts, having separate functions to perform. The circulatory system, for example, consists of the heart, veins, arteries, capillaries, the blood, etc. These various parts of each system are in their turn made up of different kinds of tissue. The heart is a complicated organ consisting of muscle tissue, nerve fibers, blood vessels, etc. Muscles, nerves and blood vessels are in their turn composed of living cells, each of which contains the mechanism of a life cycle. Among the unit cells, the various tissues, organs and systems of the body, there is a working harmony. The whole complex machine functions in unison. If one of the organs fails to do its work. if the heart fails to pump blood or if the lungs fail to inhale oxygen, the whole body ceases to function or "dies." Throughout the scries, from the single cell to the entire organism, the human body is built up compositely. This method of composite structure holds equally true in the com- position of modern society. A modern society or community consists of various sys- tems, such as the educational system, the economic system, the political system. Each of these systems is, in its turn, com- posed of institutions. Thus, for example, the educational system consists of the common schools, the high schools, the normal and professional schools and universities, the special schools, and so on. Eacli city school system is a going con- cern with its pupils, teachers, officials, school buildings, text- hooks, courses of study. Each school building, each class room, each group of pupils, is a social unit, composed either of individuals or of groups. Like the single cell of the human body, the individual pupil is a living organism, and it is out of a multitude of such organisms variously grouped that school systems are built. The social machinery, like the machinery of the body, must work smoothly, otherwise misery will be the inevitable result. Tf the educational or the economic life of a community breaks down, the whole communitv suffers, as does the bodv through ECONOMIC FOUNDATIONS 55 the failure of an important organ. If the stoppage is sig- nificant enough, as for example, a stoppage of the economic machinery like that experienced by central Europe since 1919, the social organism "dies," that is, it is resolved into its constituent elements, some of which may disappear. Those who object to the comparison between society and a living organism like the body, find more satisfaction in likening the social machine to an automobile, with its self- starter, its ignition system, its lighting system, its steering gear, its driving mechanism. Each of the systems is in turn composed of parts. Each part is made of wood, iron, copper, rubber, and these materials are, in turn, composed of mole- cules and atoms in certain combination. The automobile is not self-acting, like the body or like society, but the failure of one of its essential parts like the ignition system, means the failure of the whole machine. Society, like the human being, or like the engine, is a highly complex mechanism, and like them it cannot function successfully unless its various parts function in harmony. The major problem before a society is therefore the working out of a system of inter-relations between its parts, that will make harmonious functioning possible and easy. Just as the mechanical engineer who builds the automobile puts into it the results of his wisdom in an effort to make it effective, so the social engineer devotes himself to the problem of making society function in the way that will yield the largest results to the individuals composing it. 2. Specialisation. Association. Co-operation Every social group except the horde, which is an aggrega- tion of unspecialized and non-co-operating individuals, is con- structed on the principle of: 1. Specialization 2. Association 3. Co-operation 56 THE NEXT STEP The social group the family, the school, the factory- takes upon itself the performance of a particular social func- tion it specializes itself. Each group associates itself with other groups families with families, schools with schools, fac- tories with mines and stores. Finally, these associated groups work together or co-operate, exchanging the products which their specializations have created, and uniting their efforts in the furtherance of their commmon interests. These develop- ments take time, and some communities are more highly spe- cialized than others, but all societies which enter intimately into the life of the modern world are thus constituted. The more advanced the society, the more numerous and the more complex are the relations between its component parts. The agricultural inhabitants of the Ganges Delta have evolved a far more complex society than that of the aborigines of Australia, but Ihe civilization at the mouth of the Ganercs is simplicity itself compared with that of Britain, Belgium or Japan. Tn the Ganges Delta each family group has a home- stead. Outside of the homestead, the community life is almost wholly unspeeialized. Even whore the hom"steads are clus- tered together there are no stores, no recreation centres, and few churches or schools except in the larger towns or in the market towns, of which there are a very few. since only about one per cent of the people live in towns or cities. Practically rho entire population is occupied wit I 1 , the work of the home- stead, and the work of each homosl<->ad is very like the work of every other homestead. ("The Economic Life of a Ben era 1 District." J. C. Jack. Oxford. Clarendon Press. 1916. pp. 1 to 40.) "Flow different is the French. German or Italian village, with its various crafts, trades, professions, industries, recrea- tion centres, schools, churches and the like. Every such Europe;])] community of threo or four thousand persons is in itself a complex society, while the industrial city of fifty thou- sand people is a hive of related social activity. ECONOMIC FOUNDATIONS 57 The more highly specialized the group, the more complex, intricate and precise are its workings. This principle of social federation through specialization, association and co-operation is nowhere better illustrated than in the case of the present economic system. In each centre of population, in each town or city, in each state, in each nation, in the world at large,- the economic system is divided into various elemental economic groups or units, falling under six main headings : 1. The extractive units, which are concerned with the taking of wealth from nature's storehouse the farm, the mine, the lumber camp. 2. The fabricating units, which are busy changing the products of farm, mine and lumber-camp into semi- finished or finished forms the mill, the smelter, the factory. 3. The transportation units, which carry goods or people or messages from place to place railroads, ships, trucks, telephones. 4. The merchandising units, which assemble the goods turned out by the fabricators and distribute them to the users, wholesalers, jobbers, retailers. 5. Personal service units, which render a service to the consumer in some direct, personal way housekeepers, educators, entertainers, health experts. net-work of economic inter-rela vided into individual 'plants, factories, departments and the like. Take, as an example, one group, the manufacturing industries of the Tniied States. "When the Census of 1014 was compiled, the manufacturing industries were classed in 58 THE NEXT STEP fourteen groups, food and food products, textiles, iron and steel and their products, lumber and its remanufactures, etc. There were 496,234 wage-earners working in 59,317 food and food products establishments, 1,498,644 wage-earners in 22,995 textile establishments, 1,061,058 individuals working in 17,719 iron and steel establishments, and so forth. Each of the fourteen subdivisions of the manufacturing industries of the United States employ hundreds of thousands of men and women who are at work in tens of thousands of establishments in thousands of cities and town. The same kind of specializa- tion is to be found throughout the various modern industries, and in the different industrial countries. Each one of the larger establishments each factory or plant is in turn composed of departments, divisions, shops and the like. "Whether the individual establishment or the individual department be regarded as the unit of economic activity, the outstanding feature of the manufacturing industry is the immense number of units that must be in working order and co-operating harmoniously with the others before the whole can function smoothly. And this is but one of the general divisions of industry. At the time of the Census of 1920 there were in the United States alone. 6,447,998 farms; in 1914 there were 275,701 manufacturing establishments; in 1910 there were 1J 27,926 retail dealers and 50.123 whole- sale dealers. Literally, there are millions of productive eco- nomic units in this one country which are specialized, which are associated in their activities and which must be pnt on a co-operative basis if effective results are to be obtained from them. 3. Three Lines of Economic Organization So much, then, for the interdependence of the various economic groups under the present forms of society. This interdependence runs throughout the capitalist system. ECONOMIC FOUNDATIONS HO Farms depend on railroads, railroads on mines, mines on fac- tories, factories on farms, and so on. This extreme specialization of the economic system is the product of the past two hundred years, the outcome primarily of the industrial revolution. The experience of society with these specialized economic forms does not, therefore, extend over more than five or six geiicrations. This experience is sufficient, however, to indicate that there are three general lines along which economic organization may develop: 1. Economic "states rights" or individualism the theory upon which the present day industry as well as the modern state was founded. Under this theory each economic group must be free to go its way, cutting a path for itself through the ranks of its competitors, and making its triumphant advance over their pros- trate remains. 2. Economic bureaucracy, involving the concentration of economic authority in the hands of a centralized group which, knowing little or nothing about the requirements of particular localities, is nevertheless in a position to legislate for them and to enforce its mandates. 3. Economic federation or federalism, with local groups enjoying local autonomy in all local matters, and only so much centralized control as is necessary for the unified direction of the entire enterprise. American industry has had considerable experience with the two first forms of organization. Until the period of the Civil War. competition was the generally accepted rule in all phases of economic life. With the formation of the Standard Oil Company in 1P70. a new principle was demon- strated, and the idea of centralization was embodied in a form that served as the model for the American trust move- ment. "By the time of the late nineties, this principle of centralization had been carried so far that a reaction set in, 60 THE NEXT STEP and when the United States Steel Corporation was organized in 1901 local autonomy was recognized as one of the essential principles around which its structure was built. Experience points to the system of local autonomy in local matters and to the central control of general matters as the most workable in a complex society. In the first instance, under such a system, each local unit is responsible for its own activities and for its own discipline. It is obvious that no matter how efficient the bureaucracy, it would hardly be possible for a centralized authority to control, from one point, the six millions of farms and the quarter million industrial establishments of the United States. It is only where the handling of local matters rests with those immediately concerned that the highest degree of local pride, initiative and energy can be generated and maintained. Such a system leaves the central authority free from detail ,so that it may devote all of its energies to decisions on matters of general policy, and to such procedure as affects the welfare of the whole rather than of ar.y particular part. Economic society, to be organized successfully, must be built of units that will prove self-acting and self -directing in all matters of purely local concern. At the same time, a scheme of economic life must be devised that will make it ca>y and natural for these economic units to function co-operatively in all maters connected wiih tli" well-ben:::' of the whole industr or of the whole economic societ. Much has been done to organize the economic life of the planet. particularly during 1 he pa>t two centuries. Prior to the industrial revolution the economic life of the masses of the people, with the exception of a lit lie trading and shipping, was localized and individualized in the village, the commune, the homestead and the home. The industrial revolution, with ECONOMIC FOUNDATIONS 61 its dependence upon mechanical power, served to concentrate economic l ; fe in larger units the factory, the plant, the industrial city. As a matter of necessity, organization fol- lowed in the wake of this concentration. The owners of industry organized on the one side : the workers organized on the other. Besides these two major forms of organization within the field of industry, there was the organization of the state, which has played a leading role in 1he life of present- day society. The organization of the owners, which is far more complex and more highly developed than that of the workers, has followed four general lines: 1. The organization of one line of industry. "Woolen mills in Massachusetts and in New York unite to form the American Woolen Company: sugar refineries are consolidated into the American Sugar Refining Company. 2. The organization of those industries which are con- cerned with the turning out of one product industrial integration. The iron ore beds of Michigan. 1he coal and coke industries of Pennsylvania, lime-stone quar- ries, smelters, converters, rolling-mills, railroad oonnec- tiifns and selling organizations all unite into the Cambria Steel Company or the Carnegie Steel Company. Timber tracts, ore properties, mills, mines and selling agencies- join to form the International Harvester Company, 3. The organization of unlik' 1 and unrelated in manufacturing industries, public utilities, companies, railroads, trust companies brought u;--!"r the financial control of Company or of some other banking syndi 4. The handing tic'-ther <>f these vannus group welfare associations such as chambers of boards of trade, manufacturers' associatio 62 THE NEXT STEP Xone of these organizations has any primary interest in geographic areas or in national boundaries. Half of the business of the Standard Oil Company of Xew Jersey is carried on outside of the United States: the International Harvester Company puts up plants in Canada and in Russia ; United States Steel buys properties in Mexico ; The Xational City Bank opens agencies in Cuba and in Argentina. The great modern business units deal, not with political boundaries, but with economic areas. They seek out, as the field for their operations, abundant resources, cheap labor, attractive markets. The present economic system has made great strides toward the world organization of economic life in a compara- tively short time. Australia, Canada and the United States furnish excellent illustrations of the way in which continents have been surveyed, spanned with steel, populated and exploited in three or four generations. So completely has the economic system been altered that the seventeenth century world would not recognize its infant great-grandson of the twentieth century. o. Limitations on Capitalism Important changes have been made in the structure cf society since the inauguration of the present economic system, but these changes have? not been radical enough to keep pace with the still more radical changes that have occurred in the mechanism of economic production and exchange. The chief failure of the present order is its failure to readjust social machinery in conformity with the economic chancres that have occurred in society, and this failure is due. in large measure, to the limitations contained within tin 1 capitalist system. Like all social systems which attain to positions of conse- quence, the capitalist system has played an important role in the development of society, and like all such systems, it has had its dav. The needs of the communitv have advanced to ECONOMIC FOUNDATIONS 63 a point at which they cannot be met under capitalism, whose chief failure to function more effectively in the present crisis may be traced to : 1. Excessive centralization of the determining control of industry in the hands of financial manipulators, who do not even enjoy the advantage of owning the indus- tries which iheij dominate. Through shrewd financial dealing they have maneuvered themselves into positions of importance, which they hold because of their ability to manipulate, a political rather than an industrial virtue. The necessary result of this concentra- tion of authority is a denial of local self-determination and a corresponding loss of local initiative. The less local initia- tive there is, the more centralization is require;! to keep the machinery running, until a point is reached where all power and authority are exercised from the centre, and the local group is as devoid of spontaneity as it is of authority. At somewhere about this point, the friction involved in adminis- tration becomes so great that the whole of the social energy is consumed in the routine of keeping the social machinery running, and there is no surplus, either for leisure or improve- ment. Tin's was the outcome of a similar centralization of authority under Feudalism, and it shows itself in any organi- zation that permits itself to drift into the danger-zone of bureaucracy. 2. A second obstacle to tin further development of the present economic system is nationalism. The political state has become an adjunct to the capitalist economic system. It relies for one of its sources of driving power upon a concept of nationalism "which places the political boundary lines that happen to surround a people fir>t among the public limitations on conduct. "My country, ri points that seemed to be the centres of the crowd iie. Mines have b'vn opened, factories established, railroads huilt. electric plants constructed, bv some individual or ECONOMIC FOUNDATIONS 67 corporation interested in making a profit on the investment, and with little or no relation to the well-being of the commu- nity. There has been no recognized intelligent guidance behind the development of the industrial system. In so far as the present economic life was planned, it was planned locally, by the directors of one industry, by the chamber of commerce of some city, by a far-sighted banker or financier who insisted upon thinking in terms of the coming business generation. For the most part the system grew, however, like stalks of corn in a field, each stalk drawing its own nourishment from the soil and making what progress it could along its own path toward the zenith. Another serious drawback in the growth of the present economic system is that much of it was developed as an under- ground organization. Even had they decided to do so. indi- vidual business men have not been free to plan ahead and work out a business policy in the light of day. On the one side were the jealous competitors watching every move and eager to profit by any bit of information that they could secure with regard to the plans of their rivals On the other side was the government, with, its conspiracy laws and its anti-trust laws, ready to swonp down on the business director who planned too broadly or thought too far into the future. Then, too, there was an ever-growinu' force in a public opinion, that was suspicious of profiteers, no matter what their profes- sions. "With competitors on the watch here, and irnvernmeiit officials yonder, there was nolhini: for it but to wurk in secret, to shadow the new policies in mystery and to gel as far as possible without, heiucr found out. Far-reaching change-; have taken place, of late, in the type of men who have held the reins of control over industry. During its early years the economic machinery was con- structed by men. v-.ho had worked at their trades; men who had boirun at the bottom and climbed into a place of authority; men who had a fir-M-ham! knowr'dire of the processes under- 68 THE NEZT STEP lying their industries. Latterly, however, with bankers and other professional manipulators in control of economic life, the engineers, with their intimate knowledge of forces and processes have been pushed into the background, and "the actual work of direction has been shifted from producers to money makers. Again, the present economic system, built for the profit of the builder rather than for the welfare of the community, represents, not the science of organization for production and use. but the science of organization for exploitation and profiteering. These are some of the reasons why the economic life of the modern world has grown at haphazard. Each industrial din-dor put his own ideas into his business, and as it grew in response to them, the various businesses differed as much in shape, size and character as did the early factory buildings. The time seems to have arrived when a new working plan of economic life may be adopted. The faults and failures of the old arc glaring and the clamor for the new is reasonable and insistent. The construction of factory buildings has been evolved into a science. AVliy cannot the same thing be dene with tlif whole scheme of economic organization? Men no longer ct factory buildings according to personal whim or to the chance ideas of some budding architect. Instead they scientists in factory construction who have devol -1 years to the study and to the practical supervision of the detail of factory buildin'.:'. Can less be demanded of the fommnnity which hopes to build its economic life soundly f] solidly 2 A modern steel plant, like that at Gary, Indiana, is carefully planm d 'fore a sod is turned. The organization of llio woiks i> ihov.^iit out. sketched, drawn in detail, blue- L group i v, orkers \ hat part ici] >at es in the construction is given a blue print that snecines what is ECONOMIC FOUNDATIONS 69 to be done, and where and how. "When all of the tasks are completed a steel plant has been called into being. But suppose that each of the eight}* gangs of workers, busy on the plant, had followed the lines of its fancy or of its own special interest ! The result would resemble the helter-skelter of modern economic society. 7. Effective Economic Units Economic life has been haphazard in the past. In the future it will be one of the most scientifically built of all human institutions. It is so vital a prrt of the social life, and it yields itself so readily to structural co-ordination that the best structural minds will turn to it perforce, as the logical field for their activities. The economic structure of the future, to be sound, must- be built of effective working units. It is as impossible to build a live social system with dead component elements as it is to build a live body with dead cells. At least for the time beiua 1 , an intricate and complicated structure is needed to handle the problem of livelihood. As time goes on. Ihe nature of the economic system m;iy lie greatly modified, and its structure simplified correspondingly. While the complicated economic structure remains, however, the problem will be one of co-relating the activities of vast- numbers of economic units, and of prevailing on them to function with less friction and greater harmony. Like every social structure, the economic system will be built up of lesser social groups, begin ninu- with the simplest local body of fanners, miners or mill work"rs. and continuing on, by successive stages of organization to the largest and most higlny complex irronps in the community. The nature of each of the units that enters into the economic structure must vary with the locality, with the industry, and so on. hence it will prove to be impossible to lav down anv arbitrarv rules concerning their organization. TO THE XE::T STEP It is possible, however, to suggest certain characteristics that must be present in effective working units: 1. The economic unit, which is to be built into the new society as stones are built into a wall, must bear a very close relation to the present working forms of economic life. Ultimately, the economic units of which society is com- posed will differ completely from those now existing. It is quite out of the question, however, to build a new economic siructure ami new economic units at the same time. Habit and convention are too strong. Innovation is too terrifying and too problematical. The life of local economic units will IK- carried on to-rnr.rrow very much as it is carried on to-day by th" masses of the people. The most workable economic superstructure, for a new society, will be built upon an answer to the question: ''How is work done now?" This method of approach takes th" basic economic activities of the masses of the people for granted and s'-eks to build them into a sounder type of super-organization than that now exist incr. -. The e^onoiti \in\i, wJ> ' its size end function, must ! < .-"/ '".' .?/''// tion'O'it ,' fa ,, ,' it a ' i ', ;? i'.\ 'hi 'ace <>1 sei'fre stresses a, /'I : -' l t'n ,/s. That is, i:: :v \>> in a state of relatively '.'' '', rlibrium. >. / : /, ; ' .' autonomous sclf-rjorf rn- ' : ''- ' ,..-.-'. ' '' iff . 4. 7V ' , ; ..,. h nt of Hi-- unit must ' ' ' : ' . ,./' .' ic ; < . that win ' '':l l->'>. " ,".''',, a ;td ;-'-/' 1hc means of pro- 7 populafio . '; ' f],rtt /' y it-ill work ' " ... ',, ft, s , r , ., ;,,,;,, , ,. , ,, j - n ECONOMIC FOUNDATIONS 71 "Whether plans are being made for the rebuilding of existing economic institutions or for the establishment of new ones, these general rules hold good. They have as their objective, a workable social system that will turn the wealth of nature's storehouse into usable forms, and that will procure the distribution of the good things of life, in an equitable manner, among the groups that have assisted in their pro- duction. 8. Classes of Economic Units Those who are concerned with the establishment of a working basis for economic society must bear constantly in mind the purpose of economic organization to provide liveli- hood on the most effective possible terms. The economic system is not called on to perform any other function. Economic function would seem to be most effectively aided by some organization of the economic units that would pro- vide a structurally sound skeleton for the whole economic mechanism. The needs of particular localities, the require- ments of larger groups within one industry, the economic relations of continental areas, and finally the world organiza- tion of industries must be provided for. In order to meet this situation, it would seem desirable to think in terms of several different '_:rad"s or classes of economic units. As ;i Tli is unit is now a working parr of the p order, and whether it is a colliery in Wai' 1 the P. L. ?J. Railroad in Prance, a mill in fanning community in Raskal ' .. it wo process of tnrninu 1 oni [roods and services 72 THE NEXT STEP 2. District units composed of a number of neighboring local units in the same industry or in closely related and co-operative industries. The district is an aggregation of conveniently situated local units, and is organized as a ready means of increasing the efficiency of the groups concerned. It might cover the tobacco factories of Havana, the coal mining industry of the Pennsylvania anthracite fields or the dock working activities of Belfast. 3. The divisional units which would l>e designed to cover a convenient geographic area, and to include all of the economic activities in a, particular major industry within that area. The boundaries of the districts would vary from one industry to another. The boundaries of the divisions would be uniform for all industries. The whole world would therefore be partitioned into a number of divisions, such, for examph', as: North America, South America. South Africa, the Mediterranean Basin, Northern Europe, Northern Asia, Eastern Asia, Southern Asia and Australia. In setting the boundary lines of these divisions, economic homogeneity, geographic unity, the distribution of the world population and the character of existing civilization would all be called into question. I'mler such a grouping would fall the agri- cultural workers of Southern Asia, the transport workers of Xorth Europe, the manufacturing workers of North America. 4. World industrial units, so designed as to include within lr,f/r scope alt of the producf-rs of the world classified in accordance with thdr occupations. To-day, the outstanding method of classifying the people of tin; world is to take them in relation to their political affiliations. The new grouping would arrange all of the peo- ples in accordance with their economic activities. A simple form of classification would include: agriculture, ECONOMIC FOUNDATIONS 73 the extractive industries, manufacturing, transport, trade, housekeeping 1 , and general (miscellaneous) trades. The classification might be made far more elaborate, but for clarity of discussion, a simple classification is of great assist- ance. Every person in the world who performed a useful service would belong to one of these great industrial or occupational groups, and the aggregate of the membership of the groups would equal the aggregate of all the producers of the world. Under this plan, therefore, each individual would have a series of economic affiliations, lie might, for example, be a docker on the French Line at Le Havre (local affiliation); a dock worker in the Le Havre district (district affiliation) ; a transport worker of North. Europe (divisional affiliation) ; a. worker in the transport industries of the world (industrial affiliation) . Since each of the producers in the world would have this series of relations, all of th'. 1 producers w. .uld be grouped together in local, in district, in division;!' and in world indus- trial groups, so that the economic life of the \vorid would present the picture of n completed economic structure very similar to the political structure that has been evolvimr for many centuries, and which has reached its highest forms of development, in such new countries a^ Australia and the United States, where each person is city or town, in ;; c'Minly. in a state a or federation of slates. \Vhile political life lias been thus organized about the administration of. certain public ai'iairs. economic l;ie has remained disorganized, or !K> been organized largely with a!) eye to owners' profits. The producers society will be organ- ized in economic' terms very much as the present society is organized in political terms. Each producer will be a partici- pant in the life of economic units, graduated from the local economic unit to the world industry. 71 THE XE::T STEP 9. The Ideal and the Real This is, of course, an idealized picture, subject to an infinitude of modifications, just as an architect's plan for "a bungalow in the woods" or a city planner's scheme for a model town is idealized and subject to modifications. It is not a working drawing, but a general design which is intended to place the whole subject of economic reorganization on a plane where it can be discussed as a matter of practical social science. The plan presented here is simplified as far as possible In order that attention may be concentrated on the essential issues that the world faces. Too much time and energy have already gone into contentious over details, when there was no general plan in view. Let no man deceive himself with the delusion that the solution of the world's economic problem is a simple matter, but at the same time, each one who is striving toward a better world may rest with the assurance that there are certain simple and fundamental principles that underlie world economic orgaiii/ation. Society is structural, and as a structure it must function; the economic world is built up of working units that are compelled, by the nature i ' ' ip ii industry to work co-opcra- Hvely, but the \ ery natur i' the political structure of modern *'"'" ' i'.s this co-operative work in many essential directions; federation seems: to be -[he logical answer to the ' " ctive social organization, and it only remains workable series of economic units and to build structure a world structure in terms of it her than of polities. he world is sadly muddled. Millions pay for this ir lives; tens of millions pay with hitter ' i 1 heir dav. Th< ECONOMIC FOUNDATIONS 75 must see the whole plan as well as the multiplicity of detail, and must work with the whole plan vividly before their eyes if they are not to be blinded and led astray by the multitude of will-o'-the-wisps that flit across the path. IV. ECONOMIC SELF-GOVERNMENT 1. Maximum Advantage ECONOMIC society consists of unit groups or organs which are established for tiie performance of certain functions. Mines and other extractive units take nature's stores from their age-old resting place and prepare them for the railroad, the factory or the home; the transport units convey goods and people-; the merchandising units bring together many varieties of goods, and act as a distributing agency for those who will consume the prod nets of mine and factory. The existence of a unit of economic organization is therefore a proof of the preseii'-e of some economic function. The whole structure of economic soeiely has developed in response to the economic needs and in accordance with the economic activities of the community in which it exists. When a part of the economic structure is built, it is expected to function. Mines, when opened, must produce i-"; 1 !; railroads, when complete;, must provide transportation. Side, by side with ihe problems involved in liie kind of group- ings thai make up economic, society, there is the question of ihe handling and direction of these groups. No economic institution is of value unless it will perform some useful service by turning out an economic good, or by affording a benefit thai corresponds to some human need. Kadi rational person, ami every self-directing social group faction for the time and the energy invested in any given enterprise. This law of maximum advantage which applies with double force to social enterprises, underlies all intelli- gcntly directed effort. 7G ECONOMIC SELF-GOVERNMENT 77 Unintelligent effort concerns itself with the principle of minimum outlay seeking to ascertain the least possible ex- penditure of energy that will yield a subsistence. This is one of the essential distinctions between the present day society and most of those that have proceeded it. Likewise it is the difference between the more and the less highly civi- lized portions of the earth at the present time. The individual or the group operating on a very narrow margin, or on a deficit that involves constant misery and that may at any time spell disaster, tends to slip by with the least possible misery or suffering, or, to put it more technically, tends to expend the least possible amount of energy that is required for survival. The moment the tables are turned, and the individual or the group operates on a surplus which permits the enjoyment of more than the hare necessaries, the law of minimum outlay is supplanted by the law of maximum returns. The truth of this principle is strikingly illustrated in Canada, Australia, Argentina, and oilier relatively new societies where resources are abiuulant and surplus is large. The same men and women who, under Ktiropean conditions of narrow marginal living, were satisfied to survive with the least possible expenditure of effort, are transformed into creatures operating on another economic plane. In these, new and fertile countries, where the individual, and indeed, the entire group is able to live above the lino of bare subsistence, idual evotes lih?.ise]f untirinl to the economic struggle, cause they are poor, but becan ; 78 THE NEXT STEP up a surplus as soon as it realizes the possibility of increasing its returns through an increase in the energy and intelligence devoted to group purposes. The personal comfort and the industrial prosperity of temperate zone civilizations depend, at the present moment, in great measure upon the supply of coal which is available. Certain parts of the earth, .such as Wales, the Saar Basin and Newfoundland contain coal deposits upon which the entire industrial society is dependent for its survival. It is, then, a mnlter of the gravest importance to secure a maximum coal output, at least to the point of satisfying the minimum demands of the community. AVliatever men and machinery are required to produce the ration of coal upon which indus- trial efficiency depends must be directed toward that goal. At the same time, waste, inefficiency and dis-employment, whether of men or of machines must be reduced to a minimum. What, volume of production constitutes a maximum of return under a given set of circumstances, experiment alone will decide, but the individual and the social effort to secure this return must be unremitting. Su<-h maximum returns will be obtained by society when each productive unit is operating at maximum efficiency. The efficieney of the human body depends upon the efficient oper- ation of the digestive syslem. the respiratory system, the oircubilory syslem, and so on. The stomach, the lungs, the heart must, all function smoothly to maintain bodily health. The body cannot funciimi as a body, ft functions "through the ;iL"_rre;_rate activilies of its various organs. The same filing is true of a society, ft is impossible for the- economic system to secure its maximum returns as a system. It will work only through tin- co-operative Functioning of its various con- ien1 elements. If the efficiency (health) of the economic system is to be preserved, it will be accomplished through ""(live working of the mines and other extractive units; ECONOMIC SELF-GOVERNMENT 79 the mills, and the other fabricating units; the railroads and other transport units. Each one of these constituent elements of the whole economic society must he self-efficient, in order that there may be a high standard of efficiency in the entire economic system. The units of which the economic system is composed must therefore be self-motivating and self-acting. They must be "alive." If one part of the economic body is dead, the whole will eventually disintegrate and decay. 2. The Essentials for Maximum Returns The efficiency of the economic unit the mine, the factory, the railroad division depends upon the attitude of the indivi- dual human beings of which the unit is composed. Just as the entire economic system is made up of an aggregate of functioning units, so each unit is made up of functioning individuals. What would a coal mine be without its pick miners, roadmen, drivers, door-men, dumpers? The efficiency of the economic unit cannot be maintained unless the individuals who compose it are self-acting, intelligent beings, who know what they want and why they want it; who know the ends they desire to attain and how to reach them. Without this beginning there can be no lasting efficiency in a society thai is dependent for its success upon the self-generated aetivity of autonomous groups. In order that society may enjoy a maximum of return for its outlay of labor and machinery, therefore: 1. The human ral'cex present hi each econom < unit mu.i In-fl thruiinli <;n appeal 1<> ! In- fine st ejuaJil't'x of Ihe individual human l)<>ij. That appeal must be stroiiQ- enoncrh and constant pnongh. when coupled with th'" 1 economic appeal, to provide a reason or incentive for continued activity. M) THE NEXT STEP 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 mechani- cal devices. The more complicated the structure the more necessary arc rebuilding and replacement. 3. The itt'fjilii.ctlvitij of thr un>'t must l>e I'cpt 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 ciency in producl ion. 4. Self-motivation a/id co-operation ar< the tico fund-a- 'nicntalbj 'in port ant requirements in the working of all economic units. The former IN the best guarantee of the continuous i'unc- tioning or the unit. The latter links together the different units, making them working parts of the \v3 economic sy.- 1 cm. 1 are four indi foments the 7::a ; :.' c- of human values, the preservation of group \'\\- tiisfi perm, nonce, pi'odu.ftlvc t'lTicieney and self-generated aM ivi-y i'i n* 1 . _ .:..! ;, r-ssful con' i f sofiety is to ,si . ' - -, 1 1 is to ECONOMIC SELF-GOVERNMENT 81 society is built must meet these requirements which constitute four of the essential pre-recjuisites to the success of any eco- nomic experiment. 3. Centralized Authority Granted the desirability of efficiency in economic organi- zation, 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 determina- tion 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 pa.ss beyond the boundaries of such pressing and never- ending routine. Many bodily organs, like the stomach, func- tion involuntarily. "Walking becomes habitual. It is only when the stomach and the legs fail to \vork properly that they become the objects of attention. The same thinir should be true of a well-directed economic system. Kach 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 croups is impossible, should remember that the organs of the human body have been gaining experience in co-operative and harmonious 82 THE NEXT STEP 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 ques- tion. When this point is reached, the social machinery oper- ates 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. 4. An Ideal Economic Unit 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 cnd'iry 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 end-fry and ingenuity have been developed as the result of this stimulus. The worker, the manager, the whole producing unit strove io excel, both because failure carried with it the penalty of destruction (bankruptcy or unemployment) and because success carried with it the probability of large eco- nomic n-wards /'profits). The result was an outpouring of social on erf v in the vat-inns inrlpnfnrlpnt lno:il rrrrmnt: ECONOMIC SELF-GOVERNMENT 83 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 punish- ments 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 ear- lier stages tended to stimulate initiative, its form made co-operation difficult or impossible. The ideal economic unit would he one capable of generat- ing 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 inde- pendent localities. A study of the agricultural village of Central Europe or of the Mexican Indians shows how work- able 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. f). Rewarding Encrnjt The issue of economic self-government resolves itself imo two questions, which the average human being will sooner or later ask : 1. What do T 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 build inn of r OurnfrsJnp of the Economic Machinery The individual cannot be expected to exert himself where there is no apparent connection between the effort expended ECONOMIC SELF-GOVERNMENT 85 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 1 the various experiments that society has tried, in an effort to attain these ends, none has been more sucessful 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 com- pose the unit. The members of each economic group must be supreme in their own. field, except ';i 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 cen- tered 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 1rib,-d council or the town uu'elinjr. ^udi meetings may always he held in local, economic units, such as collieries, denartments of factories and the like. Where it proves impossible to get the members of an economic group all into one meeting place, their affairs in transacted by representatives, chosen as d: 7. The decisions having been made with regard to matters of policy, the next and equally important question arises: "Who shall be entrusted with the duiy of seeing that policies once decided upon are carried out? Who shall be entrusted with leadership in economic affair.-'?'' 86 THE XEXT STEP 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 in- struct 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 nationaliza- tion. Here, then, are three distinct tasks: (1) an investiga- tion 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, statis- ticians and mine experts. The third will fall to the lot of an advertising or publicity mail. The president of District 2 is an executive, charged with the duty of seeing that a pro- gram of mine nationalization is carried forward. The engi- neers, statisticians and advertising men that lie secures to do the work in their respective fields are experts. The.se> dis- tinctions have been well established in the world of govern- ni'-nt and of business, and they are rapidly finding their way into the world of labor. There can he no great difference of opinion about the export. Tie is a technically trained man. and as a chemist, an rician. or as an auditor of accounts lie lias a special field in which he is supposed to he a master craftsman. The selec- tion of sivh an expert, therefore, is a question of finding men with fhr knowledge and experience necessary for the doing Ttain piece of work. ECONOMIC SELF-GOVERNMENT 87 8. The Selection of Leaders 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, be- cause, 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 constitu- ency 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 he made: 1. Through heredity the leadership descending from one generation to the next in the line of Mood relationship. This is the method practiced in all countries that have kings, aristocrats, plutocrats or others who automatically in- herit power from their ancestors. 2. Through self-selection the leadership being assumed by those who are the ouickest to seize it. Primitive, disorganized or unorganized societies or asso- ciations pick their leaders in tin's way. The strongest, the most courageous, the most cunning, press tn (he frniil in an emergency, and their leadership is accepted ns a matter <>i course by those who are less strong or cour;i'_reons r c The leaders of a miscellaneous mob are 88 THE NEXT STEP most part, self-selected. Seeing opportunities for economic advantage, they have grasped them before their fellows real- ized what was happening'. The great accumulations of eco- nomic power that were made in this way during the past genera! ion 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 leader- ship behur 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 coun- tries of th" world, officials of trade unions and other volun- tary 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. ( J. The Details of Organization These general principles of economic self-government may be applied to local, di.-lrict. divisional and to world economic groupings. To tie sure the application, in each instance, will IK; varied in accordance with lie' peculiar needs in fjues- i!"ii. but a general scheme of procedure may be suggested ' as f oihj v. - : 1. SrocKSTiuxs FOR THE OKU. \XIZATIOX or A LOCAL ECO- NOMIC CXIT JX A GIVEN INDUSTRY A MINE, FACTORY, STOP,;-: a. The entire working force would meet at regular intervals, in a -hop meeting, or colliery meeting, or store meeting, to transact general business. ECONOMIC SELF-GOVERNMENT 89 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 chair- manship 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 01 the shop-steward or shop chairman in some of the more advanced of the Uritish indus- tries, in reality this .shop chairman would lie the shop executive, holding ui'iice 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 ail shop committees in the plant. e. AVherc plant committees were organized, it would be their duty to designate one ol' their members as i hair- man. This plant committee 1 chairman would there- fore be what, under present conditions, is the general manager of the plant, with his Fellow eommitteemen as his executive committee or hoard of manager?. f. Each economic unit, whether shop or ph;nt. would have its engineers or experts, picked, like other workers, by the shop committee or the plant com- mittee, and responsible to that committee for the particular tasks assigned to them. All participation in the activities of this basic economic unit hiring and liring as it is called would be determined by the shop committees and by the plant committee, each with 90 THE NEXT STEP 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-direct- ing 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 mediaeval guild or some of the modern organizations for producers' co-opera- tion. 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 eco- nomic unit represents an attempt to apply the best principles of economic and political science to the working out of an in- telligently directed society. -. SUGGESTIONS FOR THE ORGAXTZATIOX OF AX ECONOMIC DISTRICT IX A CilVKX IXDT'STUY. a. The district would consist of a number of economic unils 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 deci- ECONOMIC SELF-GOVERNMENT 91 sion 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 in- dustries 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 par- ticular industry. If the district comprised manufac- turing 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 organi- zation to recognize only such district organizations as did not involve the divisional organization in juris- dictional disputes. c. After securing recognition from the divisional organization, the dislrict organization would lie the judge of its own membership, and would he in a posi- tion 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 iii 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 tin- plant committees, or of the shop committees where there were no plant committees, would he the candi- dates. By this means, only those of recognized standing in a local group could become candidates for the higher offices. At ihe same time, the local group, when it ousted to local office would be nominating for higher office. 92 THE NEXT STEP B. When a plant committeeman was elected to the district committee, his position in the plant com- mittee would l)e tilled by special election. e. The district committee would be a large body, con- sist hi"- of at least one representative 1'rom 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, ex- perts or inspectors, whose duty it would be to check up on the technical side of the activities in the dis- trict, very much as a county agri< ullnral agent or a district sales manager checks up on the work of those who come within his jurisdiction. These ex- perts would be selected by the district executive com- mittee, subject to the approval of the district com- mittee. h. \Yhere possible, important issues confronting the dis- trict 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 in- formation 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 nil matters affecting' only the district. I. St'GGKSTlOXS F;j TIIF. OltGAXT/ATION OF A GEOGRAPHIC DIVISION' WlTillX A G1VF.X 1XDUSTKIAL OH OCCUPATIONAL! GUI IUP, a. The division would consist of a convenient ceo- ECONOMIC SELF-GOVERNMENT 93 graphic area, in so far as possible contiguous and closely bound together by transport facilities, related economic interests, etc. North America, South Amer- ica, South Africa, and Mediterranean Basin, North- ern 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 geo- graphically to the division in question, and covers all of this division, whereas the district organiza- tion includes a group of local economic units, which arc not necessarily contiguous, and are in no particular geographic relation to one another. While the district organization is strictly indus- trial, the divisional organization is industrial and geographic. B. The organization is definitely limited to tin 1 major occupational groups, each of the groups covering the whole of the division. Tlence then- would be, in each division, a division organization of trans- port workers, a division organization of agricul- tural workers, a division organization of those engaged in manufacturing and so on, making a divisional organization for each of the major industrial groups. A (list rict miirht comprise only one branch of an industry such as textile manu- facturing or electric transport. All of these dis- tricts would be included, however, in th" partic- ular divisional organization with which they would logically affiliate. Thus there mion 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 ta^k of making world economic relations more effective and more permanent than they have been in the past. The ice has hern 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 102 THE NEXT STEP 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 irre- sponsible 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. A WORLD PRODUCERS' FEDERATION 10:] The power now exercised by the bankers will, in a pro- ducers' 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 circula- tion 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 cheeks between banks totaled 462.920 millions of dollars. If to these f^un-s are added the volume of checks drawn and accepted on the same bank, the amount of commercial paper discounted, olc., some idea may be obtained of the importance of credit tran- sactions as compared with the use of cash under the present system. Nevertheless, while th" riu'ht to issue money h;is become a public function, the right to issue credit remains in the, hands of private bankers. Under a producers' society, the relation between the vari- ous groups of producers will be maintained through a system of bookkeeping 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 ihe value of its product. Such a system is in voo-ue in any lartre industrial plant, where each department keeps its own accounts, changes the other departments -\virh what they get frm it and credits them v::ih what thev receive. The whole is handled through a central 104 THE NEXT STEP 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 pro- ducers' 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. 4. Federation as a Way Out Experience has shown that the best way to secure co-opera- tion among a number of groups having more or less divergent interests is through a federated or federal system of organiza- tion, under which each of 1he 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 organi- zation or federation. The T nited States of America is an association of sover- eign states, each of which retains the right to decide those matters which are of importance to that state alone, while A WORLD PRODUCERS' FEDERATION 105 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 he 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 stales, 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, busi- ness 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 m^n 1h;;t the road to success lay along the path of federated autonomous units; rather than of highly centralized hnrcau'-racii s. The labor movement has had the same experience in many of the more advanced countries of the world. There has h.on almost a century of local, independent groups, each one , i-ting on its own initiative. The failure of such a divide-and-perisk course was predicted from the beirmninu. Then there have been highly centralized organizations of considerable extent and power, like the American Knights of Labor, which 100 THE XEXT STEP 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, Belgimn, 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 difficult ies 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 indus- try, science, commerce, art, literature have ail 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 coDiinon concern to Britain, France, Ger- many. Pus-'la, 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 conflict mo- jurisdictions and of petty jealousies that have grown up among tlie two score of inde- T ): ' ? : .--', r< ign states of Europe made a conflict almost inevil A WORLD PRODUCERS' FEDERATION 107 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 lie publicly threshed out. For when issues arise between organizations of equal and parallel jurisdiction, a conflict can frequently bo 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 b>sser degree. The economic, social and cultural life of civilization has passed beyond national boundaries. Until this fact is recog- nized, and until some organization is created with a jurisdic- tion 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 tlieir 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 recogni- tion or establishment of local, district, divisional and world federations of the local, district, divisional and world indus- trial groups. This second stop must be taken in order that there may be som" 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 federa- tions of industrial groups will be r-.-illed upon to handle; 1. Those problems involving inter-relations between the various producing Croups, su-h as the factory workers. 108 THE XEZT STEP transport workers, agricultural workers and the like, that must exchange their products and receive from one another the materials upon which existence depends. 2. Those problems which are common to all producing groups simply because they are common to men and women who are trying to live and to function together. The water-supply, roads, education, are questions of this type. Problems of the second sort, and the issues raised by them, cannot be entered upon at this point. The same federal authority that is charged with the control over inter-industrial problems will likewise charge itself, in each instance, with these common questions not immediately related to industry. This is not an attempt to under-estimate the importance of non-industrial problems, but to confine attention, for the moment, to matters directly related to production, with the conviction that when a mechanism is developed capable of handling the industrial problems there will be less difficulty in taking care of those not so closely related to industry. 6. Four Groups of Federations The issues arising between industrial groups, and those problems common to all groups, will best be handled by fed- erations having a jurisdictional scope parallel to that of the separate groups of which the federations are composed. If these component groups are local economic units, the federa- tion will be local in character. If they are district economic units, the federation will have a district as its sphere, and so on. P>y this moans, there will be created a series of federa- tions or joint organizations, beginning with the federation of local economic units, and ending with a federation of world industries. Throughout this enlarging series of federations the principle of local autonomy will be maintained in all of its rigor, and no matter will be referred to a federation that can be handled by a local group. At the same time, the A WORLD PRODUCERS' FEDERATION 100 principle of federal authority will be asserted, and those matters that concern the welfare of more than one group of parallel jurisdiction, will be referred automatically to the federal authority under whose control the group in question falls. The most elemental of the federations would be the local producers' federation, which would correspond, quite accu- rately, to the town or the city of the present day, save that its size and character would of necessity be much better reg- ulated than the character and si/e of the present-day town or city. The modern city has been built as a profiteer's paradise. From the construction of houses to the erection of office buildings, the one foremost question: "What per cent will it yield?" has been the guiding principle behind city construction. The local industrial federation will have, as its chief task, the provision of a living and working place for people, hence the character of the industrial community will be determined with a view to the well-being of the inhabitants rather than to the profit of landlords. The local federation would be under the control of a local council, the members of which would he elected by the pro- ducing units or groups composing the local federation, very much as the modern city is managed by a council ehvt"d In- wards or aldermanic districts. Except for the choice of rep- resentatives on the council by occupational groups, rather than by geographic divisions, the local federation would closely resemble the municipal government of the present day. In addition to its present functions, however, it would assume the task of dealing with issues arising between two or more of the local producing 1 groups. That is. it would have eco- nomic as well as political functions, although it would not necessarily carry on any more productiv enterprises ''gas, water, house-construction, abbatoirs) than do municipalities at the present time. The local producers' federation would be responsible for 110 THE NEXT STEP two chief lines of activity. On the one hand, it would seek to maintain working relations between the various local economic groups by adjudicating those local questions that affected two or more of the groups. On the other hand, it would take charge of, and administer, those matters of com- mon concern, such as the water supply, the local educational institutions, and so on. This second group of functions would be similar to those now performed by the city council, the board of health, the board of education. There would be a local producers' federation wherever a number of local industrial units agreed to function together. Counties, cities, boroughs, and school districts are, at the present time, organized very much in that way. The local producers' federation would therefore differ little from the existing local groups, such as towns and cities, save that its constituent elements would be occupational groups rather than geographic divisions, and that it would be functioning in the economic as well as in the political field. The second scries of federations might be called the pro- ducers' district federations. They would include all district industrial groups within a given economic field. Such a dis- trict federation would correspond, roughly, to the present stale as it exists in Mexico or Australia, or to the provinces in Canada. The district federation would function in three ways. First, there would be the issues arising between the industrial organizations that composed the district federation; second, there would be the issues arising between local federations within the district, and third, there would be those common matters, like health, education, highways and so on. The third series of federations would be the divisional producers federal ions, which would correspond, roughly, to sue]) aggregations o!' states as the Commonwealth of Australia or the Tniled States of America. The boundaries of such a federation would follow the boundaries of the principal land A WORLD PRODFCERS' FEDERATION in areas and the chief population centers. North America, South America, South Africa, the Mediterranean Basin, Northern Europe, Northern Asia, Eastern Asia, Southern Asia and Australia would furnish a working basis for sepa- rating the world into such geographical divisions. Each of these divisional federations would function along the same general lines as the local and district groups. The fourth, in the series of federations, would be the world producers' federation, which would be an organization composed of all of the major industrial groups. These groups, each of which would be organized on a world-wide basis, would unite in the world producers' federation in order to further those interests that were of consequence to two or more of them, as well as those common interests that were of concern to all alike. The world producers' federation would be built on the same principle as the local producers' federa- tion, but unlike this latter federation, the world federation has no prototype existing at the present time. The world producers' federation would be a world author- ity, linking up those interests of world consequence that are now waving about like cobwebs in the wind. Throughout its entire course this outline has been designed in such a way as to separate sharply the producing units and the administrative groups (federations). The local, district, divisional and world industrial unils are th" back-hone of the public machinery in a producers' society. For the pur- poses of facilitating the work of administration, these pro- ducers' groups are brought together, at various points, in local, district, diviMonal and in a world producers' federation. all of which federations derive the'r power directly from the industrial producers' groups. The world producers' federa- tion therefore lias no direct illations w ; ih fh ' local producers' federation, any more than the government of a county, in a modern state, lias with the central federal authority. The authority of the world producers' federation, like that nf the 112 THE NEXT STEP local, district and divisional producers' federations, is derived from its constituent industrial member groups, and is confined to the questions that are of immediate concern to a number of them, or that are the common concern of all. This arrangement will make difficult the production of a state of present type which has drifted far away from some of the most pressing necessities of the common life, and into the hands of politicians, a situation that permits tyranny on the one hand, and that makes any adequate check on the activities of these political rings difficult or impossible. This danger would be considerably reduced by delegating admin- istrative power to the federations, holding each within its prescribed range, and keeping the real power in the hands of the local, district, divisional and world industrial groups. The decision of the world producers' federation would therefore be binding on the industrial groups, and not upon the local, district and divisional producers' federations, except in so far as the industrial groups compelled these federations to follow" the policy of the world producers' federation. Ft is probable that an exception would have to be made in the case of issues arising between two divisional producers' federations. The burden of settling such an issue should rest, however, on the industrial groups rather than on the world producers' federation. This with-holding of authority from the federations in general, and from the world producers' federation in particu- lar may be open to criticism, but it has several strong points in its favor. Through its control of resources, transport and the like, the world producers' federation will wield an immense power. Its constituent members, having aided in its decisions of policy, may follow a similar course of action in the divi- sional and the district producers' federations. Again, the alternative to the organization of a series of disconnected federations is a centralized bureaucracy of such magnitude, and holding such vast power, that it would be both unwieldy A WORLD PRODUCERS' FEDERATION 11:] and dangerous, beside violating that very essential rule of local authority in local affairs. The separation of the federations would compel each of them to specialize on particular problems of administrative routine. Questions that were to be carried to wider authori- ties would be carried by and through the various constituent industrial groups. The structural organization of the world producers' fed- eration would be similar to that of the United States of America or that of the Russian Federated Soviet Republic. The constituent groups would be economic and occupational rather than political or geographic, but the principle of fed- erated autonomous groups would be the same. Each of the major industrial groups that belonged to the world producers' federation would have sovereign power over those matters which affected that group alone. The federation, on the other hand, would have jurisdiction over matters affect inn' two or more of the world industrial groups, as well as over those matters which were of common concern to all of the member groups. 7. Tii.r Form, of Organization The general lines of organization for the world producers' federation would be somewhat as follow.-: 1. The workers in each of the major industrial e-roups would vote in -Tune of each year for the members of a world parliament which would be the central authority in the world producers' federation, 2. The world parliament would consist of from SOD tn 1000 delegates, (de-led in each of the major imliu groups by the producers in that group. 114 TIIE NEXT STEP tied to more than 150 members in the world parlia- ment. b. The members of the world parliament would be elected by popular vote in each of the major indus- trial groups, the franchise being 1 extended to all pro- ducers, including those who had been producers and were rendered incapable of activity through age or infirmity. c. Each industrial division would be entitled to at least five members of the parliamentary delegation from that particular industrial group, but the details of representation from each of the major industrial groups would be left in the hands of the group. 3. The world parliament would be elected in June and would meet in July of each year. Since the world con- gresses of each of the major industrial groups would meet in the preceding January, they would have six months to thresh out their individual problems, before they wf're called upon to consider the general problems confronting all of the groups. 4. The world parliament would select, from its own mem- bership, an executive commit tee equal in size to ten per cent of the total membership of the parliament. a. On this executive committee each of the world indus- trial groups would be entitled to at least five members. b. Tin 1 exffutive committee would be the steering com- mittee of the world parliament, and when the world parliament was not in session, the executive com- mittee would be the responsible body. c. The executive eommiltce would nvet once in four months, or oft oner at its disci-Hiou. ;>. T!K' executive committee would select, from its member- ship, a number of administrative board 1 --, at the same naming the chairman of each board. Each of these A WORLD PRODUCERS' FEDERATION 115 administrative boards would bo charged with the res- ponsibility of handling 1 a unit problem, such as the con- trol of resources, the control of transport, and the like. 6. The chairmen of the various administrative boards would constitute the executive heads of the world pro- ducers' federation. They mi^ht be called the world producers' federation board of managers. This board of managers would be responsible to the world parlia- ment executive committee. a. If, at any time, the board of managers failed To secure a vote of confidence from the world parlia- ment executive; committee, on any natter involvinc: a question of general policy, the board of managers would be automatically dissolved, and the executive committee would proceed at once to select a new board that would replace the old one. b. If the executive committee failed to select a board of managers that could secure a vote of confidence. the world parliament would be automatically sum- moned to meet one month from the day on which this failure to elect occurred. c. As soon as it convened, the world parliament would proceed, as a first order of business, in the election of aa executive committee wlneh \vnuld function. d. If the parliament failed to elect an execuiivc com- mittee capable of functioning, (he |iarli;n be automatically dissolved, a sp< '''al election would beheld within, ten days, a new pa:'l:a I v [Id be selected, and would assemble thirty days from the date of tills speeial elect : > n. e. By these means, the whole machin producer.^' federation would be r ately iv^'-i-.n^'ve at all t i: 1 :-- to lie constituenc, and the board of mai PLAN FOR WORLD ECONOMIC ORGANIZATION Board of Managers consists of chairmen of administrative boards The world executive with ona member from each industry Boards of ex- perts iiml special- with chairmen by the world mmittee. World Executive Committee consists of ten per cent of World Parliament Machine Man- ii t'ui-turiny In- dustries Agricultural Industries A WORLD PRODUCERS' FEDERATION" 117 the executive committee and of the -world parlia- ment, or turn the -work over to another group. 7. The world parliament would exercise, directly, or by delegated authority, all legislative, executive and judi- cial functions that pertained to its activities. It would therefore create the departments or subdivisions neces- sary to the carrying out of these various functions. The members of the world parliament would lie elected for one year, subject to recall at any time by the con- stituency that elected them. The parliament would decide on the qualifications of its own members. This proposed plan for the organization of a world pro- ducers' federation will be made clearer by a diagram, (p. 110.) 8. AH Power to iJic Producers! The plan for a world producers' federation is designed with the object of placing all power in the hands of the pro- ducers. The society of the present day vests power particu- larly economic power in the hands of the owners of economic resources and machinery. Their public institution is the capitalist state, and their rule is perpetuated by the manipu- lation of its machinery. Tin dor this order of society, the chief emphasis is placed on owning rather than on working. The largest material rewards and the greatest amount of social prestige go to the owners. The present society sanctifies ownership, and raises the owner to a position of moral superiority. The same system which dignifies ownership can scarcely recognize work as of supreme social consequence. The worker is therefore placed in a position inferior to that of the owner. His economic rewards are less, his place on the social ladder is lower, and his children are taught in the schools the neces- sity of getting out of his class into the society of those who are able to live without working. Tt is hardlv necessarv to remark that in a, comrn.un, itv 118 THE NEXT STEP dependent for its existence upon labor, the teaching of such a philosophy points the way to class conflict and ultimately to social disintegration. If the community is dependent upon production for its existence, there must he sufficient incentive to continue production, otherwise the community dies. The disastrous consequences that must of necessity follow 011 the economic order as it is constituted at the present time are already in evidenc'v strikingly so in the case of the European breakdown. The owning class society is coming to an end falling of its own weight. The time has come when the producers must take the control of the world into their own hands or .suffer disaster. Man's sense of justice tolls him that the product should belong to him who is responsible for creating it, and his expe- rience teaches him that human beings take a greater interest in that which is theirs than they take in the property of another. The results of production should go to the producers; the machinery of production and the materials entering into production should beloncr to those responsible for the carrying on of the productive process. How shall these things be? Only when the producers themselves decide to make them come true. All power to the producers ! This sentence carries with it the key to the society of the future. VI. WORLD ADMINISTRATION 1. The Basis for World Administration WHEN the producers of the world are organized along the lines of their economic activities, and are federated in local, district and divisional federations, and in a world producers' federation, the structural side of the producers society will be complete. Such a structure is built for use, not for appear- ance, and its effectiveness depends upon the way in which it works. The handling or administration of the producers society is therefore the determining factor in its success. A world producers' society may fail as miserably as any other form of social organization unless it is deliberately utilized to attain the ends for which it was created. The establishment of a world parliament consisting of representatives from the major industrial groups would create an authority more powerful than that of any existing state because, in the first place, it would be move extensive than any existing state. But even supposing that one of the great nations Britain or the 1'nitcd Slates was to conquer the world and attempt to administer it. tin 1 world producers' federation would be far more effective than such a victor. because its rule would be founded on the will and on the con- sent of the governed and not on the imperial foundation of organized might. The world producers' federation could therefore look for a support from its constituency that no empire could hope to demand from its conquered subjects. The centralization involved in maintaininu 1 the authority of an imperial ruling class in a larr/e and complex state is so great that it invariably results in friction and disafi f <' The self-governing stale, less efficiently co-ordinated and cen- 119 120 THE NEXT STEP tralized, still has a far better chance for survival. Its energy- generating centres are so much more numerous and more localized than those of the class governed empire that they necessarily reach a larger share of the population. The roots of the self-governing social group may go no deeper than the roots of the group under a bureaucratic government, but there are more of them, and they go to more places. The founda- tions are sounder because they are broader. In addition to these functional advantages of self- government, it possesses an immense asset in the sense of pro- prietorship that leads the citizens of a self-governing commu- nity to stand by the community organization because they feel that they have built it and that it is their own. A self- governing community therefore carries within itself the means of its own perpetuation in the enthusiasm and devotion of its population to an institution in which they feel a sense of workmanship and of the pride of possession. A world parliament, organized on the basis of self- governing industrial groups, would be unique in two respects. First, in that it was of world extent, and second in that it was built upon the industrial affiliations of its citizenship. If such an organization were handled in a way to hold the alle- giance of its eonstituent members, its decisions on matters of world importance would carry an immense authority. 2. The Field of World Administration There, in fact, would be the test of world government fffir-;iey in its ability to leave the handling of local problems to local groups, and to concentrate its energies on the admin- istration of those problems which have assumed a distinctively world scope. Such capacity to understand the difference between the business of local crroups and the business of the world organization would be the touehstone of woi-ld states- manship, the criterion by which the master political minds of the age could be tested. The short-sighted, narrow-visioned WORLD ADMINISTRATION 121 leader of world affairs would seek to grain and to hold power for himself and for his immediate local interests. The pres- ence of many such men in positions of power would soon split the world government into a series of factions, each one seek- ing to destroy the others and to take away their authority. Such a competitive stage would represent little advance over the present nationalism. A world government has no virtue in itself, and may as easily degenerate into a scramble for office as may any other phase of group relationship. Its success would only be possi- ble where its power was strictly limited to the control of those matters that had reached a plane of world importance. Even then success would be impossible unless those responsible for making essential decisions saw the world problems as wholes rather than as localized and separable problems. Grave issues hang on the method in which the world prob- lems are approached and handled. Success is not assured by any means. Still, the dangers and disadvantages of a plan do not condemn it unless they outweigh the apparent advantages. The people of the western world face a number of serious problems that cannot be solved by the existing nations. Some step must be taken to cope with the new situation that h;is followed on the heels of the industrial revolut ion. and in so far as the actual practices of life have evolved to a world plane, and in so far as they concern the workers in more than one industry, it must be apparent that nothing less than some world authority will suffice to cope with the issues that they present. A number of economic questions, such as the control of resources and of transport, have already passed beyond the boundary of the individual nation, and have reached a stage of world importance where they can b^ handled only on a world basis. In the normal course of social evolution, other questions will, in like manner, emcrcrc into a place of world 122 THE NEXT STEP consequence. As rapidly as such developments occur, the administration of the world issues must be delegated to the world parliament and to its appointees and subordinate bodies. .'}. Five World Problems There are a number of problems that have passed beyond the control of any single nation, and that should therefore be made the subject of world administration. Among them are: (1) the control of resources and raw materials, (2) transport (3) exchange, credit and investment, (4) the world economic budget, and (5) adjudication of world disputes. Under a world producers' federation, the administration of these five problems would be in the hands of five administrative boards selected by the executive committee of the world parliament. Each administrative board would select and organize a staff of experts and specialists in its own field, and would present the outline of its proposed activities to the world parliament very much as the department of a modern govern- ment presents its budget to the parliament of its state. This presentation would take place through the executive committee of Hie world parliament, and it would be necessary to secure the endorsement of that committee before the plan could go before the parliament. When the plan was approved, the administrative board would begin to function as a part of the machinery of the world producers' federation. Thereafter it would serve as a part of the world administrative mechanism, the working organization of which would remain intact, even should there be a change of policy, in exactly the same way that the department of state or of agriculture, in any modern govern- ment, remains intact through the various changes of party in power. The specialists and experts who made up the staffs of the administrative hoards would secure their appointments as the WORLD ADMINISTRATION 1^:J result of civil service examinations, and would continue in their positions until some quest ion arose as to their efficiency. Each administrative board would he organized into a scries of departments corresponding 1 with the unit problems coming before the boards, with one specialist or department head charged with the direction of each of these departments. In the raw materials and resources board, for example, there might be one department for each of the more important resources such as coal, iron, copper, cotton, wool, timber, and the like. In the same way, the work of the transport board might be divided into departments covering shipping on the high seas, inland water transport between divisions, inter- divisional land transport, aerial navigation not wholly within one division, and so forth. In each instance. 1he task of pro- viding an adequate supply of the commodity or an efficient service, would fall to the department or departments involved. while the administrative board itself would sit as a court of last resort, and as a board of strategy for the field in which it was functioning. The administrative board would thus be a group primarily of experts, charged with the specific task of handling some problem of world moment, and responsible to the board of managers of the world producers' federation for the success of its activities. 4. Work of the Adiiiinixtrafh'r B"ry much isolated community, lacking some of the essential resources. It is therefore quite natural that her trade figures should show such a result. The same thing is of course true of Japan, Germany, Holland, Belgium, Italy, France, and in fact most of the important industrial countries. This is taken as a matter of WORLD ADMINISTRATION 125 course. Oddly enough, however, it is likewise true of the United States, which is as near to industrial self-sufficiency as any of the leading industrial nations. Among the 5,278 millions of dollars worth of commodities imported by the United States in 1920, there were 40 million pounds of aluminum, 143 million pounds of rice, 345 million pounds of cocoa and cacao, 1,297 million pounds of coffee. 510 million pounds of hides, 152 million pounds of fresh meat, 603 million pounds of India rubber, 260 million pounds of wool, 510 million pounds of paper stock, 1,460 million pounds of paper, 8,074 million pounds of sugar, 4.459 million gallons of crude oil, 130 million skins, and so on. Here are extensive imports of hides, oil, paper, sugar, coffee, wool and rubber seven of the most important items of modern commerce. Well supplied as it is with varieties of climate and resources, the United States is nevertheless compelled to import large amounts of some of the most essential raw materials. Like the nations of Europe, it is forced to depend, for these and other industrial essentials, upon portions of the economic world that lie outside the national boundaries. An examination of these and similar figures tells the story of the industrial future a story of limited, localized resour- ces upon which the expanding industries will be compelled to make ever increasing demands. Since all of these demands cannot be met there must ensue a ferocious strn<_r'_rle among the nations to secure and hold the resource key to economic advantage. The beginnings of that struQ'u'le have already been witnessed in the contest between France and Hermany for the coal and iron deposits of Western Europe. TN next stage will include a struggle between fit-eat Britain and the United States for the possession of the world's reserves of oil. Such a struggle, with its appalling loll of suffering and chaos can be obviated in only one way. by an apportionment. among the risers, of the chief raw materials, through an agency in whose direction all of those concerned have a share. This 126 THE NEXT STEP result could be accomplished by the resources and raw mater- ials board of the world producers' federation. The activities of the resources and raw materials board will include : 1. A survey of all available resources and raw materials. 2. A survey of the present consumption of these raw materials. 3. A survey of the present production and of the possible production of these materials. 4. A production budget, assigning to each of the producing areas the amounts of materials that they are responsible for producing. 5. A consumption budget, assigning to the various using areas their quotas of the materials produced. 6. Provision for the increase in production necessary to meet the demands of the consumers of raw materials. 7. Final decisions as to which resources should be used, and for what purposes. This board would have under its immediate control the destiny of the whole producing world. It would not own the resources any more than the postal department of a govern- ment owns the post offices and the mail trucks, but in one case, as in the other, the power to decide on the service to be ren- dered would rest with the administrative officers. The need for some central control over the world's resources, and of some clearing house for raw materials seems quit!' obvious. The world producers' federation faces no more important or pressing issue. In this field alone, through its el ins iuation of sources of conflict and its regularizing of raw maiorhd supplies, the world producers' federation could undoubtedly justify its existence. diction over all of those activities involvino; the transfer of AY OKL D A DM I X J S T i t ATIO X 1 27 goods, of people and of messages, not wholly within one divi- sion. Such a plan has been worked out in part in the I'nitfd States of America, where commerce between the states (inter- state commerce) is under the control of the Federal Govern- ment, while commerce wholly within one state is under the control of that state. The same principle, applied to a pro- ducers' society, would leave local transport in local hands. while all matters concerning world transport would be under the control of the world producers' federation. The present economic system depends on the shipment of goods from one point to another. Raw materials are sent from the place of their origin to the fabricating establish- ment that consumes them. In some cases, these distances are small, but when Cuba sends iron ore to the United Slates, or when Brazil ships coffee to Europe, or when Enu'land sends coal to Italy, the distances are considerable and the means of efficient transport are correspondingly important. The same thing holds true of the marketing of finished products. Many of the goods turned out by the present-day industry particularly machinery are very bulky and heavy. Kach of the manufacturing nations sells its goods, not only within its own borders, but at the ends of the earth. The transport of goods thus becomes supremely important. The transport of goods and of people is only one aspect of the work coming under the direction of the transport and communication board. Tn addition, then- would be; 1. The postal system, which is already on a world basis. 2. The express system, which is really only a branch of the postal system, and which is also on a world ha at the present time. 3. Telephone, telegraph and wireless machinery, wh'u-h arc in their very nature wider than the boundaries of one nation, and which are to-day amoncf the chief means of hold in 2: the people of the world close together. The mechanism of transport constitutes a vast network nf 128 THE NEXT STEP inter-relations that have been carried farther toward a world basis than any other phase of the world's economic life. The nature of ocean transport, of the postal service, of the express service and of the telephone and telegraph made this inevita- ble. The inventions and discoveries of the past century have worldized transport without the necessity of any intervention from a producer's society. While the work of the transport and communication board would be of vital consequence, it would be relatively simple, in that it would involve little innovation, but rather the unifi- cation and co-ordination of existing agencies. 7. The Exchange, Credit and Investment Board Many economic writers have characterized the processes of exchange as "non-productive" activities, nevertheless, under the present economic order they lie closer to the seat of power than any other single group of activities. The rise of the banker to his present commanding position is due, pri- marily, to his control over money, and to his power to issue or to with-hold credit. A producers' society may lay far less emphasis on money and its derivatives than does the present- system, yet the money function will remain and the money forces will doubtless play some part for a very long period in the new economic order. Money will own its position of importance, under a pro- ducers' society, to 1he need for a medium of exchange, and until men discover a means more effective than money for the facilitating of exchange, money vrill continue to play an eco- nomic r^le. The inhabitant of a modern industrial community buys many things each day. For (lie newspaper he spends a penny or t\vo; for the street-car ride, five or ten cents; for fruit, groceries, and o of economic society, one arrives at a necessary corollary to the ircneral theory. The purpose of competition is to injure, wipe out and dispose of the competitor. Therefore the 140 THE NEXT STEP misfortune of our competitors is our good fortune. This would lead, as applied to the actual conditions of life, to some such formula as : 1. Bankrupt your competitor and you will profit. 2. Impoverish your neighbor and you will benefit. 3. Injure your fellow-man and you will gain. Stated thus baldly and harshly, these three propositions sound incredibly silly, particularly in view of the example the world has just had of large scale competition the World "War yet they are a fair picture of the line of thought and conduct accepted as rational by modern economic society. The normal processes of competition are directed to the destruction of competitors. War is a frankly avowed means of smashing rivals. Nationalism is built on the theory that "our" nation is superior to all other nations, and that, in the long run, it is capable of defeating (injuring) them. The practice of such ideas render an effective organization of society virtually impossible, and it renders social catas- trophe almost inevitable. Bankruptcy breeds bankruptcy. Impoverishment is a contagious economic plague. Injury leads to bitterness, hatred and further injury. These logical fruits of competition once admitted into the economic body, threaten its very life. The tenets upon which capitalism is founded have already boon abandoned in part by their sponsors as unworkable. But at best they represent a standard of social morality that is essentially destructive of social well-being. The human race has no guarantee of the success of any experiment, and recent experiences with the war. and with the present post-war plight of Europe suggest that the capitalist experiment will fail disastrously unless some extraordinarily successful efforts are made to put things to rights. Society experiments, trying first one means of advance- ment and then another. A certain number of these new ventures, which prove to be of social advantage, are adopted ECONOMIC ORGANIZATION 141 and incorporated into the social .structure. The vast majority are rejected as inadequate to meet the social need. Capitalism is apparently in this latter class. 3. The ( 1 o*t of Experience Experiment is the necessary road to new experience, and the cost of experiment is written in the immense wastes that it involves. Experience gained through, experiment is some- times very costly. It is never cheap. Frequently these costs, measured in terms of misery, are so great as to overbalance the advantages gained through the experiment. If, therefore, there were another way to gain knowledge except through the processes of experiment, it would result in an immense saving for mankind. 4. Eihtcaiion There is a way, other than experiment, in which knowledge may be gained. Instead of relying on experimeni experience) for the spreading of knowle,!^ 1 ", it is possible 1<> utilize the indirect channel called education. If this method is followed, and the results of the race experi: experience arc made available to the yornm 1 of the need for exp"rinient will be limited to since most of the necessary know] 'dge wsl through education. The individual need jmt repeat all "I' the .:> his ancestors with animal breeding, hai smelting, writing, house-build in 'il!i the emergence of arts and crafts, the apprentice- ship to life becomes longer. At the present time, the individual may e< ntinue his education as long as he is capable of acquiring new ideas. Under the present society, therefore, Hi- 1 - /, ;:cutiop.al processes are the chief reliance for the trans- i T .;!on of new ideas. 5. Facing the Future The accumulated knowledge of the ages, handed on from one generation to the next, enables the scientist to suggest the direct ion in which new experiments should be made as well as to predict their probable outcome. His work ceases to be hapha/ard. It has a well-understood policy and common problems. Particularly in the realm of natural science, has there been a vast accumulation of verified knowledge, from which thero have been deduced principles and laws which enable the electrician or the astronomer to predict the action of the electric current or the course of the stars with almost unerring accuracy. To be sure, these predictions do sometimes go wrong, but for the most part they are founded on verified and tested hypotheses. Tlie past thus advises the present, which, from the vantage ground so gained, prepares its contribution to the future. If each generation were' compelled to learn how to build fires, to employ language, to shape pottery, to weave, to print and to harness electricity all over again, it would seldom get farther than the rudiments of what is now called civilization. The new knowledge that is gained in each generation is obtained through experiment, but many costly errors are avoided in these experiments through the wisdom that is based on the accumulated knowledge of the past. ECONOMIC OKGAXIZATION 143 Thus each generation of scientists accepts from its prede- cessors a trust for the future. Not only must it preserve the body of knowledge, but it must verify, amplify and enrich it. This is as true of the social scientist as it is of the natural scientist. The difference between them is that the natural scientist has worked out his technique and established his field, while the social scientist has reached only the threshold. 6. Accumulating Social Knowlcdyc, Social knowledge is }~et in its infancy. It is only within the century that Comte, Buckle, Marx, Spencer and other historians and sociologists have made an attempt to place the accumulations of social knowledge on a par with the accumu- lations of mathematical or chemical knowledge. Until some effort was made to study society in a scientific spirit, there was no reason for supposing that men might be able to cope with social ills or to prevent social disaster. Even to-day, while there is no longer any question as to the possibility of classifying social facts, and while sociology is regarded as a science of great promise, the feeling lingers that social events are fore-ordained. M;my people f r ,-l to-day about social disaster as the men of the middle ages felt about the plague that it is outside the field of man's preventive power. Another fatalistic school of thought holds that men learn their social lessons only through failure and disaster. According to the first line of thought it is useless to interfere with social processes because they are in the hands of the gods; according to the second, mm will not interfere, until they have been whipped into rebellion by the adverse condi- tions surrounding them. Men in the past have modified the course of human events in the most profound way. The first smelter of iron and the first constructor of a wheel heiran a series of events thai is still molding social life. It is quite possible to say that these events were fore-ordained, but it is at least equally possible 144 THE NEXT STEP to reply that the same process of fore-ordination is still busy, and that the changes that it will make through the present generation will be at least as important as those which it has made in the preceding ages. Those who believe that the race learns only through hard- ships and suffering should bear in mind : first, that most of the knowledge communicated to the individuals of each gen- eration is communicated indirectly through some process of education ; second, that society is composed of those individu- als; third, that modern communities have built a vast machine whose sole purpose it is to influence opinion by teaching (indirectly) in the school, in the church, through the printed page and the film. In Japan this machine is employed to teach the people the sanctity of the emperor ; in Britain it is used to convince the masses of the sanctity of business-as- usiial ; in France it is used to proclaim the sanctity of prop- erty; in Russia it is used to inculcate the sanctity of the revolution. If people learned only through first hand expe- rience, these propaganda machines would be failures. In practice, they are highly successful. Social disaster is not the only path to social knowledge. It is not necessary for a generation to suffer from typhus or to be ruined by war in order to be convinced that these dread diseases are menaces. The desire to prevent famine is felt by millions who have never come any nearer to it than the stories in the papers. Society learns, indirectly, through education slowly of course, but none the less surely. The average man is convinced of the desirability of trying to avoid disease, hunger and the other ills that effect him personally and immediately. lie is not yet convinced of the efficacy of a similar attitude toward war, revolution and other disasters which inevitably destroy some portion of society, and which in the end will prove as preventable as disease and famine. Social disaster seems more inevitable because it strikes more people at one time, while individual disaster lias ECONOMIC ORGANIZATION 14.", been more carefully studied, is better understood and is more localized. Grave dangers menace present-day society. Economic breakdown, war and social dissolution with their terrible scourges pestilence and famine have already overtaken millions. It is plain that some new course of social action must be planned ; that some social experiment must be inaugu- rated that will ward off the impending disasters. Social experiments should be made, as chemical and elec- trical experiments are made, after all of the available facts have been carefully considered and digested. The results of such wisely planned experiments in the social field may be just as dramatic as the results of similarly planned experi- ments in the field of natural science. Never in the history of social change has there been an intelligent direction of social processes. Many men in many ages have had ideals and aspirations, coupled, in some cases, with a limited knowledge of social practice, but social changes have come upon mankind for the most part, as a meteor comes upon the earth's atmosphere unexpected and unheralded, startling those who have seen it by the suddenness of its appearance. Nor has there been any attempt on the part of the ruling powers to instill a different point of view with regard to these matters. On the contrary, there has been a determined effort to convince men that social chancres were beyond their ken. The air of mystery has been blown away from natural phenomena, but it is encouraged and per- mitted to surround social chancres. While it endures, an intelligent direction of social life K of course, quite out of the question. This attitude is being broken down, however. The past hundred years of experiment and experience witli a competi- tive order have convinced multitudes that such an order is unworkable. During the same period, the development of economic organization on ever broader lines has emphasized the need of common purposes and common activities. 146 THE NEXT STEP Recent social experience teaches plainly that an injury to one is an injury to all; that a benefit to one is a benefit to all ; that men rise in the scale of well-being with their fellows and not from them, and that a co-operative social life is the only one that will prove livable and workable. These four propositions include the best thinking of the modern world on the fundamentals of a social structure that will prove livable and workable. The acceptance of any such standards of social life involves a right-about-face in the basic social philosophy of the world. 1. The doctrine of laissez-faire must be accepted for ivhat it is an exploded theory that has promoted, not social well-Icing, but the interests of favored classes. 2. Catastrophe must be recognised as the most costly ave- nue to progress. 3. Social science must be made at least as effective, in guiding the life of the ivorld as is physical science. Social science alone will not protect men from the dangers that surround them. Every social group is dependent for its effectiveness upon the kind of individuals of which it is com- posed, and their ideas and ideals limit the ideas and ideals of the group. At the same time, a careful!} 7 thought out course of social action, like a carefully thought out course of individual action presents a standard toward which society may work. A plan for social organization is like the blue-print with which the mechanic works. Science comprises his rules and methods of procedure, but the driving power comes, not from the lil ue-print and not from the formulas, but from the man himself. This holds equally true of society. 7. Conscious Social Improvement Conscious social improvement is the improvement made by society in pursuance of plans that are prepared and car- ECONOMIC ORGANIZATION 147 ried out with the knowledge and approval of the mass of the community. It is the product of community intelligence directed to public affairs. The individual can make conscious improvements in his condition only through observation, analysis, conclusion and experiment. The community is under the same limitations. Its progress will be intelligent only when it works rationally and purposefully upon the problems with which it is con- fronted. The individual faced with a perplexing situation in his business or in his private life, sits down and goes over the matter, examining it point by point, until he thinks that he has a solution for his difficulties. Society, under similar cir- cumstances, must follow a like course of action. People must ponder and discuss the issues before them until there is some consensus of opinion as to what course should be followed. It is only under such conditions of intelligently directed social action that conscious social improvement is made. Conscious social improvement is therefore practicable when the available knowledge about social problems has been socialized or popularized to a degree that renders the com- munity intelligent concerning its own affairs. The task of popularizing any form of knowledge falls primarily to the educator, the journalist and the other moulders of public opinion. 8. The Barriers in Prorjrms There are two important barriers to intelligent social progress. One is the lack of organized knowledge concerning social matters. The other is the restriction of this knowledge to a tiny fraction of the population. Social science, still in its infancy, has ahead of it decades of advancement before it attains a position corresponding with that of the physical sciences. Even at that its progress must be slower, first because of the intricate nature of social 148 THE NEXT STEP phenomena, and second because of the herculean efforts that the vested interests make to destroy any form of social experi- ment that threatens their privileges. Equally serious, as a limitation on the efficacy of social knowledge, is its restriction to a very small fraction of the community. Progress in the physical sciences is initiated in the laboratory, without any considerable participation by outsiders, but progress in social science depends on the atti- tude if not on the consent of the community, and therefore the socialization of social knowledge becomes one of the indispen- sable elements in social progress. The handling of social problems has been confined, in the past, to a very small minority of each community. An aris- tocracy or plutocracy has taken charge of domestic and for- eign affairs, and has made the decisions on which community well-being has depended. "With the advent of "popular gov- ernment." certain of these decisions have been turned over to the masses of the people or have been seized by them. The essential economic decisions, however, are still made by the owners of private wealth. If there is to be an organization of economic society that will function successfully and auton- omously, the knowledge on which the decisions affecting economic policy are made must be public property. Until that stop is taken the economic life of society will be directed by the chance desires of those who own the machinery of production. Social students will accumulate knowledge and reach deductions, but that is not enough. The task is not completed until the results of their researches are common property. Recent inventions and discoveries make the distribution of knowledge comparatively easy. Cheap paper, rapid print- in cr, the newspaper, the magazine, the book, have all facilitated the scattering of information to those who could read, and in tin- -\vestc-rn world this is more than nine-tenths of the adult population. For those who cannot read, the camera is an ECONOMIC ORGANIZATION 149 educational power. The machinery for public education the schools, the press, the lecture-platform, has grown within a century to a point that renders possible the speedy distribu- tion of knowledge to the most remote parts of the world. One of the greatest single steps in the reconstruction of the eco- nomic life of the world is the use of this machinery to dis- tribute such information as is essential to a clear understand- ing of the economic problem and the normal course of its development. 9. Next Steps Accept the foregoing analysis, and what lies immediately ahead of society? 1. The socialization and persistent distribution of extant knowledge. 2. A decision -with regard to the next great social experi- ment. 3. The selection of the group best able to carry through this adventure. 4. The preparation of this group for its task. 5. The placing of the task upon their shoulders, and the backing of them with every possible assistance. The working out of the detail of this program is far afield from the purpose of the present study, which must confine itself to the problems of world economies. L-'t it suffice to indicate here that in pursuance of the program outlined above there must be inaugurated a widespread propaganda the object of which will be to get the facts and their implications to the people: the facts regard intr the disintegration of ilv present order; regarding the possibilities of a new society; regarding the next steps that are necessary in its establish- ment. This propaganda is being carried on by those branches of the labor movement that are concerned with the workincr out of a new order of society. Since it is apparent that the 150 THE NEXT STEP organized producers will be the dominant element in the new society, they are its logical architects and builders. It is to this end that the energies of labor education must be directed. When the producers are ready for their stupendous task, and when the time is ripe, they will assume the responsibility for erecting the superstructure of the new society. They will make costly blunders, some of which may be anticipated. They will be compelled to face difficult questions of tactics. In the course of their activities they will make day-to-day decisions that will play a vital part in the ultimate outcome of their experiments. 10. The Success Qualities For the rest, the movement for a producers' society needs an emphasis on those qualities that will bring triumph out of defeat, and that can convert the most menacing situations into assets: 1. A willingness to learn better ways of doing things, and to abandon outgrown ideas and ideals for new ones. 2. A faith that will stand up under failure. 3. A vision that sees beyond a lowering horizon. 4. The courage to keep looking and trying, even in the face of difficulties that seem insuperable. All human achievement is conditioned on these qualities, and their development is a pre-requisite to successful experi- ment. VIII. ECONOMIC LIBERATION 1. Why Organise? FROM many sides echo voices urging the human race to co-operate for the general advantage. The world, torn and distracted by the subsistence struggle, yearns toward a method of life that will ease the strain and relieve the heart-ache that are involved in the present-day conflict. It seems that this world-need can be met by a world economic organization built along the lines of productive activity controlled by those who produce, and sufficiently powerful to utter the final word with regard to the disposition of resources and raw materials, of transport, of credit, and of the more general phases of production and consumption. There can be little difference of opinion concerning the necessity for some such organization. A question may well be raised, however, with regard to the probable developments of so vast a world machine. "What are its ultimate purposes ? Why, in the last analysis, do men seek to improve the economic and political structure of human society? Why organize at. all? There is a clear-cut answer to these questions : Men desire changes and improvements in their economic life in order that they may attain greater freedom, and they organize for the purpose of making these changes and improvements more easily. Man is subject to many drastic limitations. First, there are the physical limitations of his own body its height, its reach, its flexibility, its resistance, its fund of enenry. Then he is limited by nature by the climate, the altitudes, the fertility of the soil, the deposits of minerals, the movement 151 152 THE NEXT STEP of water. Man is further limited by habit, custom, tradition, and by the opinions of his friends and neighbors. Again, he is limited by ignorance, by fear, by cowardice, by prejudice, and by his own lack of understanding as to the true nature of freedom. In addition to all of these restrictions he is limited by the economic bonds that hold him to his job, that tempt him with gain, that drive him, day by day, to seek for food, clothing, shelter: for comfort and luxury. Only dimly do men realize these limitations. The more they learn, the more clearly they understand the nature of the bonds that hold them, and the better are they prepared to break down the most hampering barriers, and to follow where aspiration and hope beckon. Yet, even among the masses of the people, who have had little time to learn, and less in which to reflect, there is a persistent longing to be free. The plea for liberty always awakens a response in them because, through their own lives they come into such intimate contact with the hateful burdens that oppression lays upon its victims. The longing to be free is probably one of the most widely distributed of human qualities, and one, moreover, which men share with many of the higher animals. The "World "War focussed this longing and raised it to a pitch of frenzied exaltation, under the spell of which hundreds of millions fought and worked, as they thought, for liberty. The fact that they were mistaken in their ideas regarding the purposes of the war docs not in any sense detract from the sincerity of their desires, nor from the earnestness of their efforts. The "World "War fervor was typical of the eager attempts that men have made at intervals all through history, to win freedom against immense odds. During the past three or four centuries this struggle has been particularly severe in the political, the social and in the economic fields alike. Although the Dark Ages almost obliterated the expression of creative energy in the Western World, the Renaissance, the ECONOMIC LIBERATION 153 Reformation and the industrial revolution, following in quick succession, proclaimed its reawakening, and to-day there is scarcely a group of people in Egypt, in Ireland, in Korea, in the Philippines, or in dark, enslaved Africa that does not hold a molten, mass of sentiment surging toward freedom, a seething, smouldering pressure, continually seeking an outlet. Economic emancipation does not include all aspects of freedom. Many other chains remain to be broken. But the economic organization of the world would be one step in the direction of freedom, and would burst many a bond that now holds the human race in subjection. 2. Freedom from Primitive Struggle The first step in economic liberation is to free man from the more savage phases of the life struggle the struggle against nature : the struggle with other men. Since those far-off times when men lived by tearing away clusters of nuts, by picking berries, by digging roots, by snaring fish and by clubbing game, they have been com- pelled to wrest from nature the means of subsistence. In this struggle, there have been the terrible phantoms of hunger, thirst, cold, darkness and physical suffering: of every sort, driving men on. He who won in the contest with nature was able to escape the worst of these miseries, but be who lost was tortured by them as long as life remained in bis body. The raee is saddled, even to-day, by an oppressive fear of these physical hardships that makes the strongest a willing servant of any agency that will promise to ward thorn off. The first victory that men must gain in their battle for economic liberation, will be won when hunger, thirst, cold. darkness and other aspects of physical suffering are banished from the lives of all people as effectively as yellow fever and cholera have been banished from the western world during recent generations. 154 THE NEXT STEP This end has already been attained for the favored few in most countries, but famine still stalks periodically among the peoples of Asia, and even Europe, since the Great "War, has felt its grip. Among the industrial workers of the imperial countries, and among the citizens of the exploited countries, the wolf is a far more frequent visitor than is the fatted calf. Liberation from this "widespread physical hardship can be achieved by producing enough of the necessaries of life to feed, clothe and house all of the people of the world, and by supplementing an adequate production by a system of distri- bution that will eliminate hunger and cold. Machine indus- try has made such an achievement possible. It only remains for a world economic organization to co-ordinate the resources, the productive machinery and the labor, and to distribute the commodities produced to those who need them. The conflict with nature is but one aspect of the primitive struggle in which men are engaged. In addition, there is the struggle of man against man ; not to aid, to emulate, to excel, but to rob, cripple and destroy. The existing economic system is built upon the assumed desirability of a struggle whose outward manifestations are: Cl) competition between economic groups; (2) the class war between owners and workers, and (3) wars between the nations. Throughout the business world one establishment seeks to build up its organization by wiping out its competi- tors ; one class seeks to win supremacy at the expense of a rival class, and one nation seeks to found its greatness on the prostrate remains of those opposing nations that it has been able to overthrow. These three phases of competition are accompanied by three forms of war the economic war, the class war and international wars. All three forms of war have an economic background. The economic war is the contest for resources, trade, markets, monopolies and investment opportunities. The class war ECONOMIC LIBERATION 155 between the exploiter and the exploited, grows out of the economic relations existing between the owner and the worker. International wars are fought for economic advantage for resources, trade, markets. The object of all war is the destruction of a rival by resorting to those measures calculated to bring the desired result. Since all is fair in war, the end (destruction) justifies the means, no matter what it may be. "What need is there to speak to this generation of the devas- tation caused by these wars? of the killing, the maiming, the famine, the disease, the disorganization and chaos? The western world has not yet recovered from the latest international war, while the economic war and the class war are being fought on the six continents and the seven seas. The cost of wars in blood, treasure, happiness and usefulness is an intolerable one. The chains with which Mars loads the human race weigh men down to the earth. The organization of a world producers' society would go far toward freeing men from the ravages of war. The neces- sity for economic competition being removed, and exploitation being done away with, the basis of international war and of the class war would be swept away. Thus the same economic world organization that enabled man to free himself from the more brutal phases of the struggle with nature would likewise enable him to eliminate the principal causes of war, 3. Freedom from Sc The organization of a producers' society would do more than abolish the cruder aspects of the present economic strug- gle. It would lay the foundation for a new culture founded on the dignity and the worth of labor. There are two groups of human instincts in ceaseless con- tention for supremacy the possessive and the creative. Both are of immediate economic importance, and the triumph of the one usually means the subordination of the other. The 156 THE NEXT STEP instincts which urge in the direction of acquisition and accu- mulation tend to make the man a conservator. Once let him possess an abundance of the world's goods and his chief object is to hold what he has gained. The instincts which urge toward construction and creation tend to make man an innovator, initiator, an improver. The side of man's nature that urges him to possess, directs him toward wealth and power. The side of his nature that leads him to create points to invention, to craftmanship, to artistry. Thus the posses- sive and the creative instincts are not merely at odds. Pos- session leads to status while creation leads to improvement. There are some natures that are definitely inclined toward acquisition. There are others as firmly set in the direction of creation. For such natures the social standards possess little importance. They have their bent and they follow it. The great mass of men, however, have no positive set in either direction. Their lives will be primarily possessive or pri- marily creative, depending upon the kind of training that they receive. Modern society lays its emphasis on possession and accu- mulation, and upon the wealth and power which they yield. The owner of land or of capital, under the present economic order, is not required to work for his living. His rents and dividends furnish him a source of income far more regular and much more dependable than the wage of the worker, or even than the salary of the man higher up. The rewards of the property owner, moreover, are far larger than those of the worker. Compare the income tax returns of Germany, Britain and the United States with the wage scales from the same countries. The incomes above ten thousand dollars (two thousand pounds or 40,000 marks in pre-war values) per year are derived largely or exclusively from the owner- ship of property. It pays far better to own than it does to work. The ownership of capital, like the ownership of land, carries with it power over those who must use the capital and ECONOMIC LIBERATION ]57 work the land, thus setting up an owning group or class which is able to control the lives of the workers, at least to the extent of taking a part of their product and living upon it without rendering any commensurate service in return. With the economic rewards go social honors and distinctions, and the wealthy enjoy social as well as economic privileges. They develop a system of dress, of language, of manners and cus- toms that will distinguish them as far as possible from the common herd, namely, those who work for a living. Teblen describes the process admirably in his "Theory of the Leisure Class." The leisure class, he says, has its origin in so?ne form of ownership, on which it builds the structure of its prerogatives. The existence of an owning, ruling class divides society into factions, whose contentions threaten the destruction of any social group in which they take place. From the intoler- able social situation which they create, there seems to be but one logical means of escape, and that is through the establish- ment of a society in which labor and not parasitism is the ideal toward which children are taught to strive. Such a society would shift the emphasis from possession to creation (production) by rewarding the worker rather than the owner. This result may be accomplished quite simply by giving the chief rewards to those who create, and by deny- ing to the owner any direct reward for his ownership. Another step in the same direction could be taken by limiting individual ownership to the things that men use. and concen- trating in the producing group the ownership of all produc- tive tools. "When economic rewards are withdrawn from possession and given to creation, it will pay bettor to create than it will to own. Furthermore, since ownership of itself would involve no power over others, another important incentive to accumulation would be removed. A producers' society, as a matter of course, would accord the most honor to those who engaged in productive activity. 158 THE NEXT STEP thus registering the social opinion in favor of creating rather than of possessing and exploiting. With the economic and the social rewards going to producers, the young of each generation would learn that it was more worth while to be a producer than to be an owner. Again a producers' society would aim to secure the com- mon participation in the necessary social tasks the drudgery and the "dirty-work." With the essential work performed in part by all able-bodied persons, no stigma would attach to those who were engaged in it, the class of economic pariahs would be eliminated, and each participant in the necessary economic work of the world would feel that he belonged to the group in which he was playing so important a role. "But," argues the doubter, "all of this is against human nature. How is it possible to expect that men will stop pos- sessing, or will lose the desire for possession?" They cannot be expected to do either, of course. But it so happens that, in any industrial society, the group living on its ownership is a very small one compared with the group living by its labor. The preference, in au industrial com- munity, can therefore easily incline to labor rather than to ownership. As for the chief rewards of life going to pro- ducers rather than to owners, this is historically practicable. Greek society worked out au elaborate system of honors and rewards for those who could create. Human nature has not been fairly or adequately tested in recent years. Only certain of its phases have been developed by social demands, and those phases the possessive instincts are among the least socially advantageous of human qualities. Au emphasis on production rather than on accumulation would have another important result more important, in a sense, than any of those named. Tt would establish a feel- in t complete scale. There are many other books in English, bodies in German. French and Russian, pamphlets, magazine articles by the thousands, and reports of special investigations in various technical fields, all of which oftvr ample opportunity for fur- ther study along the lines suggested in this book. INDEX Acquisition, menace of ....... Administration, basis of world Administrative and producing groups ................... Administrative authority, con- centration of ............. Administration boards, func- tion of .................. America, resource monopoly of American imports .......... American industry, phases of. Association, scope of ......... Authority, centralization of . . . Bankers, as arbiters of indus- try ...................... Bankers, power of ........... Barriers to progress ......... Basic industries, and resources British foreign investments. . . Brotherhood, new possibilities of ....................... Budget board .............. Budget deficits ............. Business and geographic lines Business federation, develop- ment of ................. Business organization, nature of ....................... Business, world character of. . Capita], transfers of to pro- ducer groups ............. Capitalism and nationalism. . . Capitalism and profiteering... Capitalism and the class strug- 156 119 111 81 122 19 12.3 59 53 81 102 102 147 19 39 20 m 30 62 ior> 61 62 Capitalism, growth of Capitalism in the Western world Capitalism, initiative under... Capitalism, limitations on. . . . Capitalism, modifications in.. . Capitalism, plutocracy under. Capitalim, world role of Capitalist experiment Catastrophe, menace of Centralization, in American in- dustry Chance, part of in progress. . . Change and chaos Chaos and change Class struggle, and capitalism Climate and civilization Civilization anil climate Coal, as a factor in civilization Coal, production of Coal surplus, whore found. . . . Commerce, growth of Commodity basis fur money.. Communication, as a world problem ( 'ommuuication, development of Competition, and war Competition, justitirat ion of. . Competition, morality of .... Cumpetit'oti, place of < 'ompetit ion. profit : ' Confli'.-f. and economic antago- nism . 66 36 63 62 140 65 62 138 14'! 50 1,1(5 4S 4S 66 45 45 7S 17 ( 'onsumption, oducat ion f> r _ Capitalism, assumptions < 'o-operation, in m i Capitalism, centralization of,. Capitalism, establishment of.. Capitalism, failure of 170 INDEX Co-operative world organiza- tion 102 Copper production, world fig- ures 18 Credit, as a business factor.. 103 Creation, stimulation of 157 Creative forces, scope for. . . . 103 Culture ami human aspiration 162 Debts of European nations. . . Deficits, in European budgets Depression, present condition of "Disputes, adjustment of Disputes board Distribution and the social revolution Distribution of world wealth. Distribution of resources.... District and division compared District committees Divisional congress, organiza- tion of District economic units District organization, detail of Divisional and district organi- zation compared District federations, functions of Divisional federations, listed.. Divisional organization .. Economic activity, worldizing of ". 15 Economic affiliations, .serif, of 73 Economic authority, location of V Vi2 Economic aggression, future of Economic bureaucracy Economic causes of war Economic change, working la-is for Economic changes, frequency of Economic chaos, source; of. . . Economic competition, extent of .. Economic co-operation, neces- sity for 20 Economic depression, results of 31 Economic determinism, effects of 15 Economic disaster, menace of 29 Economic disintegration, signs of 31 Economic district organization 90 Economic evolution illustrated G6 Economic federalism 59 Economic forms 60 Economic foundations 51 Economic foundations for world organization 23 Economic groupings, listed . . 57 Economic institutions, insta- bility of, in Europe Economic interdependence . . . Economic isolation no longer possible 15 Economic justice, need for... 26 Economic leadership 85 Economic life, chaos in 67 Economic life, new basis for. 47 Economic machinery, owner- ship of 84 Economic muddle 28 Economic organization by divisions 92 Economic organization, details of 88 Economic organization, need for science in Economic needs Economic needs, enumerated. Economic organization, by dis- tricts "2 Economic organization, lines of 58 Economic organization, nature of 60 Economic organization, world i rt " O units o t ' -j Economic power, and the bank- ers . - 103 INDEX 171 Economic power, for the pro- ducers 117 Economic problems, enumer- ated 30 Economic problems, growing complexity of 15 Economic problems, nature of. 3(5 Economic program, basis for 22 Economic questions of world scope 121 Economic reconstruction, prin- ciples of 25 Economic rivalries and war.. 41 Economic self-government il- lustrated SS Economic statesmanship 23 Economic states rights 59 Economic structure, nature of 69 Economic structure, variation in fi9 Economic system, divisions of 57 Economic units, character of. 70 Economic units, classes of. . . 71 Economic units, efficiency in.. G9 Economic units, integrity of. 80 Economic units, local control of S9 Economic units, nature of local units 71 Economic units, needs of. ... 79 Economic units, productivity in SO Economic world outlook 2S Education, function of 141 Education, possibilities of . . . 1 12 Energy, rewarding of S3 Engineers, present position of 34 European bankruptcy, threat of European budget deficits .... European war debts Exchange and credit board. . . 12^ Executive, functions of Mi Executives, selection of L '<> Expansion, costs of *>4 Experience, costs of 141 "Experiment, social value of. . 135 Experiment, uncertainty of.. . 140 Expert, selection of Mj Exploitation, increase of 41 Federalism, principle of 53 Federation, in social organiza- tion 104 Finance, derangement in 29 Financial imperialism, costs of (it Financial imperialism illus- trated 39 Food Imports of Great Britain 19 Financial stability, basis for. 29 Forethought, possibilities of.. 142 Foreign exchange, demoraliza- tion of 31 Foreign investment as a science 39 Freedom, human desire for. . 152 Freedom, struggles for 152 Functional economic units . . 57 Geographic divisions, organiza- tion of 92 Geographic units, scope of. ... 72 Government control of indus- try 37 Great Britain, food import- of 19 Great Britain, foreign invest- ments of 39 Great revolution, phases of. . . -19 Hard times, history of .".1 Hiring and firing, new plan for >'.' Human aspiration and culture i' : -' Human effort, results of 4'i Human nature, limitation* on l-^ Human values, conservation of 79 Hunger struggle, elimination of 1 "'' Ideal and the real 71- I improvements and bettermi (its U > 1 mperialism, costs of (l > Imports of the I'nited States. 125 ] ncome distribution :; '' Indebtedness, since the war. . 29 172 INDEX Industrial change, through dis- covery and invention 16 Industrial efficiency, need of. 25 Industrial federation, groups of 108 Industrial federations, prob- lems of 107 Industrial leaders, change in type 67 Industrial organization, evolu- tion of 61 Industrial revolution, and pro- duction 47 Industrial revolution, effects of 47 Industrial revolution, spread of 15 Industrial revolution, sudden- ness of 47 Industrial system, characteris- tics of 101 Indusrrial waste 32 Industrial waste, responsibility for ". 32 Industrialism, effects of 16 Industries, interrelation of. . . 37 Industry, dependence on raw material 16 Industry, divisional organiza- tion of 02 Industry, government control of 37 Initiative, loss of under capi- talism 63 Initiative, stimulation of .... 83 Intelligent social direction... 145 Iron ore, production of 17 Knowledge, accumulations of. 143 Knowledge, additions to .... 143 Knowledge through suffering. 144 Knowledge, through trial and error _ 135 Labor federation, development of 105 Labor units of value 129 Laissez-faire, abandonment of 146 Leadership, changes in type of 67 Leadership, classes of 86 Leadership in economic affairs 85 Leadership, methods of selec- tion 87 Leadership, selection of execu- tives 86 Leadership, through heredity. 87 Leadership, through self-selec- tion 87 Leadership, through social choice 88 League Covenant, principles of 23 League of nations failure. ... 23 Leisure, function of 162 Liberty, through producers' or- ganization 159 Life, continuity of 14 Limitations on capitalism. ... 62 Livelihood, guarantee of 45 Livelihood struggle 43 Loans, under a producers so- ciety 131 Local autonomy, necessity for 60 Local economic problems .... 36 Local economic units described 71 Local economic units, details of SS Local federations, character of 109 Local federations, problems of 109 Local initiative under capital- ism 63 Machine ownership and self government So Manufacturing, divisions of. . 58 Mass life, effects of 139 Mass meetings, for public is- sues 92 Maximum advantage, law of. 75 Maximum efficiency, need of. 78 Maximum returns, essentials for 79 INDEX 173 Meliorism, interest in 74 Militarism, in Europe 35 Minimum outlay, law of 77 Modern business methods il- lustrated 39 Modern warfare, costs of (54 Money as a commodity 11'!) Money, function of 128 Money, future of 128 Money, labor as a basis for. . 129 Money, present uses of 129 Monopoly profit, law of 33 National boundaries and busi- ness 62 Nationalism ami capitalism.. (>3 Nationalism, and existing problems 121 Nationalism, and world prog- ress 4 Nationalism, narrowness of. . (>4 Natural resources, classified.. 45 Necessities, provision of .... 1<>1 Next steps 149 Next war, preparations for.. 35 Organic function Organic nature of society. . . . Organization, difficulties in... Organization, need for Organization of world federa- tion Organization, world need of.. Owners, organization of .... Ownership of economic machin- ery Paper money, issues of Parliament, for the world. . . . Physical hardship, elimination of Plutocracy, growth of Policy, decision of by self- direct ion Political federation, experi- ence with .54 53 152 151 Political life, organization of. 7 Poverty, losses through . Power, centralization in indus- Present-day economic problems Primitive society, economic is- Producers, future of Producers, power to Producers' federations, by dis- tricts Producers' federations, groups of Producers' world federation, character of Producer groups, control of industry by Production, necessity for .... Production of raw materials. . Productivity, necessity for maintaining Producing and administrative groups Production versus profit Profit and compel it ion i 'rofit versus we: fare Profiteers, air 1 c:j [utalism .... Progress, barriers 1n ! 'rogress of self-g ' . 1 'rogress through exj erimeii! . 113 I .flaw materials, limitations on L'aw materials, struggle f< >r, , Reconstruction, ecoiiomic basis 154 for ij,"> [ Reconstru tion, . - :.:. ; j-5 I problem ; Resources and raw materials 104 I board . 174 Resources, relation of to basic industries 19 Results and initiative 84 Sabotage 33 Science and society 51 Sectionalism, failure of 100 Self-government in local eco- nomic affairs Self-motivation, need of Self-government, progress of. Selection of leaders S7 Separatism, passing of 20 Servility, elimination of 1-3-3 Shop committees, organization of SS Social administration, difficul- ties of 74 Social book-keeping, function of 1H3 Social change and intelligence 143 Social disaster, as a means to knowledge 144 Social drive, basis of S2 Social experiment, basis for.. 14-3 Social federation and social activity 57 Social groups, federation of . . 57 Social functions, specialization of 5G Social improvement 146 Social inertia as a problem ... 82 Social knowledge, accumula- tions of 143 Social knowledge, limitations on 52 Social machinery and body machinery 54 Social organization, of the owners , Gl Social organization through federation 104 Social organization, through producers 117 Social philoonhy, restatement of 146 Social problems, handling of. 14S Social relations, growing com- plexity of 56 Social revolution ami distribu- tion 46 Social science, future of 14S Social science, needs of 146 Social science, principles of . . 51 Social structure, nature of. 61, 69 Society, as an organism 53 Society, science of 52 Sources of economic waste. . . 32 Soviet Russia, and world peace 34 Specialists, place of in world administration 123 Specialization in society 55 Standard Oil Company 59 Statesmanship, economic foun- dations of 23 Success qualities 150 Suffering a-s a basis for prog- ress 144 Surplus, effect on human ef- fort 77 Transport, place of in industry 127 Trial and error in society. . . . 135 Underground organization of business 67 Value, new standards of 130 War, economic causes of 34 War debts 29 War, elimination of 154 World finance, chaos in 29 War, forms of 154 War, increased cost of 64 War, new preparations for... 35 War, object of 155 War promises, failure of 13 War-menace, and chaos in in- dustry 34 Wa-ste in industry 32 Wealth concentration, effects of 43 Wealth distribution 36 Wealth, distribution of 42 INDEX 175 Wealth of nations World administration World administration, basis of World administration, detail of World administration, field of World authority, lack of World commerce, growth of.. World common interests .... World conflict, sources of.... 27 World disillusionment 13 Wo v ld economic organization, detail of 88 World economic organization, diagram of 07 World economic questions.... 121 World economic solidarity ... 22 World economics and the League 23 World economics, chaos in ... 28 World federation, detail of or- ganization 113 World industrial congress, or- ganization of World industrial units World industry, organization of ". 95 World isolation, passing of . . . 20 World need of organization. . 101 World organization, begin- nings in 24. World organization, principles of World parliament, organiza- tion of World organization, problem of World parliament, possibili- ties of World politics and the League World problems, enumerated. . World problems, method of ap- proach World producers' federation, character of World producers' federation, form of World producers' federation, scope of World producers' federation, structure of World reconstruction, basis for World resources, distribution of World thinking and organiza- tion World thinking, ba*is for.... World thinking, economic basis of World wealth, distribution of. Worklizing economic activity. 113 24 120 23 122 121 111 107 112 113 49 20 100 AA 000003609 5