Part 3
Only a few years ago Great Britain alone controlled it. She had a monopoly of its power and use by right of having been the first to develop it, and she was for a while the only nation having a large surplus of manufactures to sell in foreign countries. Then came Germany, France, and Belgium. Of these Germany was Great Britain’s most aggressive rival, making nearly all of the same things and most of them cheaper. After 1870 the United States developed industry very fast but for twenty years more her exports were principally agricultural because she herself consumed the entire product of her machines, besides importing manufactured goods from Europe in exchange for meat and grain and raw cotton. It was not until about 1890 that American machine-products began to invade the markets of the world in a large way. And at about the same time Japan appeared as an industrial nation, having in a few years equipped herself with Western machines and trained her imitative hand to mind them.
Such, roughly, was the economic state of the world at the outbreak of the War. The powerfully industrialized nations were four in Europe, counting little Belgium; one in the West; and one in the East—six altogether, representing hardly more than one-fifth of the world’s total population.
If we regard only the countries where the industrial population had so outrun the native food-supply that the sale of manufactures in foreign lands to pay for food had either become, or was believed to be, a vital transaction, then we count out the United States. This country is still self-nourished. That leaves only five, and the competition among these five for markets, for colonies, and heathen tribes to be instructed in wanting, for private pathways by land and sea to the sources of food, for access to the raw materials required by their machines, was already desperate and dangerous. Between two of them it was deadly.
Even then it was so. Since then the machine has multiplied tremendously where its habitat was and has gone migrating, besides, all over the earth.
In those six countries that were already intensively industrialized what appears? Their machine equipment has greatly increased. During the War it increased for obvious reasons. God was on the side of the most machines. Since the War it has continued to increase for other reasons. One reason was peculiar to Germany. There the building of furnaces, factories, and machine-works by a dynastic method, as the pyramids were built, without credit or gold, simply by command of the industrialists over labour and material, was a way of baffling the Allied creditors. Another reason was peculiar to France. Restoring the industries of the devastated regions meant building them a second time, since they had been already once reproduced elsewhere in France during the War. But the reason over all lay in that fixed idea of economic necessity, not changed in the least by anything that had happened, only now more desperate than ever, owing both to the intensified competition of the older countries among themselves and to the spread of the machine into other countries.
How the competition among themselves has been intensified may be illustrated in the case of textiles as between Great Britain and France. Before the War both imported raw cotton and exported fabrications of cotton; but, whereas Great Britain exported principally the cotton cloth of universal commerce, France exported special products representing her genius for style and artistry. Now, however, having made large additions to her general textile equipment, France feels obliged to compete directly with Great Britain in cotton-cloth of common commerce. To do this she must extend her foreign trade parallel to Great Britain’s and divide the markets hitherto dominated by the British. As with cotton-cloth, so with other manufactures, particularly those of iron and steel, wherein France proposes to compete and is equipped to compete with both Germany and Great Britain as never before. Each step she takes in this direction augments her economic necessity, for now almost the last thing you would expect to see in France is taking place. The native population as a whole is static, but its character is changing. The industrial part of it is growing; the agricultural part is waning. People are deserting the fields to embrace industrial life—to mind machines. In every city there is a housing problem; public credit is employed to build small dwellings for the wage-earners; yet in the country, two hours from Paris, you will see houses empty and going to ruin, whole rural villages in the way to be abandoned, vineyards perishing for want of care, fields going to grass instead of grain. Their industrial power is rising; their agricultural power is falling. Before the War they were, or might have been, self-nourishing on their own soil like the people of the United States. That precious security they cast away. In place of it they take on the anxieties of empire. They must impose upon Morocco the blessings of European civilization in order to have an outlet there for the surplus of their machines.
Dramatic are the migrations of the machine and not unlike the migrations of natural species, men and beasts, in search of food. The machine seeks either cheaper raw material or people to mind its processes.
There is Italy, with a population greater than that of France, growing half-a-million a year. It is the most fecund race in Europe. Suddenly the Italians wake up and are resolved upon an industrial career. Before the War this thought was dim among them. In the crisis it took shape. Since the War it has become an enthusiasm, and now smoke-towers are rising very fast. Definitely they have turned their minds from agriculture to industry, not merely in order that they may become self-supplied with manufactures instead of buying them from other countries with lemons and olive oil, but in order to grow rich and powerful in foreign trade. They propose hereafter and progressively to exchange machine-wares for food. Italy will be a formidable rival for Great Britain, Germany, France, and Belgium, who are already beginning to feel it.
Poland perceives her destiny to be industrial: she has already a large surplus of manufactured goods to sell. Likewise Czechoslovakia. These are instances of new countries. Spain and Greece are importing machinery, and Spain is so anxious to develop industry that she considers paying a bounty out of the public treasury on exports of textiles. India, whose historic economic function had been to send raw cotton to Great Britain and buy cotton cloth from Manchester, now consumes half her own raw cotton in her native mills; she not only satisfies three-quarters of her own want for cotton cloth but is beginning actually to export that commodity, even to the United States. This will seem very wasteful, indeed, when you pause to set it against the historical background of the United States. For a long time we exported raw cotton and imported cotton cloth. That was to have been the pattern of our economic life as a British colony; we were to produce only raw materials, ship them to Great Britain and buy from her the surplus of her machines. We were forbidden, in fact, to weave cloth for sale or to have iron mills. Now we are an industrial nation; we consume more and more of our own raw cotton and export enormous quantities of cotton cloth. Ultimately we shall have no raw cotton at all to sell; our mills will require the whole of our annual crop; we shall have nothing but cotton cloth to sell. To whom shall we sell it? Not to the Indians; they wish to make their own. Probably not to the Egyptians. The Japanese manufacturers of cotton goods have recently invaded the Egyptian market that was formerly Great Britain’s own, and are underselling the British there. You would think China would be Japan’s natural outlet for cotton goods. So it is. The difficulty is that Japan must be looking further because China is beginning to supply herself.
The Chinese instance is poignant. A few years ago—until the War, in fact—China exported food and raw materials and imported manufactured goods—nothing else to speak of either way. This was as the Western industrial nations wished it to be. So anxious were they to have it so that they bound China by treaty not to put tariff barriers against the goods they wished to sell in the Chinese markets, except by mutual consent—that is to say, with their consent.
The War suspended this thraldom. The Chinese imported machines and began to make their own things, especially cloth. Power-looms appeared as by magic. And after the War, they continued to appear. During three years after the War the number trebled, and in 1922, the table of Chinese imports and exports presented a strange face. Among her imports were machines and machine-parts; also semimanufactured goods to be finished in Chinese factories. And one-fifth of her total exports consisted of manufactured goods. China an exporter of machine products!
And so up and down the earth. In Brazil, where there was hardly any visible production of artificial things before 1914, the whole outlook has changed. That country is now able from her own machines to meet the whole of her want for matches, textiles, footgear, wallpaper, phonograph-discs, hardware, hats, and playing cards, and will soon be self-supplied with practically everything she needs.
The Colonial System that was to have answered forever Great Britain’s need for raw materials and food in exchange for machine-products will not hold in that character. In India the revolt is political; elsewhere it is peaceably economic. Canada is already powerfully machined; she is exporting motor-cars. Australia, going in the same direction, is beginning to export shoes. The Union of South Africa takes steps to subsidize local industry. Ireland no sooner gains control of her economic life than she puts a tariff-wall around herself to limit the sale of foreign goods, meaning British goods as well, thinking thereby to foster infant industries.
Well, everyone now is doing that. The old industrial countries, too, are protecting themselves against one another’s goods, the last to come to it being Great Britain herself. For more than half-a-century she was the protagonist of free trade, abhoring tariffs, because she was paramount in machine-craft and could beat her rivals both in their own markets and in her own. That advantage having departed from her, she is driven to tariff-protection: she puts up barriers against other people’s goods if they are too cheap, because they are too cheap, and calls it Safeguarding Home Industries.
V
THE PARADOX OF SURPLUS
What does it mean? Can there be too many desirable and useful things? Can things be too cheap? You would say No. Surely, so long as any human want remains unsatisfied, things cannot be either too plentiful or too cheap? But there is another dimension.
Everything that is not still or dead must exist in a state of rhythmic tension. It is true of the plant, it is true of the animal, it is true of each race of plants and each race of animals, it is true of the kingdom of plants against the kingdom of animals. It is true of people, as individuals, as races, as a species. And it is true, also, of the machine.
In the living organism growth of tissue at a normal rate consonant with the rhythm is vital. A wild growth of that same tissue will be fatal. In the aggregate of life there is equilibrium among millions of different forms, each form striving but never succeeding and is possessing every other form and taking the world. The oyster, if unhindered, would displace every other living thing on the earth in maybe ten generations, and then, of course, perish for want of space in which to contain itself. What hinders the oyster and at the same time preserves it is that principle of tension in nature, without which it would be impossible for innumerable forms and varieties of life, the relations of which to one another are reciprocal, neutral, hostile, anonymous, to exist together all in one great taut pattern.
Now regard the third kingdom, artificial, implanted with mechanical beasts, that contains civilization. Life in this environment is economic. Its characteristic behaviour is a progressive differentiation of labour. Tasks are divided and subdivided until, at length, there are countless separate groups of people, each one performing a singular function to which it is trained and tending to become unable to perform any other. The subdivisions are beyond enumeration. They multiply so fast that the book of the census cannot keep up with them.
The shoe-industry, for example, does not consist in shoemakers. You might search it in vain for a shoemaker—that is, one who should know how to raise a pair of shoes from flat leather. In the shoe factory the material passes through a train of machines. Each machine is minded by an operative who performs one little specialized part of the work in endless repetition. The product is shoes by thousands of gross.
But who determines what kinds of shoe and how many shoes shall be made? What becomes of them when they are made? Who knows they can be sold? What if they are not saleable?
If you address these questions to one of the operatives minding a machine you will find him dumb. He knows only his own function.
It is very complicated. There are two industries here. One is the shoe-industry; the other is the shoe-machine industry. One could not exist without the other, yet they are separate and very unlike. The shoe-industry itself, that has dispensed with shoemakers, will have a finance department, an economic department, a buying department, a department of production science, a style and designing department, a chemical department, a department of distribution, a sales department, an advertizing department, and others we do not think of. It is all about shoes. These are all shoe people. They agglomerate in shoe towns. They think shoes. The world is a foot. The more it can be shod the better. They live by shoes.
But to do this they must be able to exchange shoes for the things they want. Shoes, therefore, must have a relation of value to every other thing in the economic world. It follows that, in order to have this exchange-value, shoes must have also a relation of quantity to all other things. If for any reason the production of shoes becomes suddenly abnormal that exchange-value is lost. It is like one kind of tissue growing wild in the organism. Shoes are necessary; but an excessive quantity cannot be absorbed by the economic body. There will be in that case a morbid pathology in the shoe-industry, unemployment in the shoe town, despair among the shoe people, many of whom have never learned to do anything else. Left to themselves, without shoes to make, they might even starve.
It may be in the same way a soap town, a textile town, a garment town, an iron town, a motor town like Detroit, a rubber-tire town like Akron, a furniture town like Grand Rapids. It may be all of these—that is to say, industry as a whole, increasing its output at an abnormal rate. As you project the thought you begin to see, first, the vital importance of rhythm, equilibrium, tension, in the realm of industry, and then the inverse meaning of a sudden competitive increase in the machine-power of the world.
Ask the Italians what it means. They are an old people coming to it with a fresh mind. The conversation that follows took place in February, 1925. Talking are, on one side, the Italian Minister of Finance, and on the other, a visiting journalist:
“The industrial idea is new in Italy. It is since the War. You had a clean slate. You could have done anything you had the imagination to do. First you might have made a scientific survey of Italy’s latent genius and resources, and then you might have thought of producing goods that should be uniquely Italian and therefore non-competitive. But what have you done? You have gone in for the great staples of world commerce, such as cotton and woollen textiles, artificial silk, and motor-cars. Don’t you see that in doing this you take on the competition of Great Britain, Germany, France, Belgium, the United States?”
“Yes, we see that.”
“Those countries have the field and the experience and better access than Italy to sources of raw material.”
“That we know, also.”
“Then how can you hope successfully to compete with them? What have you that they have not? What advantage against theirs?”
“One you haven’t thought of.”
“What is it?”
“A man can live on less in Italy than anywhere else. We don’t know why that is. It may be the way the sun shines on him. But it is a fact. That is our advantage. With that we shall succeed.”
“Do you realize what that means? You are saying that Italy proposes to found an industrial career on the lowest terms of human existence. Your people will not accept it.”
“But they will.”
“How do you know they will?”
“Because they will do anything sooner than starve.”
What a finish for the morning hope of the machine-age!—if it were. Monotonous tending of the machine on the lowest standard of living; alternative, starvation.
Suppose it were true. Suppose the Italian people did accept the terms and acquired the knack and skill. Then Italian manufactures, being cheaper than any other, would sweep the markets of the world. The older industrial nations—Great Britain, Germany, France, the United States, _et al._—could protect their domestic markets by tariff-barriers, but they would find themselves losing their foreign markets to the Italians. For such industrial countries as are obliged to exchange a machine-surplus abroad for food the loss of foreign markets would be fatal. They would have to meet the Italian competition. They would have to say, as the Italians now are saying: “It is that or starve.” They would have to let down the standard of living to meet Italy’s wage-cost. This would oblige Italy to make her standard lower still, and thus, in a cycle, until all of them were sunk in misery.
And this is by no means an impossible progression of events. It has once taken place on a lesser scale. Beginning about 1870, there was a sudden and uncontrollable increase in the output of industry from two principal causes. One was the rapid rise of competitive industry in Germany and the United States; the other—much more potent—was the discovery of a new and cheaper way of making steel. This one discovery transformed the aspect of industry by increasing its potential power as much, perhaps, as one-hundred fold. Until then people spoke of the iron age; after that it was the steel age. For a quarter of a century prices fell continuously, while solemn economic bodies sat pondering the phenomenon. In that time all the capital employed in industry was lost at least once, probably twice or three times. The producer’s only hope was to improve his machines and increase production, for as he did that his cost per unit fell and for a little while he could undersell his competitor. In methods of production and in the efficiency of machines there was necessarily amazing progress; nevertheless, when all other means of reducing costs had failed, it had to be taken out of labour. In the United States it was not so bad because here the domestic demand for manufactures was unlimited, and a tariff-wall protected industry from foreign competition. In Germany it was very bad.
Germany then was where Italy now is. Her advantage was that the German people would work harder and longer for less money than the British. The competition was between these two. The British Government, disturbed by her new rival’s success in foreign trade, made a study of labour conditions in Germany. It found Sunday labour very prevalent in the factories. “Only the hours of divine service are excluded”, said a report from Saxony.
Commenting, _The_ (London) _Economist_ said: “The question of Sunday labour is one of considerable interest for England, for it is unquestionable that among the causes of Germany’s ability to compete with England as a mercantile and industrial country the fact that here more hours are worked for less money is not the least important. The prohibition of Sunday labour would, of course, mean increased cost of production, and every increase in the cost of production will render it more difficult for Germany to outrival older manufacturing countries in the markets of the world.”
What might have happened does not detain us. What did happen was very fortunate.
First, the food-supply from free virgin land in North and South America increased at the same time in a prodigious manner, so that, notwithstanding the wild energy of the machine, the equilibrium between agriculture and industry was fairly well maintained.
Second, there was still room in the world for colonial development on a vast scale. This occurred, and the outlets thereby created for the surplus product of machines were most timely.
Third—and this is very important—finance, to save itself from deluge, got control of industry. It was unable to buy industry out. All the banks in the world had not money enough to do that. This apparently insuperable difficulty it solved in a simple manner. It formed industry by groups into great joint-stock corporations and sold the stock to the public. And, although generally finance did not keep control in a literal sense, it did so centre it as to make the management responsive thereafter to financial counsel. The classic instance in the United States was the formation of the Steel Trust, which was in very earnest a measure of desperation. The steel-making machine had become a demon whose pastime was panic. By this feat of finance, which occurred in all industrial countries, a new rhythm was established. It was most imperfect: absolute control of production was impossible. But panics from overproduction were thereafter episodic, not continuous, and this was a great improvement.
And now a second time the machine has got away. But how much more powerful it is and widely planted than before. The industrial capacity of the United States alone is greater than that of all Europe twenty-five years ago. There are no more such virgin continents as North and South America to be exploited for food; and, besides, countries that were then content to play an agricultural part, exchanging meat and grain and raw materials for machine-made wares, now are resolved to have industries of their own—nay! more, to have an industrial surplus for sale abroad, engaging in that game themselves. Colonies are no longer docile. And as to finance, there is little probability that it will be able again to lay its hand upon the throttle. There are several reasons why.
The significance of industry has changed. Formerly it was a private affair in which the State was but dimly concerned, and so concerned only in a social sense, whereas now the idea of industry is basically political. It associates with thoughts of security independence in all circumstances, national welfare, power, and grandeur. A factory is like a ship to be privately enjoyed in time of peace, subject to mobilization for war. The War did that. Great Britain now subsidizes so-called key-industries as before she subsidized ships under the eye of the Admiralty if they were so built as to be easily converted into cruisers. All this is beyond the control of finance.
For another reason, there are signs that industry in the future is more likely to command finance than finance is to dominate industry.