Monday, July 11, 2016

The Achievements of Capitalism By Prof. E. R. A. Seligman 1921

The Achievements of Capitalism By Prof. E. R. A. Seligman 1921

See also The History & Mystery of Money & Economics-250 Books on DVDrom and 300 Books on DVDROM About America that Obama Should Read and Capitalism in America - 100 Books on DVDrom 

For a list of all of my disks, with links click here

Visit my Economics blog at

In beginning a debate of this magnitude, it is pertinent to inquire what the words mean. What do we really understand by Capitalism and what by Socialism? Unless we are clear about that, we are wandering in a maze of uncertainty. Now by Capitalism, I think we may understand that form of industrial organization where the means of production, and by that, I mean primarily under modern technological conditions the machine and the funds required to work the machine, are in the control of private individuals. The difficulty of defining Socialism is that while Capitalism is an institution, Socialism is only a theory, unless indeed we except a few sporadic examples that we find in the middle of the 19th century in this country, and unless we also except the gigantic enterprise that is now being conducted by Soviet Russia. . . You have your choice of the different brands of Socialism as a theory, but as an organization, as an industrial form, all these various forms and kinds of Socialism are permeated by one fundamental common idea. That is, that the control of the method of production, that the control of capital, for, of course. Socialists like everyone else concede the necessity of capital, that the control of capital shall be in the hands of the group and that there shall be no room for private rents, private interests or private profits.

Having thus defined those two opposing ideas, the next point that I desire to make is that while there are all forms and manner of capitalists, just as there are all kinds and manner of human beings, just as there are reactionary and stand-pat capitalists, and forward looking and progressive capitalists, while that is true, my contention is that capitalism is progressive. There is only one form of capitalism and that is progressive capitalism. Every form of industrial organization is progressive. . .

Now, then, taking up the points in order, I want first to call attention to the achievements of Capitalism. We are now not discussing what might have been attained under other conditions but simply what has been attained. What are the actual facts and the achievements of Capitalism? I should sum them up as follows: first and foremost, I should say that we must recognize the accumulation of wealth irrespective of where it is and in whose hands it is—the cheapening of production and the accumulation of wealth—because it is undeniable that certain advantages from this accumulation of capital and wealth accrue to the worker. . .

In the second place, I would put the diversification of consumption. Compare the World today with what it was in all previous ages and take what the laborer even though he be the most poorly paid of all the laborers, take what he eats and what he wears and what he has with which to shelter himself. All of this is the result of the capitalist system. . .

In the third place, capitalism is responsible for democracy. . . What has brought about democracy is the industrial revolution, modern capitalism, and that means a public opinion which has never existed before in the history of the world and to the extent that every workman no matter how humble he be, has today democracy and has today a voice in framing even to a small extent the management of the affairs of state, which is due to the form of industrial society under which we live.

And in the fourth place, I should put as one of the achievements of capitalism, liberty of movement. In the middle ages, there was not liberty. The serf could not move. The serf was bound to the soil and it is only since capitalism has developed that we have the liberty of movement, implying with that all the results of liberty of production as well as the liberty of consumption.

And finally, to cap the climax, modern capitalism is responsible for education and for science. Never before in the history of the world have we had a form of public instruction comparable to our own.

I do not deny indeed that there is a dark side as well as a bright side and to that I now come to address myself. What are the weaknesses and the excrescences of Capitalism? My point is that since Capitalism is a progressive form of society, these weaknesses are remediable and these excrescences can be and are being locked off. What are those weaknesses? Of course, everyone knows. In the first place, we have unfair competition between businesses and human beings. . .

And in the second place, we have of course as one of these sad results, the fact that unjust privileges still continue and that sometimes certain forms of integraded organization known as potential monopolies make their appearance. . .

And in the third place, I should say that modern capitalism does indeed result in certain exaggerated fortunes. The development of a leisure class has its very bad sides at a time when everyone ought to be working.

Now, when you come to the laborer of course there are very great evils there, but they are gradually being overcome. Take the conditions of work and the hours of work. Many years ago, the great movement was for twelve hours a day. I remember the ten hour day movement. Then there was the great fight for the eight hour day and now some of our factory laws even require only a six hour day in certain industries. Capitalism itself is gradually changing those conditions—Capitalism is changing those conditions not because it likes to do it but because it is forced to do it by the letting loose of those very forces which are implicit in modern form of capitalism. So it is with the hours, with the wages. Wages are by no means what they ought to be. Wages are certainly far less than they should be. . .

And finally we find that not alone are those things all true but then the one great point—I should say, the two great indictments of our present system, are first: The insecurity of employment for the workman— that very, very bad thing which is being attacked and which is entirely susceptible of being improved by the application to it of the same principle that we have applied to accidents, that we have applied to many other evils, namely, the insurance principle. There is no reason in the world why the workman should be made to bear as he has today, the burden of unemployment and of insecurity of business.

And finally, the last point, the joylessness of life. That to a certain extent must continue under any form of industrial government, as long as we have a machine. Machines will be needed under Socialism as under Capitalism. But the real joylessness of the machine tender can be abated, can be diminished and can be done away with by giving him more of a participation in the industry itself, as we are gradually doing through what we call our industrial democracy. . .

I want to say a word about why, with all these things, I am not a Socialist. And I should put it in this way. In the first place, as regards the remuneration of labor, Socialism preaches equal pay. A bonus, Lenin told us, was something only for bourgeois society. Equal pay means payment according to need, whereas it is not payment according to need but payment according to efficient work that is going to set the world onward, and even in Russia today, they have been compelled as you all know of course, to give up their original plans of payment according to need and now have developed the bonus system to a point even unheard of in our United States.

In the second place, we deal with the other side of it, the man at the top. If society has progressed at all events in some ways, it is due above all to the man who has been the leader—the leader in industry. . . We may not believe as our great Emerson said that we are all as lazy as we dare to be, but it is true that the race-horse does best when he has a pace-maker and even we who sometimes play golf, don't play as well alone as when we play with a partner.

Under socialism, leadership would be and the possibilities of leadership would be immensely restricted for two reasons: first, you would not have the incentive that you have now and in the second place, the risk would be far more limited. Nowadays people who get to the top through the selective process do so because they are willing and able to take risks. Under any form of socialistic government, the risk could not, would not be taken because they could not afford to take it. These two points, the selective process of the modern competitive system and the restriction of the risk function in modern society are to my mind the chief indictment against socialism.

With Capitalism...In 1850, wages were $204. In 1910, the average wage—mind you the average wage of the average workman, taking the low and the high altogether, had gone up to $507...When Mr. James J. Hill, the great Empire builder, built one of the great trans-continental railroads which have brought about this very cheapening of product and the diversification of consumption of which I spoke, did he not contribute to production? And when our friend Mr. Ford with whose general philosophy perhaps I am not in entire accord, when he brought down the price of automobiles, the automobiles that are used by the workmen all over this country in going to and from their daily work, could those fortunate workmen say that Mr. Ford has been able to keep up his millions by simply taking them, filching them, stealing them, from the men in his employ.

I do not deny that there is theft. I do not deny that there is robbery. I do not deny that there are bad people as well as good people, but I do say that the essence of the capitalist system today, that the essence of profits today, of legitimate profits is not theft, but service and that people in the long run cannot under modern conditions, in the long run and under normal conditions make great profits unless they really do service for the community.

Join my Facebook Group

No comments:

Post a Comment