Book: Freeland

T >> Theodor Hertzka >> Freeland




As to the salaries of the directorate, these were from the beginning very
different in different associations. Where no extraordinary knowledge and
no special talent were necessary, the overseers were content to have their
superintendence valued at the price of from eight to ten hours of work per
diem. There were directors who received as much as the value of twenty-four
hours of work per diem, and in the very first year this amounted to an
income of about 850£. The functionaries of a lower grade received, as a
rule, the value of from eight to ten hours of work per diem. In most cases
the controlling council of inspection received no extra remuneration for
their duties.

The credit granted to the associations in the first year of work reached an
average amount of 145£ per head of the participating workers; and if it be
asked whence we derived the funds to meet the requirements of the total
number of our members, the answer is, from the members themselves. And the
reference here is not merely to those voluntary contributions paid by the
members on their joining the International Free Society, for these
contributions were in the first instance devoted to the transport service
between Trieste and Freeland, and would not have sufficed to supply our
associations with capital if they had all been devoted to that purpose. The
credit required in the course of the first year rose to nearly two million
pounds sterling, while the voluntary contributions up to that date did not
much exceed one million and a-half. The principal means which enabled us to
meet the requirements of our members were supplied us, on the one hand by
the Society's property hi disposable materials, and on the other hand by
the members' tax.

It should be mentioned here that, for the first year, the committee
reserved to itself the right of deciding the amount and the order of
granting the credit given. This, though merely negative, interference with
the industrial relations of the associations was not in harmony with the
principle of the producers' right of unconditioned self-control; but was so
far unavoidable, inasmuch as our commonwealth had not yet actually attained
to that high degree of productiveness of labour which is the assumed result
of the perfect realisation of all the fundamental principles of that
commonwealth. Later, when we were more fully furnished with the best means
of production which technical progress placed within our reach, and we were
consequently no longer occupied in provisionally completing and improving
what already existed, there could never be any question whether the surplus
of the current production would suffice to meet the heaviest fresh claims
for capital that could arise. It was different at the beginning, when the
need for capital was unlimited, and the means of supplying that need as yet
undeveloped. The Free Commonwealth could not offer more than it could
supply, and it had therefore to reserve to itself a right of selection from
among the investments that applied for credit. Thanks to the thorough
solidarity of interests created by the free mobility of labour, this could
happen without even temporarily affecting the essential material interests
of the producers by giving some a dangerous advantage over others. For if,
as was scarcely to be avoided, certain productions were helped or hindered
by the giving or withholding of credit, this was immediately and naturally
followed by such a shifting of labour as at once restored the equilibrium
of profits.

But this interference during the first year extended only to the
controlling of the amount and order of granting the credit asked, for, and
not to the way in which it was used. In this respect, from the very
beginning the principle of the producers' responsibility was carried out to
the fullest extent. As it was necessary for the producers to be successful
in order to repay the capital taken up, so it was their business to see
that care was taken to make a profitable use of such capital. It is true
that--as has been already stated--the consumers ultimately bear the cost of
production; but they do this, of course, only when and in so far as the
processes employed in production have been useful and necessary. If an
association should procure unnecessary or defective machinery, it would be
impossible for it to transfer to the purchasers of its commodities the
losses thus occasioned; the association would not have increased, but
diminished, its gains by such investments. It can therefore be left to the
self-interest of those who are concerned in the associations to guard
against such a waste of capital.

We now come to the question how it is possible to guarantee the equal right
of everyone to equally fertile land. This problem also is solvable in the
simplest manner by the free mobility of labour involved in the principle of
free association. As everywhere else in the world, there was in Freeland
richer and poorer land; but as more workers were attracted to the better
land than to the worse, and as, according to a well-known economic law, a
greater expenditure of labour upon an equal extent of land is followed by
_relatively diminishing_ returns, so the individual worker obtained no
higher net profit per hour of labour on the best land than upon the worst
land which could be cultivated at all.

On the Dana plateau, for example, by the expenditure of 32 hours of labour
48 cwt. of wheat could be produced per acre; in Eden Vale the same
expenditure of labour would produce merely 36 cwt. Therefore, as the cwt.
of wheat was worth 3s. 1-1/2d., and 1-1/2d. was sufficient to cover all
expenses, the land association in the Dana plateau had at the end of the
year a return of 4s. 6d. for every hour of work, and, after deduction of
tax and repayment of capital, 2s. 9d. for division among the members. The
members of the Eden Vale association, on the other hand, had only 2s. per
hour of labour to divide among the members; and as careful investigation
proved that this difference was due neither to accidental uncongeniality of
the weather nor to a less amount of labour, but to the character of the
soil, the consequence was that in the next year the newly arrived
agriculturists preferred the better land of the Dana plateau. There was now
an average expenditure of 42 hours of labour to the acre in the Dana
plateau, but in Eden Vale only 24; yet in the former place the additional
10 hours of labour did not yield the 1-1/2 cwt. per hour, as was the case
when the expenditure of labour was only 32 hours, but merely a scant 3
qrs.; that is, the returns did not rise from 48 cwt. to 63 cwt., but merely
to 55 cwt.--sank therefore to 1.34 cwt. per hour of labour. The consequence
was that the returns, notwithstanding the considerable increase in the
price of grain due to the improved means of communication, rose merely to
5s., of which 3s. per hour of labour was available for division among the
members. In Eden Vale, on the other hand, the gross returns were lessened
merely 3 cwt. by the withdrawal of eight hours of labour per acre; the
produce therefore now was 33 cwt. for 24 hours of labour, or 1.37 cwt. per
hour of labour. The Eden Vale association therefore numbered a trifle more
than that of Dana; and as Eden Vale was a more desirable place of
residence, and had more conveniences than the Dana plateau, the stream of
agriculturists flowed back to Eden Vale until, after two other harvests,
there remained a difference of profit of about five per cent. in favour of
the Dana plateau, and this advantage, with slight variations, continued
permanently.

But just as the principle of the solidarity of interests brought about by
the mobility of labour placed him who used the actually worse land in the
enjoyment of the advantages of the better land, so everyone, whatever
branch of production he might be connected with, participated in all the
various kinds of advantages of the best land; and, on the other hand, every
cultivator of the soil, like every other producer, derived profit from all
the increased productiveness of labour, in whatsoever branch of labour in
our commonwealth it might arise, just as if he were himself immediately
concerned in it. _All_ means of production are common property; the use
which any one of us may make of this common property does not depend upon
the accident of possession, nor upon the superintending care of an
all-controlling communistic authority, but solely upon the capacity and
industry of each individual.




CHAPTER IX


As already stated, the fundamental condition of the successful working of
the simple organisation described above was the completest publicity of all
industrial proceedings. The organisation was in truth merely a mode of
removing all those hindrances that stand in the way of the free realisation
of the individual will guided by a wise self-interest. So much the more
necessary was it to give right direction to this sovereign will, and to
offer to self-interest every assistance towards obtaining a correct and
speedy grasp of its real advantage.

No business secrets whatever! That was at once the fundamental law of Eden
Vale. In the other parts of the world, where the struggle for existence
finds its consummation not merely in exploiting and enslaving one another,
but over and above this in a mutual industrial annihilation--where, in
consequence of the universal over-production due to under-consumption,
competition is synonymous with robbing each other of customers--there, in
the Old World, to disclose the secrets of trade would be tantamount to
sacrificing a position acquired with much trouble and cunning. Where an
immense majority of men possess no right to the increasing returns of
production, but, not troubling themselves about the productiveness of
labour, must be content with 'wages'--that is, with what is necessary for
their subsistence--there can be no sufficient demand for the total produce
of highly productive labour. The few wealthy cannot possibly consume the
constantly growing surplus, and their endeavour to capitalise such
surplus--that is, to convert it into instruments of labour--is defeated by
the impossibility of employing the means of a production the products of
which cannot be consumed. In the exploiting world, therefore, there
prevails a constant disproportion between productive power and consumption,
between supply and demand; and the natural consequence is that the disposal
of the products gives rise to a constant and relentless struggle between
the various producers. The principal care of the exploiting producers is
not to produce as much and as well as possible, but to acquire a market for
as large as possible a quantity of their own commodities; and as, in view
of the disproportion above explained, such a market can be acquired and
retained only at the expense of other producers. There necessarily exists a
permanent and irreconcilable conflict of interest. It is different among
us. We can always be sure of a sale, for with us no more can be produced
than is used, since the total produce belongs to the worker, and the
consumption, the satisfaction of real requirements, is the exclusive motive
of labour. Among us, therefore, the disclosure of the sources of trade can
rob no one of his customers, since any customers whom he may happen to lose
must necessarily be replaced by others.

On the other hand, what reason has the producer in the world outside to
communicate his experiences to others? Can those others make any use of the
knowledge they would thus acquire, except to do him injury? And can he use
any such information when communicated to him, except to the injury of
others? Does he allow others to participate in his business when his is the
more profitable, or does another let him do so with the business of that
other when the case is reversed? If the demand for the commodities of a
producer increases, the labour market is open to him, where he can find
servants enough ready to work without inquiring about his profits so long
as they receive their 'wages.' Thus, elsewhere in the world, not even are
the consumers interested in the publication of trade practices, which
publication, moreover, as has already been said, would be a matter of
impossibility. Quite different is this among us in Freeland. We allow
everyone to participate in our trade advantages, and we can therefore
participate in the trade advantages of everyone else; and we are compelled
to publish these advantages because, in the absence of a market of
labourers who have neither will nor interest of their own, this publicity
is the only way of attracting labour when the demand for any commodities
increases.

And--which is the principal thing--whilst elsewhere no one has an interest
in the increase of production by others, among us every one is most
intensely interested in seeing everyone produce as easily and as well as
possible. For the classical phrase of the solidarity of all economic
interests has among us become a truth; but elsewhere it is nothing more
than one of those numerous self-deceptions of which the political economy
of the exploiting world is composed. Where the old system of industry
prevails, universal increase of production of wealth is a chimera. Where
consumption by the masses cannot increase, there cannot production and
wealth increase, but can be only shifted, can only change place and owner;
in proportion as the production of one person increases must that of some
one else diminish, unless consumption increases, which, where the masses
are excluded from enjoying the increasing returns of labour, can happen
only accidentally, and by no means step by step with the increasing power
of productiveness of labour. With us in Freeland, on the contrary, where
production--in view of the necessary growth of the power of consumption in
exactly the same proportion--can and does increase indefinitely so far as
our facilities and arts permit, with us it is the supreme and most absolute
interest of the community to see that everyone's labour is employed
wherever it can earn the highest returns; and there is no one who is not
profited when the labour of all is thus employed to the completest extent
possible. The individuals or the individual associations which, by virtue
of our organisation, are compelled to share an accidentally acquired
advantage with another, certainly suffer a loss of gain by this
circumstance looked at by itself; but infinitely greater is the general
advantage derived from the fact that the same thing occurs everywhere, that
productiveness is constantly increasing, and their own advantage therefore
compels the occurrence of the same everywhere. To how undreamt-of high a
degree this is the case will be abundantly shown by the subsequent history
of Freeland.

It remains now to say something of the measures adopted to ensure the most
extensive publicity of industrial proceedings. We start from the principle
that the community has to concern itself with the affairs of the individual
as little as possible in the way of hindering or commanding, but, on the
other hand, as much as possible in the way of guiding and instructing.
Everyone may act as he pleases, so far as he does not infringe upon the
rights of others; but, however he acts, what he does must be open to
everyone. Since he here has to do not with industrial opponents, but only
with industrial rivals, who all have an interest in stimulating him as much
as possible, this publicity is to his own advantage. In conformity with
this principle, when a new member was admitted by the outside agents, his
industrial specialty was stated, and the report sent as quickly as possible
to the committee. This was not done out of idle curiosity, nor from a
desire to exercise a police oversight; rather these data were published for
the use and advantage of the productive associations as well as of the new
members themselves. The consequence was that, as a rule, the new members on
their arrival at the Kenia found suitable work-places prepared for them,
such as would enable them at once to utilise their working capacity to the
best advantage. No one forced them to accommodate themselves to these
arrangements made without their co-operation, but as these arrangements
served their advantage in the best conceivable way, they--with a few
isolated exceptions--accepted them with the greatest pleasure.

The second and most important subject of publication were the trade reports
of the producers, of the associations as well as of the comparatively few
isolated producers. Of the former, as being by far the more important and
by their very nature compelled to adopt a careful system of bookkeeping, a
great deal was required--in fact the full disclosure of all their
proceedings. Gross returns, expenses, net returns, purchases and sales,
amount of labour, disposal of the net returns,--all must be published in
detail, and, according to the character of the respective data, either
yearly, or at shorter intervals--the amount of labour, for example, weekly.
In the case of the isolated producers, it sufficed to publish such details
as would be disclosed by the regulation about to be described.

The buying and selling of all conceivable products and articles of
merchandise in Freeland was carried on in large halls and warehouses, which
were under the management of the community. No one was forbidden to buy and
sell where he pleased, but these public magazines offered such enormous
advantages that everyone who did not wish to suffer loss made use of them.
No fee was charged for storing or manipulation, as it was quite immaterial,
in a country where everyone consumed in proportion to his production,
whether the fees were levied upon the consumers as such, or upon the same
persons in their character as producers in the form of a minimal tax. What
was saved by the simplification of the accounts remained as a pure gain.
Further, an elaborate system of warranty was connected with these
warehouses. Since the warehouse officials were at the same time the channel
through which purchases were made, they were always accurately informed as
to the condition of the market, and could generally appraise the warehoused
goods at their full value. The sales took place partly in the way of public
auction, and partly at prices fixed by the producers; and here also no
commission was charged to either seller or buyer.

The supreme authority in Freeland was at the same time the banker of the
whole population. Not merely every association, but every individual, had
his account in the books of the central bank, which undertook the receipts
and the disbursements from the millions of pounds which at a later date
many of the associations had to receive and pay, both at home and abroad,
down to the individual's share of profits on labour and his outlay on
clothes and food. A 'clearing system,' which really included everything,
made these numberless debit and credit operations possible with scarcely
any employment of actual money, but simply by additions to and subtractions
from the accounts in the books. No one paid cash, but gave cheques on his
account at the central bank, which gave him credit for his earnings,
debited his spendings to him, and gave him every month a statement of his
account. Naturally the loans granted by the commonwealth as capital for
production, mentioned in the previous chapter, appeared in the books of the
bank. In this way the bank was informed of the minutest detail of every
business transaction throughout the whole country. It not only knew where
and at what price the producers purchased their machinery and raw material
and where they sold their productions, but it knew also the housekeeping
account, the income and cost of living of every family. Even the retail
trade could not escape the omniscience of this control. Most of the
articles of food and many other necessaries were supplied by the respective
associations to their customers at their houses. All this the bank could
check to a farthing, for both purchases and sales went through the books of
this institution. The accounts of the bank had to agree with the statements
of the statistical bureau, and thus all these revelations possessed an
absolutely certain basis, and were not merely the results of an approximate
valuation. Even if anyone had wished to do so, it would have been simply
impracticable to conceal or to falsify anything.

This comprehensive and automatically secured transparency of the whole of
the productive and business relations afforded to the tax assessed in
Freeland a perfectly reliable basis. The principle was that the public
expenditure of the community should be covered by a contribution from each
individual exactly in proportion to his net income; and as in Freeland
there was no source of income except labour, and the income from this was
exactly known, there was not the slightest difficulty in apportioning the
tax. The apportionment of the tax was very simply made as soon as the
income existed, and that through the medium of the bank; and this was done
not merely in the case of the associations, but also of the few isolated
producers. In fact, by means of its bank the community had everyone's
income in hand sooner than the earners themselves; and it was merely
necessary to debit the earners with the amount and the tax was paid. Hence
in Freeland the tax was regarded not as a deduction from net income, but as
an outlay deducted from the gross product, just like the trade expenses. In
spite of its high amount, no one looked upon it as a burden, because
everyone knew that the greater part of it would flow back to him or to his,
and every farthing of it would be devoted to purposes of exclusively public
utility, which would immediately benefit him. It was therefore quite
correct to recognise no difference whatever between productive outlay by
the commonwealth and the more private outlay of the associations and
individuals, and accordingly to designate the former not as 'taxes,' but as
'general expenditure.'

This general expenditure, however, was very high. In the first year it
amounted to thirty-five per cent. of the net profits, and it never sunk
below thirty per cent., though the income on which the tax was levied
increased enormously. For the tax which the community in Freeland had
imposed upon themselves for the very purpose of making this increase of
wealth possible was so comprehensive in its objects as to make a most
colossal amount necessary.

One of its objects was to create the capital required for the purposes of
production. But it was only at first that the whole of this had to be met
out of the current tax, as afterwards the repayment of the loans partly met
the new demands.

A constantly increasing item of expenditure was the cost of education,
which swallowed up a sum of which no one outside of Freeland can have any
conception.

The means of communication also involved an expenditure that rose to
enormous dimensions, and the same has to be said of public buildings.

But the chief item of expenditure in the Freeland budget was under the head
of 'Maintenance,' which included the claims of those who, on account of
incapacity for work or because they were by our principles released from
the obligation of working, had a right to a competence from the public
funds. To these belonged all women, all children, all men over sixty years
of age, and of course all sick persons and invalids. The allowances to
these different classes were so high that not merely urgent necessities,
but also such higher daily needs as were commensurate with the general
wealth in Freeland for the time being, could be met. With this view the
allowances had to be so calculated that they should rise parallel with the
income of the working part of the population; the amounts, therefore, were
not fixed sums, but varied according to the average income. The average net
profit which fell to the individual from all the productive labour in the
country, and which increased year by year, was the unit of maintenance. Of
this unit every single woman or widow--unless she was a teacher or a nurse,
and received payment for her labour--was allotted thirty per cent.; if she
married, her allowance sank to fifteen per cent.; the first three children
in every household were allowed five per cent. each. Parentless orphans
were publicly supported at an average cost of twelve per cent. of the
maintenance unit. Men over sixty years and sick persons and invalids
received forty per cent.

It may at once be remarked that it would startle those unaccustomed to
Freeland ideas to hear the amounts of these allowances. In the first year
the maintenance unit reached 160£; therefore an unmarried woman or a widow
received 48£; a married woman 24£; a family with three children and a wife
48£; an old man or invalid 64£, which, in view of the prices that then
prevailed among us, was more than most European States give as pensions to
the highest functionaries or to their widows and orphans. For a cwt. of
fine flour cost, in that first year at the Kenia, 7s., a fat ox 12s.;
butter, honey, the most delicious fruits, were to be had at corresponding
prices. Lodgings cost not more at most than 2£ a year. In brief, with her
48£ a single woman could live among us in the enjoyment of many luxuries,
and need not deny herself to any material extent of those conveniences and
enjoyments which at that time were obtainable at all in Eden Vale. And
afterwards, when prices in Freeland were somewhat higher, the profits of
labour, and consequently the percentage of the maintenance allowance,
quickly rose to a much greater extent, so that the purchasing power of the
allowance constantly became more pronounced. But this was the intention of
the people of Freeland. Why? In the proper place this subject will be again
referred to, and then will in particular be explained why the women,
without exception, receive a maintenance allowance, and why teaching and
nursing are the only occupations of women that are mentioned. Here we
merely state that it naturally required a constantly increasing tax to
cover all these expenses.

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