Book: Freeland

T >> Theodor Hertzka >> Freeland




Mr. Clark now drew our attention to the comprehensive, transparent, and
detailed publicity which marked all the pecuniary affairs of Freeland, in
consequence of the entry in the bank books of all commercial and industrial
relations. No one can deceive either himself or others as to his
circumstances; and one of the most important social consequences of this is
that no one has any desire to shine by extravagant spending. Extravagance
is only too often prompted by a desire to make oneself appear in the eyes
of the world richer than one really is; such an attempt in this country
would only provoke a smile. And if anyone wished to spend in luxuries more
than he earned, the bank would naturally refuse him credit for such a
purpose; and without this credit the spendthrift would have to appeal to
the liberality of his fellow-citizens before he could indulge in his
extravagance. The amounts of all incomes and of all outgoings lie open to
the day; all the world knows what everybody has and whence he gets it. And
as everyone is free to engage in any branch of industry whatever, the
difference of income can excite no one's envy.

But Lord E---- here asked whether the degree of authoritative arbitrariness
inevitable in fixing salaries of different kinds--_e.g._ of officials--did
not present some contradiction to the otherwise operative principle of
unconditional freedom of choice of calling, and to the equilibrium in the
proceeds of different kinds of labour which resulted from this freedom.
'When the profits of the woollen industry are higher than those of
agriculture, fresh labour will be transferred to the former until an
equilibrium has been established between the two profits; if a permanent
excess of profit shows itself in one of these branches of production, it is
evident under your institutions that this can be due solely to the fact
that the labour in this more profitable industry is less agreeable, more
exhausting, or demands a higher or rarer knowledge or skill. No one has the
slightest ground to complain of injury; and so far the harmony produced by
freedom is worthy of all admiration. But when it comes to appointments and
salaries, this absolute freedom must cease. You, as the head of a
department of the government, receive 1,400£, your neighbour the
hand-worker earns merely 600£; how do you know that the latter does not
feel that he is wronged thereby?'

'My lord,' said Mr. Clark, smiling, 'if you mean, how do I know whether my
neighbour does not feel himself wronged _by nature_ because he is not able,
like me, to earn 1,400£ a year, I must answer that I can speak only from
conjecture, and that I really possess no certain knowledge as to his
feelings. But if you think that my neighbour, or anyone else in Freeland,
could find in my higher salary an advantage conferred on me by an arbitrary
exercise of authoritative power, or by the favour of the electors, or for
any inadequate reason, I can certainly show that you are mistaken. For my
salary is, in the last resort, as much the result of free competition as is
the labour-profit of my neighbour. Whether I am the right man for my post
is a question which is decided by the corporations by whom my election is
made, and whose choice is controlled or superseded by no automatically
working contrivance; with what salary my office must be endowed, in order
that qualified men, or let us say men who are held to be qualified, may be
obtained, this is regulated by exactly the same automatic laws as is the
labour-profit of a weaver or an agriculturist. And this holds good of the
salary of the youngest official up to that of the heads of the departments
of the Freeland government. The fixing of the salaries in every case
depends upon the free judgment of the presidents or of the electoral
colleges; but these presidents or electoral colleges must fix the salaries
at such sums as will at any time attract a sufficient number of qualified
candidates. Of course, a pound more or less a year would make no
difficulty--it is a recognised principle that the salaries should be high
enough to attract rather a superfluity than a lack of candidates; but when
the number of candidates is greater than a certain ratio, the salaries are
reduced, whilst a threatened lack of candidates is met by an increase of
salaries. I will add, that it is to be taken as a matter of course that in
Freeland the unsuccessful candidates are not breadless aspirants. Success
or failure is never therefore a question of a livelihood, but of the
gratification of inclination and sometimes of vanity. A man gives up his
office when more profitable or more agreeable occupation attracts him
elsewhere. The public officials are not paid the same salaries in all the
branches of the public service. Specially trying work, or work demanding
special knowledge, obtains here higher profits, just as in the various
industries. And whilst the labour-earnings of ordinary manual labour are
the measure of the salaries of the lower officials, so do the salaries of
the various association-managers exercise a regulative influence upon the
salaries of the higher public officials. You, also, have often experienced
that the attractions of positions connected with public activity have in no
small degree brought down the salaries of government officials, professors,
&c., below the level of the incomes of those who hold the chief posts in
associations. As a rule, it is found that with a rise in the general level
of intelligence there is a _relative_--by no means an absolute--sinking of
the higher salaries. While the directors of several large associations
receive as much as 5,000 hour-equivalents a year, the highest officials in
the Freeland central government at the present time receive only 3,600
more, and that because our persistent assertion of the relative
depreciation of the higher salaries is met by the parliaments with an
equally persistent resistance, and the parliaments yield to our
importunities only very slowly and very reluctantly. To be just, it should
be added that the same game is repeated in the associations. The directors
would often be satisfied with much lower salaries, for they often really do
not know what to do with their incomes, which, in comparison with prices in
Freeland, are in some cases exorbitant, and increase with every increase in
the value of labour. Particularly during the last decade, since the value
of the hour-equivalent has increased so much, proposals from above to
reduce salaries have become a standing rule. I repeat, this reduction must
be understood to be merely relative--that is, to refer merely to the number
of hour-equivalents. The value of a labour-hour has quadrupled within the
last twenty years; those of us, therefore--we public officials, for
example--who receive twenty-eight per cent. fewer hour-equivalents than we
did originally, still have incomes which, when reckoned in money, have been
nearly tripled. As a rule, however, the associations will not hear of even
such a reduction. Though their directors openly avow their willingness to
accept lower salaries, the associations are afraid of offending some one or
other of the competing societies which pay higher salaries; and as a few
hundred pounds are not worth considering in view of the enormous sums which
a great association annually turns over, the reduction of the salaries goes
on but slowly. Nevertheless there is a gradual lessening of the difference
between the maximum and the minimum earnings, plainly proving that even in
this matter of salaries the law of supply and demand is in full operation.'

Lord E---- thanked him for this explanation. But now Sir B---- proposed a
far weightier question. 'What struck me most,' said he, 'when I was
examining the enormous operations of your central bank, and what I am not
yet able to understand, is how it is possible, without arbitrary exercise
of authority and communistic consequences, to accumulate the immense
capital which you require, and yet neither pay nor reckon any interest.
That interest is the necessary and just reward of the capitalist's
self-denial I do not indeed believe; but I hold it to be the tribute which
has to be paid to the saver for sparing the community, by his voluntary
thrift, the necessity of making thrift compulsory. What I now wish to know
is, what were your reasons for forbidding the payment of interest? Or are
you in Freeland of opinion that it is unjust to give to the saver a share
of the fruits of his saving?'

'We are not of that opinion,' answered the director. 'But first I must
assure you that you have started from an erroneous assumption. We _forbid_
the payment of interest as little as we "forbid" the undertaker's profit or
the landlord's ground-rent. These three items of income do not exist here,
simply because no one is under the necessity of paying them. If our workers
needed an "undertaker" to organise and discipline them for highly
productive activity, no power could prevent them from giving up to him what
belonged to him--namely, the profit of the undertaking--and remaining
satisfied themselves with a bare subsistence. Nothing in our constitution,
and no one among us, would interfere with such an undertaker in the
peaceable enjoyment of his share of the produce. If the land needed--'

'Pardon my interruption,' said Sir B----. '"If our workers needed an
undertaker to organise and discipline them, no power could prevent them
from giving up to him the whole of the produce"--these were your words. In
the name of heaven, do not your workers need such a man? Do they need none
over them to organise, discipline, guide, and overlook the process of
production? And when I hear you so coolly and distinctly assert that such a
man has a right to the produce, and that neither for God's sake nor in the
name of justice need he leave to the worker more than a bare subsistence, I
am compelled to ask myself whether you, an authority in Freeland, are
pleased to jest, or whether what we have hitherto seen and heard here rests
upon a mere delusion?'

'Forgive me for not having expressed myself more plainly,' answered the
director to Sir B---- and to the rest of us who, like him, had shown our
consternation at the apparent contradiction between the last words of our
informant and the spirit of Freeland institutions. 'I said, "If our workers
needed an _undertaker_": I beg you to lay emphasis upon the word
"undertaker." A man or several men to arrange, organise, guide the work,
they certainly need; but such a man is not an undertaker. The difference
between our workers and others consists in the fact that the former allow
themselves to be organised and disciplined by persons who are dependent
upon them, instead of being their masters. The conductors of our
associations are not the masters, but the officials--as well as
shareholders--of the working fellowship, and have therefore as little right
to the whole produce as their colleagues abroad. The latter are appointed
and paid by the "owner" of what is produced; and in this country this owner
is the whole body of workers as such. An undertaker in the sense of the old
industrial system, on the other hand, is a something whose function
consists in nothing but in being master of the process of production; he is
by no means the actual organiser and manager, but simply the owner, who, as
such, need not trouble himself about the process of production further than
to condescend to pocket the profits. That the undertaker at the same time
bears the risks attendant upon production has to be taken into account when
we consider the individual undertaker, but not when we consider the
institution as such, for we cannot speak of the risk of the body of
undertakers as a whole, I called the undertaker, not a man, but a
something, because in truth it need not be a man with flesh and blood. It
may just as well be a scheme, a mere idea; if it does but appropriate the
profits of production it admirably fulfils its duty as undertaker, for as
such it is nothing more than the shibboleth of mastership. Let us not be
misled by the fact that frequently--we will say, as a rule--the undertaker
is at the same time the actual manager of the work of production; when he
is, he unites two economic functions in one person, that of the--mental or
physical--labour and that of the undertakership. Other functions can just
as well be associated together in him: the undertaker can be also
capitalist or landlord; nevertheless, the undertaker, as economic subject,
has no other function than that of being master of other men's labour and
of appropriating to himself the fruits of the process of production after
subtracting the portions due to the other factors in production.

'And this master, whose function consists simply of an abstract mastership,
is an inexorable necessity so long as the workers are servants who can be
disciplined, not by their enlightened self-interest, but only by force. To
throw the blame of this exclusively or only mainly upon "capital" was a
fatal error, which for a long time prevented the clear perception of the
real cause--the servile habits and opinions that had grown stronger and
stronger during thousands of years of bondage. Capital is indispensable to
a highly developed production, and the working masses of the outside world
are mostly without capital; but they are without it only because they are
powerless servants, and even when in exceptional cases they possess capital
they do not know how to do anything with it without the aid of masters. Yet
it is frequently the capital of the servants themselves by means of
which--through the intervention of the savings-banks--the undertaker
carries on the work of production; it none the less follows that he pockets
the proceeds and leaves to the servants nothing but a bare subsistence over
and above the interest. Or the servants club their savings together for the
purpose of engaging in productive work on their own account; but as they
are not able to conceive of discipline without servitude, cannot even
understand how it is possible to work without a master who must be obeyed,
because he can hire and discharge, pay and punish--in brief, because he is
master; and as they would be unable to dispose of the produce, or to agree
over the division of it, though this might be expected from them as
possessors of the living labour-power,--they therefore set themselves in
the character of a corporate capitalist as master over themselves in the
character of workmen. In these productive associations, which the workers
carry on with money they have saved by much self-denial or have involved
themselves in worry and anxiety by borrowing, they remain as workers under
a painful obligation to obey, and the slaves of wages; though certainly in
their character of small capitalists they transform themselves into masters
who have a right to command and to whom the proceeds of production
belong--that is, into undertakers. The example of these productive
associations shows, more plainly than anything else can, that it was
nothing but the incapacity of the working masses to produce without masters
that made the undertaker a necessity. We in Freeland have for the first
time solved the problem of uniting ourselves for purposes of common
production, of disciplining and organising ourselves, though the proceeds
of production belonged to us in our character of workers and not of
capitalists. And as the experiment succeeded, and when undertaken by
intelligent men possessing some means must succeed, we have no further need
of the undertaker.

'But undertakership is not forbidden in Freeland. No one would hinder you
from opening a factory here and attempting to hire workers to carry it on
for wages. But in the first place you would have to offer the workers at
least as much as the average earnings of labour in Freeland; and in the
second place it is questionable if you would find any who would place
themselves under your orders. That, as a matter of fact, no such case has
occurred for the past eighteen years--that even our greatest technical
reformers, in possession of the most valuable inventions, have without
exception preferred to act not as undertakers, but as organisers of free
associations--this is due simply to the superiority of free over servile
labour. It has been found that the same inventors are able to accomplish a
great deal more with free workers who are stimulated by self-interest, than
with wage-earners who, in spite of constant oversight, can only be induced
to give a mechanical attention to their tasks. Moreover, the system of
authoritative mastership was as repugnant to the feelings of the masters as
to those of the men under them, and both parties found themselves
uncomfortable in their unfamiliar _rôles_--as uncomfortable as formerly in
the _rôles_ of absolutely co-equal associates in production. So
considerable was this mutual feeling of discomfort, and so evident was the
inferiority of the servile form of organisation, that all such attempts
were quickly given up, though no external obstacle of any kind had been
placed in their way. Certainly it must not be overlooked that every
undertaker who needs land for his business is in constant danger of having
claims made by others upon the joint use of the land occupied by him, for,
of course, we do not grant him a privilege in this respect; neither he nor
anyone else in Freeland can exclude others from a co-enjoyment of the
ground. Nevertheless, as we have plenty of space, it would have been long
before the undertaker would have had to strike his sail on this account.
That the few who in the early years of our history made such attempts
quickly transformed themselves into directors of associations, was due to
the fact that, in spite of any advantages which they might possess, they
could not successfully compete with free labour. Three of these undertakers
failed utterly; they could fulfil their obligations neither to their
creditors nor to their workmen, and must have had to submit to the disgrace
of bankruptcy if their workmen, distinctly perceiving the one defect from
which the undertakings suffered, had not taken the matter in hand. Since
the inventions and improvements for the introduction of which these three
undertakers had founded their businesses, were valuable and genuine, and
the masters had during their short time of mastership shown themselves to
be energetic and--apart from their fancy for mastership--sensible men, the
workers stepped into the breach, constituted themselves in each case an
association, took upon themselves all the liabilities, and then, under the
superintendence of the very men who had been on the brink of ruin, carried
on the businesses so successfully that these three associations are now
among the largest in Freeland. Four other several individuals--also notable
industrial inventors--avoided a threatened catastrophe only by a timely
change from the position of undertakers to that of superintendents of
associations; and they stand at present at the head of works whose workers
are numbered by thousands, and have since realised continuously increasing
profits, high enough to satisfy all their reasonable expectations. Thus, as
I have said, undertakership is not forbidden in Freeland; but it cannot
successfully compete with free association.'

Sir B---- and the others declared themselves perfectly satisfied with this
explanation, and begged the bank director to proceed with his account which
they had interrupted. 'You were saying,' intimated my father, 'that in
Freeland interest was no more forbidden than undertaker's gains and
ground-rent. As to undertaker's gains we now understand you; but before you
proceed to the main point of your exposition--to interest--I would like to
ask for fuller details upon the question of ground-rent. How are we to
understand that this is not forbidden in Freeland?'

'How you are to understand that,' was the answer, 'will best be made plain
to you if I take up my train of thought where I left off. If, in order to
labour productively, we required the undertaker, no power in heaven or
earth could save us from giving up to him what was due to him as master of
the process of production, while we contented ourselves with a bare
subsistence--that is what I said. I would add that we should also be
compelled to pay the tribute due to the landlord for the use of the ground,
if we could not till the ground without having a landlord. For property in
land was always based upon the supposition that unowned land could not be
cultivated. Men did not understand how to plough and sow and reap without
having the right to prevent others from ploughing and sowing and reaping
upon the same land. Whether it was an individual, a community, a district,
or a nation, that in this way acquired an exclusive right of ownership of
the land, was immaterial: it was necessarily an _exclusive_ right,
otherwise no one would put any labour into the land. Hence it happened, in
course of time, that the individual owner of land acquired very
considerable advantages in production over the many-headed owner; and the
result was that common property in land gradually passed into individual
ownership. But this distinction is not an essential one, and has very
little to do with our institutions. With us, the land--so far as it is used
as a means of production and not as sites for dwelling-houses--is
absolutely masterless, free as air; it belongs neither to one nor to many:
everyone who wishes to cultivate the soil is at liberty to do so where he
pleases, and to appropriate his part of the produce. There is, therefore,
no ground-rent, which is nothing else than the owner's interest for the use
of the land; but a prohibition of it will be sought for in vain. In the
fact that I have no right to prohibit anything to others lies no
prohibition. It cannot even be said that I am prohibited from prohibiting
anything, for I may do it without hindrance from anyone; but everybody will
laugh at me, as much as if I had forbidden people to breathe and had
asserted that the atmospheric air was my own property. Where there is no
power to enforce such pretensions, it is not necessary to prohibit them; if
they are not artificially called forth and upheld, they simply remain
non-existent. In Freeland no one possesses this power because here no one
need sequestrate the land in order that it may be tilled. But the magic
which enables us to cultivate ownerless land without giving rise to
disputes is the same that enables us to produce without undertakers--free
association.

'Just as little do we forbid interest. No one in Freeland will prevent you
from asking as high a rate of interest as you please; only you will find no
one willing to pay it you, because everyone can get as much capital as he
needs without interest. But you will ask whether, in this placing of the
savings of the community at the disposal of those who need capital, there
does not lie an injustice? Whether it is not Communism? And I will admit
that here the question is not so simple as in the cases of the undertaker's
gains and of ground-rent. Interest is charged for a real and tangible
service essentially different from the service rendered by the undertaker
and the landowner. Whilst, namely, the economic service of the two latter
consists in nothing but the exercise of a relation of mastership, which
becomes superfluous as soon as the working masses have transformed
themselves from servants working under compulsion into freely associated
men, the capitalist offers the worker an instrument which gives
productiveness to his labour under all circumstances. And whilst it is
evident that, with the establishment of industrial freedom, both undertaker
and landowner become, not merely superfluous, but altogether
objectless--_ipso facto_ cease to exist--with respect to the capitalist,
the possessor of savings, it can even be asserted that society is dependent
upon him in an infinitely higher degree when free than when enslaved,
because it can and must employ much more capital in the former case than in
the latter. Moreover, it is not true that service rendered by capital--the
giving wings to production--is compensated for by the mere return of the
capital. After a full repayment, there remains to the worker, in proportion
as he has used the capital wisely--which is his affair and not the
lender's--a profit which in certain circumstances may be very considerable,
the increase of the proceeds of labour obtained by the aid of the capital.
Why should it be considered unreasonable or unjust to hand over a part of
this gain to the capitalist--to him, that is, to whose thrift the existence
of the capital is due? The saver, so said the earlier Socialists, has no
right to demand any return for the service which he has rendered the
worker; it costs him nothing, since he receives back his property
undiminished when and how he pleases (the premium for risk, which may have
been charged as security against the possible bad faith or bankruptcy of
the debtor, has nothing to do with the interest proper). Granted; but what
right has the borrower, who at any rate derives advantage from the service
rendered, to retain all the advantage himself? And what certainty has he of
being able to obtain this service, even though it costs the saver nothing
to render it, if he (the borrower) does not undertake to render any service
in return? It is quite evident that the interest is paid in order to induce
the saver to render such a friendly service. How could we, without
communistic coercion, transfer capital from the hands of the saver into
those of the capital-needing producer? For the community to save and to
provide producers with capital from this source is a very simple way out of
the difficulty, but the right to do this must be shown. No profound thinker
will be satisfied with the communistic assertion that the capital drawn
from the producers in one way is returned to them in another, for by this
means there does not appear to be established any equilibrium between the
burden and the gain of the individual producers. The tax for the
accumulation of capital must be equally distributed among all the
producers; the demand for capital, on the other hand, is a very unequal
one. But how could we take the tax paid by persons who perhaps require but
little capital, to endow the production of others who may happen to require
much capital? What advantage do we offer to the former for their compulsory
thrift?

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