The Great Silence of "Liberals"
Harry Gunnison Brown
[Reprinted from The Freeman, November, 1938]
The idea that depression is due to "the profit system" as
such, to "capitalistic exploitation" of labor, is one that
seems to have captured almost completely the minds of our radical
literary intelligentsia. The idea seems to be that "capitalistic
exploitation" depresses wages while Increasing the Incomes of
property owners, that therefore wage earners cannot buy the goods they
work to produce, that in consequence the goods become unsaleable and
that this Is the cause of business depression and unemployment.
Even if we grant that capital "exploits" the workers or
that employers "exploit" employees or that any propertied
class "exploits" other classes, this would not at all
Indicate that unemployment or business depression la thus caused. For
though I pick your pocket every week and so decrease your ability to
buy goods and services, yet, for every dollar less that you have to
spend, I have a dollar more to spend. The idea of the literary
Intelligentsia that capitalist employers cannot sell as many dollars'
worth of goods if wages are low and property incomes high as in the
reverse situation, is pure assumption for which they never present
real evidence. The fact is that the rich buy as well as the poor, that
capitalist employers buy each others' products as readily as do wage
earners. They may not, to be sure, buy the same things; but there is
just as much employment in the malting of steam yachts and palatial
residences as in the manufacture of work shoes and blue denim
overalls.
But now our literary intelligentsia may reply -- as they sometimes do
reply -- that the recipients of large incomes don't spend most of
their money but save and invest it instead of spending! Very well.
What is saving and investing? Isn't it buying things? Not buying steam
yachts and cut flowers, perhaps, but buying brick, structural steel,
machinery and trucks. And the making of these investment foods employs
labor just as truly as the making of anything else. And if the
recipients of the larger incomes buy the stocks and bonds of
corporations, do not the corporations then spend, for machinery and
buildings requiring labor to make, the money they so receive? Even if
the stocks and bonds are purchased, not from the corporations that
issue them but from previous holders, do not these previous holders
expect to spend the money they so receive?
Driven from all these other defenseless positions, the intelligentsia
resort to their last one. Is it not the case, they inquire, that such
saving and investment must increase the output of goods beyond the
possibility of disposing of them?
But here, too, their position is untenable. Saving, and the
consequent increase of capital, means more competition to get capital
used and, therefore, lower interest rates. It means that business can
afford to operate on a narrower margin. It means that labor is better
equipped with capital, is able to produce more, and is therefore worth
more in wages (unless the crowding of land -- as from land speculation
-- causes the gain to go to landowners in higher rents). And if wages
are not higher, then competition of capital will make prices lower. In
short, the natural and normal result of increased saving, investment
and capital construction, is to increase the buying ability of the
very classes to whose lack of buying ability the intelligentsia
attribute our depressions! If we have depressions this is not because
some have small incomes and others large incomes, however undesirable
such inequality, if based on unjust Institutions, may be. It is not
because of excessive saving. It is not because of the construction of
too much capital; for capital is a tool that aids us to produce more
of what we want and with less effort; and, in general, men are still
eager to get the use of capital and are willing to pay to use it.
It is a pity that such mental confusion as has been described above,
afflicts so many of those who appear to be sympathetic with common
folks and who might do something toward popularizing real reform. Or
are many of the literary intelligentsia so dependent for a livelihood
on their skill in playing up fallacies that are widely believed In by
their public, and in brightly toying with a rapid succession of new
ideas, that they think they cannot afford to, and perhaps do not
seriously desire to, do anything else?
Sharp and persistent decrease of hank credit (or other circulating
medium) makes for an apparent superfluity of goods and labor because
there is not enough circulating medium to buy them at current prices
and wages, and many prices and wages do not quickly and easily adjust
themselves to a lower level. But such apparent superfluity can be
largely prevented by wise and skillful control of the volume of money
and bank credit.
Tariff restrictions lessen the possibilities of profitable
specialization, and make the goods we want and need cost us more labor
to get, so that we can't enjoy so much. Removal of tariff barriers is
the obvious solution.
Private monopoly exploits the consuming public through exorbitant
prices. The solution here is to enforce competition, and this is
certainly possible if those in the executive, legislative and judicial
branches of our government believe in doing it and really try to do
it. In the case of the public service industries, where the use of a
single plant is manifestly desirable, the solution is effective and
fair regulation of rates.
Private enjoyment of the billions of dollars a year of
community-produced site values and natural resource values, compels
the raising of the revenues required by government, toy taxing the
earnings of labor and the necessities of the poor and by penalizing
thrift and improvement. It makes the sale prices of land high and
discourages home ownership. It encourages the speculative holding of
land out of use, makes available land scarce and its rent high and
crowds people into slums where all the conditions of life are
unfavorable and hard. The obvious solution is certainly not to prate
of the evils of "the profit motive" which in so many ways is
a benefit to us and a stimulus to progress, and which actuates every
wage earner when he gives up a poorer job for a better one, just as
truly as it does his boss or any capitalist investor. The solution is
for the public to take, through taxation, all or nearly all of the
annual rental value of land and sites.
But this proposal is THE SUBJECT OF THE GREAT SILENCE. It isn't "good
form" to discuss it "in the best circles." The literary
intelligentsia rarely or never mention it. The high-brow magazines to
which they contribute may use their columns for everything and
anything else but they won't refer to this. But perhaps the time will
come when they will have to refer to it -- and take it seriously, too
-- or find themselves under permanent and withering suspicion of
covering a fundamental conservatism with a cloak of' pretended and
unenlightening liberalism.
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