Business and Unemployment

Harry C. Maguire

[Reprinted from Land and Freedom, September-October 1939]

Is business to blame for unemployment? The radicals say it is. The Karl Marx or Socialist argument is that the capitalist unbalances distribution by taking a profit or "surplus value" from the workers. The latter cannot buy back all they produce; a surplus of goods accumulates; production slows down; men are idle; and there is a depression. The way to cure the disease is to remove the cause, i.e., the private ownership of capital. The State must own and run business, they assert. The fact that communism (which is socialism put into practice) has resulted in the total loss of individual liberty in Russia, in the suppression of freedom of publication, of speech, of religion, in universal poverty and squalor, and finally even the loss of the right to life itself, seems not to affect our radicals. "Business is to blame for unemployment" is their constant theme, day in and day out. The Karl Marx professors, the power behind the throne in Washington, turning out thousands of students from our colleges yearly, re-echo this communistic cry against business.

What is business doing about it? Business is taking a beating, lying down, by not denying it. There is a character in Greek mythology who was unconquered until it was found out that whenever his feet touched the earth his strength returned. The business haters and baiters cannot be overcome so long as they can say, unchallenged, that business is to blame for unemployment.

Productive capital, or real business, is to use the vernacular, "taking the rap." How can running a factory or a wheat farm, or a department store cause unemployment? When productive capital is unemployed, or idle, it earns no wages for itself interest. In fact, it tends to decay and dissipate. Leave any capital unused, such as machinery, for a number of years and it becomes junk worthless. Real business, which is the making and distributing of goods, is eager to employ men. The childish Karl Marx dogma that business cannot function because of surplus value need not be considered here. No mature adult mind can believe that the wage earners who do part of the producing should receive all of the product and the wage savers (capital suppliers) nothing. Or, that the part of the product that goes to management and capital is surplus value, causing unemployment. It makes no sense which is nonsense.

Business must stand up and fight the radical slogan that it is to blame for unemployment. This is as absurd as to say that labor is to blame for unemployment because it doesn't buy the entire products of business and thereby stops business running full time. Certainly both want to work to earn interest and wages, and neither is blamable for the depression.

What then is responsible for unemployment, if it is not business, labor, or Karl Marx's surplus value? The writer believes that Henry George's conclusion deserves careful investigation. He points out that a group owns and controls the land. Labor and business must use land. For permission to do so, this land monopoly group can take and it does take from them all they produce, except a bare living. At times of "land speculation," it tries to take more, not leaving them a bare living. Then labor and business become idle and unemployed -- depression follows. George concludes that land monopoly is to blame for unemployment.